Skip to content

Working Capital Line of Credit: What It Is and Best Options

By Randa Kriss
Last updated on May 16, 2024
Edited byChristine Aebischer
Fact checked and reviewed
A working capital line of credit is a good option to get cash as needed for operating expenses, seasonal slowdowns and to bridge cash flow gaps.

with Fundera by NerdWallet

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

A working capital line of credit is a type of short-term financing that’s used to cover a business’s operating expenses, such as rent, payroll or inventory. These small-business loans are not used to fund large investments, like opening a new location or purchasing real estate.
Working capital lines of credit are available from a wide range of lenders and can be particularly useful for businesses that experience cash flow gaps or seasonal slows.
Below, compare some of the best options and learn more about how these credit lines work.

How much do you need?

with Fundera by NerdWallet

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 7 best working capital lines of credit

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA 7(a) loan

with Fundera by NerdWallet

Best for SBA working capital lines of credit

$5,000,000650

with Fundera by NerdWallet

Wells Fargo Small Business Advantage® Line of Credit

5.0/5

Best for Bank working capital lines of credit

$50,000680
Read Review

Fundbox - Line of credit

5.0/5

Best for Working capital lines of credit for startups

$150,000600
Read Review

OnDeck - Line of credit

with Fundera by NerdWallet

5.0/5

Best for Unsecured working capital lines of credit

$100,000625

with Fundera by NerdWallet

Headway Capital - Line of credit

with Fundera by NerdWallet

5.0/5

Best for Working capital lines of credit for bad credit

$100,000625

with Fundera by NerdWallet

Chase - Business line of credit

Best for High-limit working capital lines of credit

$500,000700
Read Review

American Express® Business Line of Credit

5.0/5

Best for Working capital lines of credit for low-revenue businesses

$250,000660
Read Review

Here are 7 best working capital lines of credit

Best for SBA working capital lines of credit

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Bank working capital lines of credit

Wells Fargo

Max Amount

$50,000

Min. Credit Score

680

Best for Working capital lines of credit for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Unsecured working capital lines of credit

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Best for Working capital lines of credit for bad credit

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for High-limit working capital lines of credit

Chase

Max Amount

$500,000

Min. Credit Score

700

Best for Working capital lines of credit for low-revenue businesses

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

I'M INTERESTED IN:

Our pick for

SBA working capital lines of credit

Part of the 7(a) loan program, SBA CAPLines provide funding for short-term working capital needs. Each of the four credit lines is designed for a specific purpose, including general working capital, seasonal slows, construction and contract orders.

SBA 7(a) loan

Read Review

with Fundera by NerdWallet

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

Our pick for

Bank working capital lines of credit

Wells Fargo offers a revolving working capital line of credit in amounts up to $50,000. You may be able to qualify with less than two years in business — as long as you have good credit.

Wells Fargo Small Business Advantage® Line of Credit

Max Loan Amount
$50,000
Min. credit score
680
Est. APR
13.00-15.00%
Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Max loan

$50,000

Min. Credit score

680

Apr range

13.00-15.00%

Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Our pick for

Working capital lines of credit for startups

You can get a business line of credit from Fundbox in amounts up to $150,000. This revolving credit line can be used for a range of short-term purposes — and you may be able to qualify with just six months in business.

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.

Our pick for

Unsecured working capital lines of credit

There is no physical collateral required to access a working capital line of credit from OnDeck. The lender will take out a general lien on your business assets and ask you to sign a personal guarantee.

OnDeck - Line of credit

Read Review

with Fundera by NerdWallet

Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.90-84.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly

Max loan

$100,000

Min. Credit score

625

Apr range

35.90-84.90%

OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
Read Review

with Fundera by NerdWallet

Our pick for

Working capital lines of credit for bad credit

Headway Capital provides fast working capital lines of credit for borrowers with a minimum credit score of 600 or higher. You can qualify within minutes and receive funds as soon as the next business day.

Headway Capital - Line of credit

Read Review

with Fundera by NerdWallet

Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

Max loan

$100,000

Min. Credit score

625

Apr range

35.00-80.00%

Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
Read Review

with Fundera by NerdWallet

Our pick for

High-limit working capital lines of credit

Chase offers a credit line up to $500,000 that allows you to withdraw funds as needed, but you’ll typically need strong credit and at least two years in business to qualify.

Chase - Business line of credit

Max Loan Amount
$500,000
Min. credit score
700
Chase offers a revolving credit line that allows you to withdraw funds as needed, but you’ll typically need strong credit and at least two years in business.

Max loan

$500,000

Min. Credit score

700

Chase offers a revolving credit line that allows you to withdraw funds as needed, but you’ll typically need strong credit and at least two years in business.

