Best Payroll Loans
Cover payroll gaps with lenders like OnDeck, which can fund in as little as 30 minutes, or Credibly, which accepts business owners with credit scores as low as 550.
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- Payroll loans aren’t a single product. Businesses often use lines of credit, revenue advances or invoice factoring to cover payroll gaps.
- Funding can arrive the same day. OnDeck can fund in as little as 30 minutes, while many online lenders deliver within 24 hours.
- Payroll financing can cost significantly more than traditional business loans, so compare total borrowing costs, not just starting rates.
- Lower credit scores and newer businesses can still qualify. Credibly accepts scores as low as 550, while Fundbox requires only three months in business
This page covers business payroll loans — financing for business owners to cover employee wages. If you’re an employee looking for a paycheck advance, check out LendingTree’s guide to payday loans.
Our top picks for payroll loans
What is a payroll loan?
Payroll loans are short-term small business financing options that help business owners cover employee wages when cash flow doesn’t line up with payroll deadlines.
There isn’t one specific “payroll loan” product. Businesses typically use a business line of credit, revenue advance, short-term loan or invoice factoring, depending on their cash flow situation.
Payroll financing can help cover wages, payroll taxes, employee benefits, commissions and contractor payments.
Is a payroll loan right for your business?
When a payroll loan may make sense:
- Payroll is due within days and you’re facing a temporary cash flow gap.
- You have incoming revenue, unpaid invoices or future sales that can support repayment.
- The cost of borrowing is lower than the cost of missing payroll.
When to avoid payroll financing:
- Cash flow problems are ongoing or structural.
- You would need to borrow repeatedly just to cover payroll.
- Repayment costs would create additional financial strain.
- You qualify for lower-cost financing options.
How to reduce the need for payroll financing:
- Maintaining a cash reserve for at least one payroll cycle.
- Following up on invoices before they become overdue.
- Negotiating longer payment terms with vendors.
- Forecasting seasonal revenue slowdowns in advance.
- Reviewing expenses, pricing and profit margins regularly.
Types of payroll loans
The best payroll financing option depends on how quickly you need funds, how your business generates revenue and whether you need recurring or one-time access to capital.
Short-term business loans
Best for: Startups or borrowers with limited credit that need fast funding.
Short-term business loans provide a lump sum repaid in fixed daily or weekly installments over three to 24 months. Online lenders typically have more flexible requirements than traditional banks, with funding available as soon as the next business day. Borrowing costs, however, can be significantly higher than traditional business financing.
Business line of credit
Best for: Businesses that want a reusable funding source for ongoing or seasonal cash flow gaps.
A business line of credit lets businesses borrow as needed and draw funds again as balances are repaid. Borrowers typically only pay interest on the amount they use. Terms can range from 12 weeks to five years, though some lenders also charge origination, maintenance or draw fees.
Merchant cash advance
Best for: Businesses with strong credit card sales looking for flexible repayment.
A merchant cash advance (MCA) provides upfront funding that’s repaid through a percentage of future debit and credit card sales. Payments typically decrease when revenue slows down, but borrowing costs can be expensive. MCA providers also use factor rates instead of APRs, which can make costs harder to compare.
Invoice factoring
Best for: Businesses waiting on unpaid invoices to cover payroll.
With invoice factoring, businesses sell unpaid invoices to a factoring company in exchange for an upfront advance — often up to 90% of the invoice amount. The factoring company then collects payment from customers and sends the remaining balance minus fees.
Invoice factoring can also be easier to qualify for than traditional payroll financing because approval depends more on your customers’ creditworthiness than your business credit score.
Failing to make payroll can create serious financial and legal problems for a business. Depending on your state and the circumstances, missed payroll may lead to:
- Wage theft claims or labor law violations
- IRS penalties and interest for unpaid payroll taxes
- Lawsuits from employees or contractors
- Damage to employee trust and retention
- Additional fees, penalties or collection actions
Some states may reduce penalties if missed payroll was caused by a good-faith mistake or temporary oversight. Even so, businesses are still responsible for paying all wages owed.
If cash flow timing is the problem, not long-term profitability, payroll financing may help businesses avoid missed payroll deadlines and related penalties.
How to compare payroll loans
Payroll loans vary significantly by cost, speed and repayment structure. Here’s what to weigh before committing:
Interest rate or factor rate
Compare total borrowing costs, not just the advertised starting rate. If a lender uses a factor rate instead of APR, convert it before comparing offers.
Funding time
If payroll is due soon, compare how quickly each lender can deliver funds after approval. Some online lenders fund the same day, while banks may take longer.
Repayment method
Lines of credit, invoice factoring and merchant cash advances all handle repayment differently. Choose a structure that fits how your business receives revenue.
Repayment term
Short repayment terms may reduce total interest but can strain cash flow. Longer terms offer more breathing room but may cost more over time.
For qualified users, LendingTree’s small business concierge service connects you with an expert who can help you compare loan options and choose the best fit for your business needs.
This individualized approach helped LendingTree’s small business concierge service connect more than 5,000 borrowers with over $300 million of loans last year.
Alternatives to payroll loans
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Traditional business financing
SBA loans and working capital loans may offer lower rates and longer repayment terms, but approval can take weeks. -
Collect overdue invoices
If unpaid invoices are causing the payroll gap, follow up with customers, offer payment plans or consider early-payment discounts. -
Use a business credit card
A business credit card may work for short-term, recurring expenses, but avoid carrying a balance if the APR is high. -
Consider a personal loan
Some lenders allow personal loans for business expenses. This may be easier to qualify for, but you’ll be personally responsible for repayment. -
Cut expenses or adjust pricing
If payroll gaps happen regularly, review your expenses, pricing and profit margins to identify longer-term cash flow problems. -
Look for grants or special financing
Small business grants, local programs or special financing may be available, especially for startups, innovative businesses or woman- and minority-owned businesses.
Our methodology
We looked at over 30 payroll loan lenders to come up with the seven best picks. Here’s a closer look at the criteria we used to make our selections:
- Funding time: We prioritized lenders who were able to provide funding within two business days or less.
- Funding method: We tried to select lenders who offer various types of financing in order to allow business owners to select the method that works best with their business model.
- Interest rate: We weighted lenders more heavily if they advertise interest rates that are lower than competitors. We also factor in transparency around rates and fees.