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Best Working Capital Loans of December 2022

Working capital loans can be used to finance short-term business expenses. Compare options from online and SBA lenders.
Written by Randa Kriss, Rosalie Murphy
Edited by Ryan Lane
Last updated on September 27, 2022

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Working capital loans finance everyday business operations and short-term expenses, like rent, payroll and inventory. These small-business loans can help keep your business afloat when you face cash flow gaps, but they aren’t meant to finance long-term expenses like real estate.
Both banks and online lenders offer working capital loans. Government-backed SBA 7(a) loans, term loans and business lines of credit can all be used for working capital. The right business capital loan for you will depend on your qualifications and how fast you need access to funding.

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 5 working capital loans

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Lender
Best for
Max loan amount
Min. credit score
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Kabbage - Line of credit

on Kabbage's website

Best for Working capital line of credit$250,000640

on Kabbage's website

Credibility Capital - Online term loan

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Best for Fast working capital loan for highly qualified borrowers$500,000650

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OnDeck - Online term loan

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Best for Fast working capital loan for borrowers with bad credit$250,000625

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SBA 7(a) loan

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Best for Working capital loans for established businesses$5,000,000650

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Fundbox - Line of credit

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Best for Working capital loan for startups$150,000600

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Here are 5 working capital loans

Best for Working capital line of credit

Kabbage

Max Amount

$250,000

Min. Credit Score

640

Best for Fast working capital loan for highly qualified borrowers

Credibility Capital

Max Amount

$500,000

Min. Credit Score

650

Best for Fast working capital loan for borrowers with bad credit

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Working capital loans for established businesses

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Working capital loan for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Our pick for

Working capital line of credit

Kabbage’s line of credit is available to businesses with as little as $3,000 per month in average monthly revenue, making it widely accessible to small and medium-size businesses.

Kabbage - Line of credit

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on Kabbage's website

Max Loan Amount
$250,000
Min. credit score
640
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.

Our pick for

Fast working capital loan for highly qualified borrowers

Credibility Capital’s loans can fund within a matter of days, but you’ll need annual revenue of at least $200,000 and fair to good credit to qualify.

Credibility Capital - Online term loan

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Max Loan Amount
$500,000
Min. credit score
650
Est. APR
8.99-17.99%
Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Our pick for

Fast working capital loan for borrowers with bad credit

OnDeck’s same-day business loans are available to business owners with credit scores of 625 or more.

OnDeck - Online term loan

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly

Our pick for

Working capital loans for established businesses

The SBA 7(a) loan program includes 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.

SBA 7(a) loan

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
9.25-11.75%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate

Our pick for

Working capital loan for startups

Fundbox will fund businesses with six months in business, potentially less, and bad credit. But repayment terms max out at just 24 weeks.

Fundbox - Line of credit

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Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly

How Much Do You Need?

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What is a working capital loan?

A working capital loan is a type of short-term financing used to cover day-to-day business expenses, such as rent, payroll, utilities or inventory purchases. These loans can come in several forms, including term loans, lines of credit and SBA loans.
Working capital loans are designed to help businesses stabilize cash flow and manage operational costs. They are especially useful for businesses with uneven or seasonal cash flow, but not suited for long-term expenditures. If you’re making a big purchase, consider a more specialized loan product like equipment financing or an SBA 504 loan.

How do you get a working capital loan?

You can get a working capital loan from a variety of sources, including online lenders, banks and credit unions. Before you apply for a business loan, you’ll need to figure out what kind of lender you want to work with.
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 spotty credit history, though they will typically charge higher APRs than banks and credit unions.
You’ll then need to provide financial statements and details about your business and its owners so lenders can see if you meet their business loan requirements. Online lenders can review applications in as little as a few hours, while banks tend to take longer. SBA loans 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.

What are the benefits of a working capital loan?

A working capital loan may be a good choice when your business is low on cash and has few accounts receivable due soon. Working capital funding can provide a lifeline for seasonal businesses that experience a dip in sales, like landscapers, ski resorts and retailers, as they cover day-to-day operational expenses during slow periods.
A working capital loan is a short-term loan to solve a temporary slowdown, so it isn't the best solution for business expansion or financing a long-term investment. If you need to borrow for those reasons, consider a long-term business loan instead.

Which working capital loan is best for your business?

Several types of business loans can provide you with working capital. Here’s how to tell which might be the best fit for you.
Business lines of credit: A line of credit provides a lot of flexibility, as you get access to funds up to a credit 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. But terms tend to be fairly short — potentially less than a year.
Business lines of credit are 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.
SBA loans: These loans are 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 CAPLines program, a subset of SBA 7(a) loans, offers SBA lines of credit to businesses that want to tap a revolving line of credit as needed while their business ebbs and flows.
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.
Term loans: While term loans are commonly used for financing an expansion, they can also be used as short-term working capital funding. 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.
Invoice factoring: This type of financing lets you turn unpaid invoices into fast working capital. The factoring company buys your invoices for an upfront payment minus a fee, and it gets paid when it collects from your customer.
Invoice factoring is best for business-to-business 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: While invoice factoring is an option if you bill other businesses, merchant cash advances may be available if you work directly with consumers. MCAs are financing that you repay with a percentage of your future debit and credit card sales. Because lenders can make these withdrawals automatically, they usually give less weight to other qualification factors like your credit score.
Merchant cash advances tend to have very high fees, making them a funding option of last resort. But if you need working capital to overcome an acute financial crunch — and especially if you can’t qualify for other types of financing — they may be helpful.

Find and compare the best small-business loans

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on September 27, 2022