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Best Working Capital Loans of December 2024

By Randa Kriss, Olivia Chen
Last updated on October 14, 2024
Edited by Sally Lauckner
Fact checked and reviewed
Working capital loans can be used to improve cash flow and finance short-term business expenses such as payroll, rent and utilities.

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Working capital loans can cover day-to-day business expenses and help keep your business afloat when you face cash flow gaps. These small-business loans are available to a wide variety of businesses and can often fund quickly, but come with frequent payments and can be expensive.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 6 best working capital loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA 7(a) loan

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Best for established businesses

$5,000,000650

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iBusiness Funding - Online term loan

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4.6/5

Best for long-term funding

$500,000640

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Bluevine - Line of credit

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5.0/5

Best for fast loans

$250,000625

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Fora Financial - Online term loan

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4.8/5

Best for bad credit

$1,500,000570

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Fundbox - Line of credit

Read Review
5.0/5

Best for newer businesses

$150,000600
Read Review

American Express® Business Line of Credit*

Read Review
5.0/5

Best for low revenue

$250,000660
Read Review

Here are 6 best working capital loans

Best for established businesses

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for long-term funding

iBusiness Funding

Max Amount

$500,000

Min. Credit Score

640

Best for fast loans

Bluevine

Max Amount

$250,000

Min. Credit Score

625

Best for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

Best for newer businesses

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for low revenue

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

I'M INTERESTED IN:

Our pick for

established businesses

The SBA 7(a) loan program includes term loans as well as line of credit options that you can use for working capital, seasonal expenses or costs to cover supplies and labor while completing a contracted project. Certain requirements are up to the lender issuing the loan, but as a general rule, you’ll need a couple of years in business and strong personal credit to qualify.

SBA 7(a) loan

Read Review

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Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%

Pros

  • Large borrowing maximums.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Collateral is typically required.
  • Longer processing times than online lenders.
Low interest rate

SBA 7(a) loan

Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
Low interest rate

Our pick for

long-term funding

If you’re looking for working capital loans for long-term needs, iBusiness Funding (formerly Funding Circle) online loans have terms up to seven years. These loans can fund within a matter of days, but you’ll need at least two years in business to qualify.

iBusiness Funding - Online term loan

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Max loan amount
$500,000
Min. credit score
640
Est. APR
15.22-45.00%

Pros

  • Cash can be available within two business days.
  • Competitive rates among online lenders.
  • Terms up to seven years.
  • iBusiness Funding also offers SBA loans up to $5 million.

Cons

  • Charges an origination fee.
  • Must be in business for a minimum of 24 months.
  • Minimum credit score is higher than some other lenders.
May fund quickly

iBusiness Funding - Online term loan

NerdWallet rating 
4.6/5
Max loan amount
$500,000
Min. credit score
640
Est. APR
15.22-45.00%
May fund quickly

Our pick for

fast loans

If you’re suddenly in need of a working capital loan to cover cash flow, Bluevine’s line of credit can provide an approval decision in as little as five minutes and funding within the same day.

Bluevine - Line of credit

Read Review

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Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%

Pros

  • Cash can be available within 12 to 24 hours.
  • Can be used to build business credit.
  • Low minimum credit score requirement.

Cons

  • Requires weekly payments.
  • Not available in North Dakota, South Dakota or Nevada.
  • Rates can be high compared with traditional lenders.
May fund quickly

Bluevine - Line of credit

NerdWallet rating 
5.0/5
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
May fund quickly

Our pick for

bad credit

If bad personal credit is preventing you from funding that could help keep your business afloat, Fora Financial offers loans to borrowers who have a personal credit score of 570 or higher. Businesses may be able to receive working capital amounts between 75% - 125% of their monthly gross sales.

Fora Financial - Online term loan

Read Review

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Max loan amount
$1,500,000
Min. credit score
570

Pros

  • Cash can be available quickly.
  • Get a discount for prepaying.
  • No collateral required.
  • Low minimum credit score requirement.

Cons

  • Charges a factor rate that makes it more difficult to compare costs with other lenders.
  • Can’t build business credit.
  • Longest loan term is 18 months.
  • Charges an origination fee.

Fora Financial - Online term loan

NerdWallet rating 
4.8/5
Max loan amount
$1,500,000
Min. credit score
570

Our pick for

newer businesses

Fundbox offers working capital lines of credit up to $150,000. It can fund within the same day as approval and only requires three months in business to qualify.

Fundbox - Line of credit

Read Review
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%

Pros

  • Financing available within one business day after approval.
  • Simple application with minimal documentation required.
  • Low minimum credit score, time in business and annual revenue requirements.
  • No prepayment penalties, account maintenance fees or inactivity fees.

Cons

  • Rates are high compared with traditional banks.
  • Weekly repayments required over a short term (maximum of 24 weeks).
May fund quickly

Fundbox - Line of credit

NerdWallet rating 
5.0/5
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
May fund quickly

Our pick for

low revenue

American Express offers business lines of credit that can be used as a working capital loan to make business purchases, address cash flow issues and other purposes. You only need to earn $3,000 in monthly revenue to qualify.

