Working capital loans can help you pay for operational costs, such as rent, payroll and debt payments. Access to working capital gives you the flexibility to invest in your company’s growth and cover day-to-day expenses, but you shouldn’t use the loans for long-term investments, such as real estate.
Banks offer the lowest financing rates on these loans, so if you own an established business with strong cash flow, you may want to start there. But if the bank says no or if you need cash fast, you can turn to online lenders for small business loans. You’ll likely pay higher interest rates for working capital from online lenders than from banks.
Working capital financing options include a term loan, a business line of credit or invoice factoring. Business credit cards can also provide access to working capital, and you can earn rewards in the process.
Working capital loans: Compare your options
In the table below, scroll right to see all the lenders.
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Working capital loans for everyday needs
The term working capital can encompass virtually every facet of your finances, but ultimately you need it to, well, keep your company working. That could include coping with seasonal dips in revenue, covering maintenance costs, keeping your payroll up to date or managing your inventory.
If your personal credit score is at least 560: Kabbage offers a quick working-capital line of credit up to $250,000.
- Pro: Good option for borrowers with poor credit who need fast cash
- Con: Annual percentage rates can reach 99%
If your personal credit score is more than 600: StreetShares is a peer-to-peer lender that offers lines of credit and term loans to businesses making at least $75,000 a year.
- Pro: Good option for businesses with low revenue
- Con: Can borrow only up to 20% of your annual revenue
- Loan amount: $2,000 to $250,000.
- APR: 24% to 99%.
- Loan term: 6, 12 or 18 months.
- Funding time: A few minutes to several days.
- Read our Kabbage review.
- Loan amount: $2,000 to $250,000 for term loans; $5,000 to $250,000 for standard line of credit; Up to $2 million for invoice factoring and government contract financing
- APR: 9% to 40%; 1% to 5.5% for select products
- Loan term: 3 to 36 months
- Funding time: 1 to 5 days
- Read our StreetShares review
If your business needs more than $100,000: A term loan from OnDeck is an option; the lender provides loans of up to $500,000.
- Pros: High borrowing amounts, up to $500,000; minimum personal credit score is 500, but most borrowers have 660 or higher
- Con: APRs can reach 99.4%
Line of Credit
- Loan amount: Up to $100,000
- APR: 11% to 60.8%, as of Q1 2018
- Loan term: Repaid weekly for up to six months
- Funding time: As quickly as 24 hours but typically a few days
- Read our OnDeck review
*APRs update quarterly
Everyday needs also can be financed with a business credit card. You’ll also have the added benefit of building your business credit and earning rewards, such as cash back or travel miles.
- Pro: Earn rewards on business purchases
- Con: Typically requires good personal credit to qualify; credit limits are typically lower than a business line or line of credit
Working capital loans for large purchases
If you need a large sum to cover an equipment purchase or minor expansion project, focus your search on lenders that offer the lowest APRs and longer repayment terms.
- Pros: Lowest APRs on the market and a 10-year repayment term
- Con: Application process is rigorous and it takes longer to get funding — typically several weeks, compared with a few days with other online options
For equipment purchases: Currency Capital offers loans up to $2 million for established businesses.
- Pros: Currency’s platform matches borrowers with equipment lenders
- Con: Some lenders on the platform charge a prepayment penalty
SBA 7(a) Loan
- Loan amount: $30,000 to $350,000
- APR: 9.7% to 11.04%
- Loan term: 10 years
- Funding time: As quickly as seven days but typically several weeks
- Read our SmartBiz review
- Loan amount: $5,000 to $2 million
- APR: 6% to 24%
- Loan term: 1 to 5 years
- Funding time: As fast as same day to 2 weeks
- Read our Currency Capital review.
For quick funding and competitive rates: Credibility Capital offers loans of up to $400,000.
- Pro: Can get funding in approximately seven days
- Con: Term length maxes out at three years
- Loan amount: $50,000 to $400,000.
- APR: 10% to 25%.
- Loan term: One, two or three years.
- Funding time: Seven days on average.
- Read our Credibility Capital review.
Working capital loans if you have unpaid customer invoices
Companies that work in the business-to-business sector will face gaps in cash flow. To help keep your business running while the check’s in the mail, consider invoice financing. It’s a good option when you’re in a pinch, although high APRs make these services pricey.
For businesses with strong-credit customers: BlueVine can front you cash of up to $5 million even if your business is less than a year old and you have poor credit.
- Pro: Good way to tap into a customer’s strong credit score
- Con: If your customer doesn’t pay you, you’re still on the hook for the loan
For businesses with shaky credit: If you need fast financing, Fundbox can get you cash in one to three business days.
- Pro: No minimum revenue or personal credit score required to qualify
- Con: Must have access to accounting software like QuickBooks
- Loan amount: $20,000 to $5 million.
- APR: 15% to 68%.
- Loan term: 1 to 13 weeks
- Funding time: 1 to 3 days.
- Read our BlueVine review.
- Loan amount: $1,000 to $100,000.
- APR: 10.1% to 68.7% for 12 weeks; 11.4% to 78.6% for 24 weeks.
- Loan term: Equal repayments over a 12- or 24-week period.
- Funding time: As fast as the next business day.
- Read our Fundbox review.
Evaluate small-business loans carefully
When looking for a working capital loan, it’s important to compare all of your options based on APR, which represents the true cost of the loan, including all fees. To evaluate other loans, you can go to NerdWallet’s small-business loan tool. NerdWallet’s list of lenders is based on factors including market scope, customer experience and lender trustworthiness.