Our pick for

Working capital lines of credit for low-revenue businesses

American Express offers lines of credit up to $250,000, with flexible repayment terms. Borrowers will need strong personal credit and at least a year in business, but only $3,000 in monthly revenue to qualify.

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.

How Much Do You Need?

with Fundera by NerdWallet

What is a working capital line of credit?

A working capital line of credit is used specifically to finance short-term operating expenses, as opposed to investing in one purchase or long-term project. You might use this business line of credit to pay for rent, payroll, utilities, inventory, supplies, emergency expenses, employee training or large order fulfillments.

What is working capital?

Working capital is the difference between your business’s current assets (cash, accounts receivable, inventory) and its current liabilities (accounts payable and debts). This metric provides an evaluation of your business’s short-term financial health and refers to the capital that you have available to spend on day-to-day expenses.

How a working capital line of credit works

A working capital line of credit allows you to borrow up to a certain limit and pay interest only on the funds you draw.
You then repay the money you’ve borrowed, usually weekly or monthly. You can continue to draw on the line as needed — provided you make timely payments and don’t exceed your credit limit.
Working capital credit lines can be secured or unsecured. Secured business lines of credit are backed by physical collateral, like inventory or equipment, whereas unsecured lines don’t require physical collateral.

Working capital loan vs. line of credit

The main distinction between working capital loans and working capital lines of credit is the way that they’re structured. Whereas a credit line offers a specific amount of funds that you can draw from as needed, a working capital loan provides a lump sum of cash upfront that you repay over a set period of time.
As a result, you may find some working capital loans — especially those issued by online lenders — offer larger funding amounts and longer repayment terms compared with line of credit options. Ultimately, however, available financing varies largely based on the lender and your qualifications.

Pros and cons of working capital lines of credit

Pros

Cons

How to choose the right working capital line of credit

Working capital lines of credit can be issued by banks, credit unions and online lenders. In addition to offering their own lines of credit, some banks and credit unions also offer SBA programs such as SBA CAPLines which can help you meet your short-term financing needs.
Here’s what you can do to find the right working capital line of credit for your business.

1. Look at the qualification requirements

Determining where you can qualify for a working capital line of credit can help you narrow down your options. Requirements vary from lender to lender, but they’ll typically consider the following criteria:
  • Personal credit score. In general, the stronger your credit score, the more financing options you’ll have available. Traditional lenders will usually require that you have fair to good credit — ideally a score of 650 or higher — to qualify for their products. Online lenders, on the other hand, are often more flexible. You may be able to qualify for a credit line with a personal credit score as low as 600.
  • Time in business. Similar to your credit score, lenders prefer to see that you have an established business history. Some (but not all) banks will ask to see two or more years in business, whereas online lenders may require only six months or more.
  • Annual revenue. Minimum annual revenue requirements can range, but overall, you should be able to show your lender a history of solid financial performance. It can also be helpful to present strong cash flow and sales projections.

2. Research and compare lenders

Once you have an understanding of your business’s qualifications, you can begin to research different small-business lenders. The right lender for you will depend on a variety of factors.
For example, if speed is your top priority, an online lender will likely be able to fund your credit line the fastest. On the other hand, if you’re looking for the lowest possible interest rate you can get, you should start your search with a bank or credit union.
As you compare lenders, you should consider information including:
  • Credit limits. Your ideal credit limit will vary based on your specific working capital needs, and how frequently you will repay your credit line. Understanding what you’re looking for can help you narrow down lenders. 
  • Interest rates and fees. The best interest rates and fees typically come from banks and credit unions and usually require strong personal credit and business revenue. 
  • Repayment terms. Make sure the available repayment terms work with your business model and the income you know you have coming in. 
  • Funding speed. Keep in mind that you may be taking multiple draws instead of just one lump sum, so the speed of funding won’t just matter up front. Considering the ease of the lender’s process can save you time and logistical headaches later on. 
  • Application process. Online lenders typically have streamlined application processes, making them ideal if you need to access capital fast. Though they can be cheaper, banks and CDFIs can take much longer to process applications. 
  • Customer support. With a line of credit, you may need to interact with your lender about your account more frequently than with a term loan, so look for multiple contact channels and good customer support ratings. 
  • Lender reputation. Look at reviews on sites like Trustpilot and the Better Business Bureau to make sure your lender is reputable and trustworthy. 

3. Understand the application process

Although specific requirements vary by lender, you’ll likely be asked to provide:
  • Personal information about you and any other business owners.
  • Basic business information and paperwork.
  • Personal and business bank statements.
  • Personal and business tax returns.
  • Business financial statements (e.g., profit and loss statement, balance sheet).
If you’re working with an online lender, you may have the option to digitally connect your financial accounts to expedite the application process. Some banks and credit unions may allow you to apply online, but others might require you to visit a branch to submit an application in person.
Last updated on May 16, 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 and 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