American Express® Business Line of Credit*

Read Review
Max loan amount
$250,000
Min. credit score
660

Pros

  • Streamlined application process with minimal paperwork.
  • Financing from $2,000 to $250,000 available.
  • Accepts borrowers with a minimum FICO score of at least 660 at the time of application.
  • Monthly repayment schedule (as opposed to daily or weekly).
  • No prepayment penalties, account maintenance fees or draw fees.

Cons

  • Must have online checking or PayPal account to verify cash flow.
  • Complex monthly fee structure makes it difficult to compare costs to other lenders.

American Express® Business Line of Credit*

NerdWallet rating 
5.0/5
Max loan amount
$250,000
Min. credit score
660

How Much Do You Need?

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A closer look at the best working capital loans

SBA 7(a) loan

Who should consider it: Established businesses with good personal credit that aren’t in a rush for funding.
Notable features:
  • Maximum loan terms up to 10-25 years (depending on loan usage). 
  • Collateral required on loans over $50,000. 
  • SBA guarantees 50%-90% of loan amount (depending on loan type and size).

iBusiness Funding (formerly Funding Circle)

Who should consider it: Established businesses with good personal credit that need fast funding.
Notable features:
  • Loan amounts range from $25,000 to $500,000. 
  • No prepayment penalties. 
  • Charges an origination fee.

Bluevine

Who should consider it: Businesses that need quick funding to cover gaps in cash flow.
Notable features:
  • Can request draws directly through your dashboard. 
  • Line of credit comes with a free Bluevine Business Checking account. 
  • No prepayment penalties. 

Fora Financial

Who should consider it: High-revenue businesses that are having trouble qualifying for financing due to bad credit.
Notable features:
  • Possible to increase your loan amount after you’ve paid down 60%. 
  • Offers prepayment discounts. 
  • Charges an origination fee.

Fundbox

Who should consider it: Businesses in need of fast cash that have a short time in business and/or bad credit.
Notable features:
  • Choice of repayment terms (
    3
    or
    6
    months) for every draw. 
  • Can make draw requests through the mobile app. 
  • Line of credit amounts range from $100 to $150,000. 

American Express® Business Line of Credit

Who should consider it: American Express Business customers who can’t meet other line of credit minimum revenue requirements.
Notable features:
  • No origination fee. 
  • Requires collateral.
  • Payment due dates and fees provided before you sign your loan agreement for transparency.  

What is a working capital loan?

Working capital loans are short-term loans that are best for covering gaps in cash flow for expenses related to your business’s day-to-day operations. This can include rent, payroll, utilities, supplies, inventory and accrued expenses like taxes.
Working capital loans may come in the form of business lines of credit, term loans, SBA 7(a) loans and invoice financing loans. Banks and credit unions, online lenders and other alternative lenders may all offer working capital loans.
Did you know...
Working capital is the amount of money available at any given time to meet short-term, or day-to-day, business needs. Net working capital is calculated by subtracting current liabilities from current assets. Current liabilities and assets are generally more liquid things like accounts payable, salaries, cash on hand or accounts receivable. Seasonality, growth stage and industry can all influence the ideal amount of working capital for your business.

When to consider a working capital loan

Here are some common situations where a working capital loan may make sense for your business:
  • Inconsistent cash flow. For businesses that experience seasonal fluctuations in sales or have bill due dates that don’t always align with their monthly cash receipts, a working capital loan can be a good option.
  • New business opportunity. Taking on a new client, accepting a large order or expanding a business operation can require more capital than a business has available. In these situations, additional cash can be accessed through a working capital loan.
  • Unexpected expenses. Even with the best of planning, random expenses can disrupt a business’s budget. For businesses that don’t have surplus cash, a working capital loan can help pay for unexpected expenses or create an emergency fund for the future.

