Best Working Capital Loans of December 2024

A closer look at the best working capital loans

• 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).

• Loan amounts range from $25,000 to $500,000. 
• No prepayment penalties. 
• Charges an origination fee.

• Can request draws directly through your dashboard. 
• Line of credit comes with a free Bluevine Business Checking account. 
• No prepayment penalties. 

• Possible to increase your loan amount after you’ve paid down 60%. 
• Offers prepayment discounts. 
• Charges an origination fee.

• 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. 

• 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?

When to consider a working capital loan

• 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

Pros and cons of working capital loans

Where to get a working capital loan

• 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

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.