How much do you need?
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 8 working capital loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA working capital loans | $5,000,000 | 650 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Working capital loans for established businesses | $500,000 | 660 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 4.7/5 Best for Fast working capital loans | $250,000 | 625 | with Fundera by NerdWallet |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Working capital loans for bad credit | $1,500,000 | 570 | with Fundera by NerdWallet |
Fundbox - Line of credit | 4.9/5 Best for Unsecured working capital loans | $150,000 | 600 | Read Review |
Accion Opportunity Fund - Small Business Working Capital Loan | 4.6/5 Best for Working capital loans for women- and minority owned businesses. | $250,000 | 570 | Read Review |
American Express® Business Line of Credit | 4.6/5 Best for Working capital loans for American Express customers | $250,000 | 660 | Read Review |
PayPal Working Capital Loan | Best for PayPal Premier or Business account holders | $250,000 | 300 | Read Review |
Here are 8 working capital loans
Best for SBA working capital loans
Best for Working capital loans for established businesses
Best for Fast working capital loans
Best for Working capital loans for bad credit
Best for Unsecured working capital loans
Best for Working capital loans for women- and minority owned businesses.
Best for Working capital loans for American Express customers
Best for PayPal Premier or Business account holders
I'M INTERESTED IN:
Our pick 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
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%
Our pick 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
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%
Our pick 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
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%
Our pick 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
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
Our pick 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%
Our pick for
Working capital loans for women- and minority owned businesses.
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%
Our pick 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
Our pick 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
300
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
300
A closer look at the best working capital loans
SBA 7(a) loan
Best for: SBA working capital loans
Notable features:
- Borrowing maximums of $5 million.
- Interest rates capped at 15%.
- Personal guarantee required.
Who should consider it: Established businesses with good personal credit who aren’t in a rush for funding.
SBA 7(a) loans offer high borrowing maximums and relatively low fixed rates, which make them a good choice for working capital needs. You’ll need at least a 650 credit score to qualify, and keep in mind that the funding process for SBA loans can be longer than other business loans.
Funding Circle
Best for: Working capital loans for established businesses.
Notable features:
- Funding available within two business days.
- Loan terms up to seven years.
- Minimum 660 credit score required.
Who should consider it: Established businesses with good personal credit, who need fast funding.
Funding Circle is an online lender that combines some positive features of both traditional lenders and online lenders. It offers loan amounts up to $500,000 and terms up to seven years — longer than most online lenders. Like most online lenders though, funding can be available in as little as two business days.
OnDeck
Best for: Fast working capital loans.
Notable features:
- Funding may be available within the same business day.
- Minimum credit score requirement of 625.
- Daily or weekly repayments are required.
Who should consider it: Businesses that have exhausted other options and are in need of fast working capital to cover cash flow gaps.
OnDeck’s online, streamlined application process can get you funding up to $250,000 within the same business day. Due to the frequent weekly or daily payments, its products are best for those who need quick cash to cover cash flow gaps, not to finance large or long-term projects.
» MORE: Best same-day business loans
Fora Financial
Best for: Working capital loans for bad credit.
Notable features:
- Minimum credit score: 570.
- Prepayment discounts available.
- High minimum revenue requirements.
Who should consider it: High-revenue businesses that are having trouble qualifying for other forms of financing primarily due to bad personal credit.
Fora offers fast financing with flexible credit score and time in business requirements. However, its high monthly revenue requirements make it the best fit for high-income businesses that can’t qualify for other loans because of personal credit.
Fundbox
Best for: Unsecured working capital loans.
Notable features:
- Minimum credit score requirement of 600.
- Six month time in business requirement.
- Loan amounts up to $150,000.
Who should consider it: Businesses in need of fast funding that can’t qualify for other loans due to personal credit or length of time in business.
Fundbox offers loans up to $150,000 with terms up to 24 weeks and relatively flexible qualification requirements. Its high rates and prepayment discounts make it a good choice for businesses that need fast funding that can be repaid relatively quickly.
Accion Opportunity Fund
Best for: Working capital loans for women- and minority owned businesses.
Notable features:
- Loan amounts up to $250,000.
- Rates as low as 8.49%.
- Minimum 570 credit score required.
Who should consider it: Startups, women- and minority-owned businesses and other businesses that aren’t able to qualify for traditional loans.
Accion is a community development financial institution (CDFI) that provides funding to underserved businesses that may have had trouble qualifying for traditional loans. It offers low rates, flexible qualification requirements and relatively high borrowing maximums.
American Express® Business Line of Credit
Best for: Working capital loans for American Express customers.
Notable features:
- Monthly repayment schedule.
- Minimum credit score of 660.
- Line of credit amounts up to $250,000.
Who should consider it: American Express Business customers who need revolving working capital to cover gaps in cash flow.
American Express’s business line of credit offers flexible monthly payments and no prepayment penalties, making them a great option for current customers that frequently need to cover gaps in cash flow. You’ll need good personal credit to qualify, but relatively low monthly revenue at just $3,000.
PayPal Working Capital Loan
Best for: PayPal Premier or Business account holders.
Notable features:
- No credit check required.
- Funding can be available within minutes.
- Low minimum revenue requirements.
Who should consider it: PayPal customers who have held a Premier or Business account for at least 90 days.
PayPal working capital loans are an easy and fast option for those who already hold an account. There is no credit check and low minimum revenue requirements for loan amounts up to $250,000. Customers should be careful of the daily repayments that are automatically deducted from their accounts.
🤓 Nerdy Tip
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.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.
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
Working capital loans can easily provide your business with the funds needed to address slower periods, whether your business operates seasonally or is experiencing a one-off sales dip.
You can use a business working capital loan for a variety of purposes, such as purchasing inventory or supplies, making payroll and covering utilities.
Although some working capital loans require that you meet strong eligibility criteria, others — like online business loans or loans from other alternative lenders — can be more flexible.
Some online lenders can provide same-day financing, whereas others may take a few business days. More traditional lenders, however, will have a longer funding timeline.
Cons
Working capital loans typically have short repayment terms — and some lenders may require daily or weekly payments.
Some types of business working capital loans can carry high annual percentage rates (APRs) and other fees.
Certain lenders may charge interest as a factor rate — which can make it difficult to understand the cost of your financing — as well as compare it to other lenders. You should always try to translate the interest a lender charges into an APR to get a better sense of loan costs.
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 as8.49% for businesses that have been operating for at least a year and have a minimum570credit 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.
- 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.
- Research lenders. Do some research to find lenders that suit your specific business needs, and make sure you understand their business loan requirements.
- 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.
- 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.
>> MORE: How to apply for a business loan
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 July 26, 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.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Learn more
Frequently Asked Questions
Working capital is determined by subtracting your business’s current liabilities from your current assets. Current assets include short-term assets such as cash, inventory and accounts receivable. Current liabilities include short-term liabilities such as accounts payable, loan payments and salary expenses.
The main benefit of a working capital loan is that it can help your business when you’re experiencing a cash flow gap or seasonal dip in sales. You can use a working capital loan to cover day-to-day operational expenses during these periods.
Some online working capital loans are available in amounts up to $500,000 or more, whereas SBA working capital loans max out at $5 million. Working capital loans are usually available in lower funding amounts since they’re used to cover short-term expenses.