Types of working capital loans

Several types of business loans can provide you with working capital. Repayment terms, funding amounts and interest rates vary based on loan type and lender, as well as your business’s qualifications.
Loan Types
Overview
At a glance
A business line of credit is best for companies that need to get through a short-lived slowdown. You’ll need strong revenue in time to pay back your lender before the loan term ends. Lines of credit provide a lot of flexibility, as you get access to funds up to a set limit and only pay interest on what you’ve borrowed. You can draw and repay funds as often as you’d like, as long as you make payments and don’t exceed your limit.
  • Short, but flexible repayment terms.
  • Only pay interest on what you’ve drawn.
  • Revolving source of capital can be good to cover regular gaps in cash flow for strong-revenue businesses.
SBA loans are partially guaranteed by the U.S. Small Business Administration and issued through participating banks, credit unions and online lenders. SBA 7(a) term loans and lines of credit provide up to $5 million for working capital, expansion or equipment purchases.
SBA 7(a) term loans are best for companies that need a lump sum of working capital while undertaking a pivot or expansion. The long terms and low interest rates of SBA loans make them one of the most affordable types of financing, though they can be slow to fund.
  • Government-guaranteed loans, issued by private lenders.
  • Long terms and low interest rates.
  • Financing up to $5 million.
The CAPLines program, a subset of SBA 7(a) loans, offers lines of credit to businesses that want to use a revolving line of credit as needed while their business ebbs and flows.
The SBA Working Capital Pilot program also offers flexible credit lines with greater flexibility than the CAPLines and a unique fee structure.
  • The Working CAPLine to be used for working capital may come with higher fees than other CAPLines products.
  • Terms can go up to 10 years.
Term loans provide a sum of cash upfront that is repaid over a set period of time with fixed, equal payments.
Term loans can be useful as business debt consolidation loans, helping reduce your debt load so you can use working capital more efficiently. In general, though, they can be a good choice for businesses that want flexible financing and have sufficient cash flow to make fixed payments.
  • Term loans are repaid over a set period of time with interest.
  • Average rates on business bank loans range from 6.42% to 12.41%.
  • Rates from alternative lenders can range from 6% to 99%.
With invoice financing, you can use your unpaid customer invoices as collateral on a working capital loan. These loans are often used to cover cash flow gaps caused by the unpaid customer invoices themselves.
Invoice financing is best for B2B companies that have a significant amount of cash tied up in invoices.
  • Invoice financing companies may advance as much as 90% of an unpaid customer invoice.
  • Invoice financing companies charge fees that can amount to APRs as high as 79%, depending on how quickly the loan is repaid.
  • Invoice financing usually has more lenient qualification requirements than more traditional loans.

Pros and cons of working capital loans

Pros

Suitable for cash flow gaps and seasonal slows.

Flexible funds that can be used for a variety of purposes

Accessible to a wide variety of businesses.

Can fund quickly.

Cons

Some lenders may require daily or weekly payments.

May be expensive.

Lenders may charge interest as a factor rate — which can make it difficult to understand the cost of your financing.

Where to get a working capital loan

Working capital loans are available from a variety of sources, including online lenders, banks and credit unions. It’s important to understand what kind of lender you want to work with, plus the benefits of each type of working capital loan, before you start applying.
  • Banks and credit unions are good options for established businesses with collateral and strong credit, and tend to offer the lowest interest rates.
  • Online lenders may make more sense if you have a poor credit history, though they will typically charge higher APRs than business loans from banks. Invoice financing loans also typically come from online or fintech lenders. 
  • Community development financial institutions (CDFIs), which can include credit unions and nonbank lenders, may also offer working capital loans. CDFIs are usually missioned to lend to underserved or marginalized communities, so they may be able to offer lower rates with more relaxed criteria than traditional lenders. 

How to get a working capital loan

The general process for getting a working capital loan doesn’t differ too much from any other business loan.
  1. Understand your financing needs. Working capital loans are typically for short-term business needs. Start by assessing if your business really needs capital now, or if you can qualify for a longer-term, more affordable loan. You’ll also want to determine how much capital your business needs. 
  2. Research lenders. Do some research to find lenders that suit your specific business needs, and make sure you understand their business loan requirements
  3. Gather business documents. You’ll need to provide financial statements like profit and loss statements, bank statements or tax returns, as well as business and legal documents, like your operating agreement and business plan
  4. Apply with lenders. Online lenders can review applications in as little as a few hours, while banks tend to take longer. SBA loans can have the longest application timelines. If you’re approved for financing from an online lender, you could have access to your working capital within a few days. Again, bank and SBA lenders will likely take longer. 

Alternatives to working capital loans

  • Invoice factoring lets you turn unpaid invoices into fast working capital. The factoring company buys your invoices for an upfront payment minus a fee, and collects payment directly from your customer. Invoice factoring is best for B2B companies that are struggling to qualify for other types of financing. Since this isn’t technically a business loan — you’re selling an asset, not borrowing money — factoring companies don’t give as much weight to your credit score or business history as banks and online lenders do.
  • Merchant cash advances are a type of financing that you repay with a percentage of your future debit and credit card sales. Because MCA lenders can make these withdrawals automatically, they usually give less weight to other qualification factors like your credit score. However, merchant cash advances usually have very high fees, making them a funding option of last resort. While invoice factoring is an option if you bill other businesses, MCAs may be available if you work directly with consumers.
  • Business credit cards offer a revolving line of credit that you can spend up to a certain limit, and only pay interest on what you’ve spent, similar to business lines of credit. Business credit cards typically require good personal credit, but not a lot of time in business. They can be a good option to cover short-term gaps in cash flow as long as you are diligent about paying down the balance each cycle.
  • Family and friends business loans can be an option when you need cash for working capital. This type of loan won’t build your business credit history, but it can be fast because there’s no application process, credit check or documents submission. However, while family and friends loans are typically informal, it’s recommended that you put the loan terms in writing to avoid any misunderstandings in the future that could affect your personal relationships.
NerdWallet writer Rosalie Murphy contributed to this article.
Last updated on October 14, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: - Transparency of rates and terms. - Flexible payment options. - Fast funding times. - Accessible customer service. - Reporting of payments to business credit bureaus. - Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

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