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Best Working Capital Loans of 2018

June 7, 2018
Small Business, Small Business Loans

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 alternative lenders. You’ll likely pay higher interest rates for working capital from alternative 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.

Working capital loansKabbage_Logo_150x40ondeckStreet SharessmartbizScreenshot 2017-05-11 09.24.23credibilitycapitallogobluevinefundbox
Best forFast fundingBusinesses with strong cash flowSmaller purchasesLow-rate SBA loansBusinesses looking for equipmentBusinesses looking for low rates and short termsBusinesses with large unpaid customer invoicesBusinesses with unpaid customer invoices
Loan details
Loan amount$2,000 - $250,000$5,000 - $500,000$2,000 - $150,000; Up to $2 million for specialty products$30,000 - $350,000$5,000 - $2 million$10,000 - $350,000$20,000 - $5 million$1,000 - $100,000
APR24% - 99%16.7% - 99.4% as of Q1 20189% - 40%; 1% to 5.5% for specialty products8.53% - 9.83%6% - 24%10% - 25%15% - 68%10.1% - 78.6%
Minimum qualifications
Personal credit scoreNo minimum credit score500 600Under $150K: 600
Over $150K: 650
585650530No minimum credit score
Annual revenue$50,000$100,000$75,000$50,000$75,000$150,000$100,000None required
Time in business1 year1 year1 year2 years6 months18 months3 monthsThree months of activity in compatible accounting software
Apply now at Kabbage
Apply now at OnDeck
Apply now at StreetShares
Apply now at SmartBiz
Apply now at Currency Capital
Apply Now at Credibility Capital
Apply now at BlueVine
Apply now at Fundbox

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For more details


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 500: Kabbage offers a quick working-capital line of credit up to $150,000.

  • 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
Kabbage_Logo_150x40
  • Loan amount: $2,000 to $250,000.
  • APR: 24% to 99%.
  • Loan term: 6 or 12 months.
  • Funding time: A few minutes to several days.
  • Read our Kabbage review.
Apply now at Kabbage
StreetShares-e1459274893272
  • Loan amount: $2,000 to $150,000 for term loans; $5,000 to $150,000 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
Apply now at StreetShares

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%
OnDeck_logo_2017

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

Apply now at OnDeck

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



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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.

For lowest rates and longest repayment period: SmartBiz provides Small Business Administration loans to established businesses.

  • 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
smartbiz

SBA 7(a) Loan

  • Loan amount: $30,000 to $350,000
  • APR: 8.53% to 9.83%
  • Loan term: 10 years
  • Funding time: As quickly as seven days but typically several weeks
  • Read our SmartBiz review
Apply now at SmartBiz
Screenshot 2017-05-11 09.24.23
  • 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.
Apply now at Currency Capital

For quick funding and competitive rates: Credibility Capital offers loans of up to $350,000.

  • Pro: Can get funding in approximately seven days
  • Con: Term length maxes out at three years
credibilitycapitallogo
  • Loan amount: $10,000 to $350,000
  • APR: 10% to 25%
  • Loan term: 1, 2 or 3 years
  • Funding time: 7 days on average
  • Read our Credibility Capital review
Apply now at Credibility Capital

 


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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
bluevine-e1431706679103

Invoice Factoring

  • 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.
Apply now at BlueVine
fundbox

Invoice financing

  • 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: 1 to 3 business days
  • Read our Fundbox review
Apply now at Fundbox

 

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.

 

 

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