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Best Working Capital Loans of June 2024

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.

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By Randa Kriss, Rosalie Murphy
Last updated on May 20, 2024
Edited bySally Lauckner
Fact checked and reviewed
A working capital loan is a type of short-term financing used to cover day-to-day business expenses. 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. Working capital loans are available to a wide variety of businesses and can often be funded quickly, but they also come with frequent payments and can be expensive.

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LenderBest forMax loan amountMin. credit scoreAPR rangeMax term length
U.S. Small Business Administration
SBA working capital loans$5,000,00065011.50-15.00%25 years
Funding Circle
4.5/5.0  
Working capital loans for established businesses$500,00066015.22-45.00%7 years
OnDeck
5.0/5.0  
Fast working capital loans$250,00062527.20-99.90%2 years
Fora Financial
4.5/5.0  
Working capital loans for bad credit$1,500,000570See review1 year and 6 months
Fundbox
5.0/5.0  
Unsecured working capital loans$150,00060036.00-99.00%6 months
Accion
5.0/5.0  
Working capital loans for startups$250,0005708.49-24.99%5 years
American Express Business Blueprint™
5.0/5.0  
Working capital loans for American Express customers$250,000660See review2 years
PayPal
PayPal Premier or Business account holders$250,000580See reviewSee review

Best for SBA working capital loans

U.S. Small Business Administration

Max Loan

$5,000,000

Min. Credit Score

650

APR Range

11.50-15.00%

Max Term Length

25 years

Best for Working capital loans for established businesses

Funding Circle

Max Loan

$500,000

Min. Credit Score

660

APR Range

15.22-45.00%

Max Term Length

7 years

Best for Fast working capital loans

OnDeck

Max Loan

$250,000

Min. Credit Score

625

APR Range

27.20-99.90%

Max Term Length

2 years

Best for Working capital loans for bad credit

Fora Financial

Max Loan

$1,500,000

Min. Credit Score

570

Max Term Length

1 year and 6 months

Best for Unsecured working capital loans

Fundbox

Max Loan

$150,000

Min. Credit Score

600

APR Range

36.00-99.00%

Max Term Length

6 months

Best for Working capital loans for startups

Accion

Max Loan

$250,000

Min. Credit Score

570

APR Range

8.49-24.99%

Max Term Length

5 years

Best for Working capital loans for American Express customers

American Express Business Blueprint™

Max Loan

$250,000

Min. Credit Score

660

Max Term Length

2 years

Best for PayPal Premier or Business account holders

PayPal

Max Loan

$250,000

Min. Credit Score

580

Best for

SBA working capital loans

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.

SBA 7(a) loan

Read Review

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Read Review

with Fundera by NerdWallet

Best for

Working capital loans for established businesses

Funding Circle’s loans can fund within a matter of days, but you’ll need at least two years in business to qualify.

Funding Circle - Online term loan

Read Review

with Fundera by NerdWallet

Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly

Max loan

$500,000

Min. Credit score

660

Apr range

15.22-45.00%

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
Read Review

with Fundera by NerdWallet

Best for

Fast working capital loans

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

OnDeck - Online term loan

Read Review

with Fundera by NerdWallet

Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly

Max loan

$250,000

Min. Credit score

625

Apr range

27.20-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Read Review

with Fundera by NerdWallet

Best for

Working capital loans for bad credit

Fora Financial offers working capital loans to borrowers who have a personal credit score of 570 or higher.

Fora Financial - Online term loan

Read Review

with Fundera by NerdWallet

Max Loan Amount
$1,500,000
Min. credit score
570
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.

Max loan

$1,500,000

Min. Credit score

570

Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Read Review

with Fundera by NerdWallet

Best for

Unsecured working capital loans

Fundbox offers working capital lines of credit up to $150,000. You do not need to put up physical collateral, but the lender does require a UCC lien, and in some cases, a personal guarantee.

Fundbox - Line of credit

Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
May fund quickly

Max loan

$150,000

Min. Credit score

600

Apr range

36.00-99.00%

Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.

Best for

Working capital loans for startups

You may be able to qualify for a working capital loan from Accion with three months or more in business.

Accion Opportunity Fund - Small Business Working Capital Loan

Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.

Max loan

$250,000

Min. Credit score

570

Apr range

8.49-24.99%

Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.

Best for

Working capital loans for American Express customers

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.

American Express® Business Line of Credit

Max Loan Amount
$250,000
Min. credit score
660
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Max loan

$250,000

Min. Credit score

660

The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Best for

PayPal Premier or Business account holders

PayPal Working Capital loans are available to PayPal Premier or Business account holders. Loan amounts range from $1,000 to $250,000.

PayPal Working Capital Loan

Max Loan Amount
$250,000
Min. credit score
580
The PayPal Working Capital loan can help low-revenue business owners (with a PayPal account) access fast financing.

Max loan

$250,000

Min. Credit score

580

The PayPal Working Capital loan can help low-revenue business owners (with a PayPal account) access fast financing.
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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.

What is working capital?

Working capital is the amount of money that you have available at any given time to meet your short-term, or day-to-day, business needs. Your net working capital is calculated by subtracting your current liabilities from your current assets. Current, or short-term, liabilities and assets are generally more liquid things like accounts payable, salaries, cash on hand or accounts receivable.

🤓 Nerdy Tip

Seasonality, growth stage and industry can all influence the ideal amount of working capital you need for your business. A business focused on growth, for example, may need a working capital loan so it has enough cash to purchase new assets, hire employees and rent a larger facility.

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 business 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.

Business lines of credit

A business line of credit provides 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. But terms tend to be fairly short — potentially less than a year.
Working capital 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

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 CAPLines program, a subset of SBA 7(a) loans, offers SBA lines of credit to businesses that want to use 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.

Pros and cons of working capital loans

Pros

Cons

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 banks and credit unions. 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. For example, Accion is a nonprofit CDFI that offers rates as low as
    8.49
    % for businesses that have been operating for at least a year and have a minimum
    570
    credit score. 

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.

🏦 Curious about SBA loans?

Here’s an overview of how SBA loans work, the types of SBA loans that are available, what each loan type can be used for and how to get SBA financing for your small business.

Last updated on May 20, 2024

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