Best Working Capital Loans in 2024

A working capital loan can help finance ongoing or short-term business expenses, like payroll, rent and inventory. The best working capital loan depends on your qualifications and how much you need.

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Best working capital loans in January 2024

By Jill A. Chafin | Edited by Sarah Fisher and Janet Schaaf | Updated December 28, 2023
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderUser ratingsBest forMax loan amountMin. credit scoreMin. time in business
Bad credit$1,500,000500Six months
User ratings coming soonLine of credit$250,000625Two years
Fundbox logoStartups$150,000600Six months recommended
User ratings coming soonEstablished businesses$500,000660Two years
ondeck logo
(692)
User Ratings & Reviews rating-reviews-tooltip-icon

Ratings and reviews are from real consumers who have used the lending partner’s services.

Fast funding$250,000625One year
User ratings coming soonSBA working capital loans$5,000,000680 recommendedTwo to three years recommended
Learn more about how we chose our picks.

Fora Financial: Best for bad credit

Loan amounts$5,000 to $1,500,000
Starting interest rateFactor rates from 1.10 to 1.40
Term lengthUp to 15 months
Min. credit score500
Min. time in businessSix months

See Personalized Loan Offers

Bluevine: Best for line of credit

Loan amounts$6,000 to $250,000
Starting interest rate6.20% simple
Term length6 or 12 months
Min. credit score625
Min. time in businessTwo years

See Personalized Loan Offers

Fundbox: Best for startups

Loan amountsUp to $150,000
Starting interest rate4.66% for 12 weeks 8.99% for 24 weeks
Term length12 or 24 weeks
Min. credit score600
Min. time in businessSix months
recommended

See Personalized Loan Offers

Funding Circle: Best for established businesses

Loan amounts$25,000 to $500,000
Starting interest rate11.29%
Term length6 to 84 months
Min. credit score660
Min. time in businessTwo years

See Personalized Loan Offers

OnDeck: Best for fast funding

Loan amounts$5,000 to $250,000
Starting interest rate35.40%
Term lengthUp to 24 months
Min. credit score625
Min. time in businessOne year

See Personalized Loan Offers

SBA CAPLines: Best for SBA working capital loans

Loan amountsUp to $5,000,000
Starting interest ratePrime rate + 3.00% to 5.00%, depending on loan size and term length
Term length120 months
Min. credit score680 or higher recommended
Min. time in businessTwo to three years recommended

See Personalized Loan Offers

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What is a working capital loan?

A working capital loan is a catch-all term for short-term business financing. Due to its flexible nature, working capital funding is an ideal fit for unexpected business expenses or extra cash to expand and grow your business.

The repayment plan and timeline will vary depending on your loan type. Some lenders may require daily or weekly payments from your credit card sales or direct payments from your business checking account.

Types of working capital loans

Working capital loans can be used to cover operating expenses for small businesses, such as payroll, daily costs, inventory and more.

  • Short-term business loans: Term loans provide a lump sum of cash upfront for working capital purposes. Maximum amounts typically range from $250,000 to $1.5 million or higher, with repayment terms typically lasting three to 24 months.
  • Business line of credit: If you need frequent cash infusions, a working capital business line of credit lets you borrow as little or as much as you need up to your credit limit. You only pay interest on the amount you withdraw.
  • Merchant cash advance: Though technically not a loan, a merchant cash advance is an alternative form of business financing that offers a lump sum in exchange for a percentage of your business’s future earnings (commonly, your credit card sales). You can repay with a portion of daily or weekly credit card sales. However, the factor rate can make this a more expensive option.
  • SBA loans: The Small Business Administration offers working capital loans through its CAPLines program — an umbrella term for a type of 7(a) loan that functions as a line of credit. They can offer good terms and loan amounts to help you fund your various business needs.

Pros and cons of working capital loans

ProsCons

  Flexible funding for a wide range of business purposes

  Quick funding from some online lenders

  Accessible to a wide range of businesses with varied minimum requirements

  Interest rates can be high due to factor rates

  Some lenders require daily or weekly payments

  Collateral may be required for a secured business loan

How to get a working capital loan

  1. Decide how much you need. Write a list of your company’s most urgent needs and estimated operating costs. Consider whether you need the funds upfront or prefer ongoing access to cash on an as-needed basis. Use our business loan calculator to estimate your borrowing power, making sure the weekly or monthly payments are within your budget.
  2. Determine your eligibility. Lenders will typically list their business loan requirements on their website. Factors that determine your creditworthiness usually include your credit profile (your personal FICO Score and business credit score), time in business, annual revenue and whether you can provide collateral and/or a personal guarantee.
  3. Compare small business lenders. You can apply for a working capital loan with a traditional bank, credit union or an online business lender. Compare interest rates, repayment terms and additional fees to find the best loan option for your business needs.
  4. Gather required documents. Having essential documents ready can help speed up the application process. You will likely need a business plan, personal and business bank statements, personal and business tax returns and any applicable business licenses.
  5. Submit your application. The application process is typically quick and automated, often done online. Your lender may reach out to you for additional information and next steps.

Tips for comparing working capital loans

If you receive multiple working capital loan offers, consider the following factors when picking the loan that best fits your needs:

  • Rates: The business loan interest rates for working capital loans vary depending on the loan type and lender. Factor rates are also frequently involved, which can make your interest payments higher.
  • Extra fees: Some lenders add origination, prepayment and late fees. These additional fees can significantly increase the loan’s overall cost.
  • Repayment terms: Some repayments start immediately and have very short terms. To reduce the risk of default, make sure you can afford to repay the debt by the scheduled date(s).
  • Loan amounts: While you want the approved amount to cover your necessary expenses, it’s important to avoid borrowing more than you need, as that can be unnecessarily expensive.
  • Time to funding: If you need funds immediately, consider a lender advertising “fast funding,” as opposed to an SBA or traditional bank loan which tend to have longer approval timelines.
  • Lender support: Some lenders offer free business support and coaching as part of the loan process.

Our in-depth catalog of small business lender reviews is a great way to compare business loan options before signing on the dotted line.

How we chose our picks

When we made our list of best working capital loans, we considered the type of loan product, the required length of time in business, interest rate and term length.

To appear on our list, lenders needed to meet the following criteria:

  • Minimum credit score requirement of 680 or below
  • Repayment terms of at least three months
  • Minimal restrictions on loan uses or purposes

Best working capital loans summary

Frequently asked questions

A working capital loan can be used to cover almost any day-to-day operational expense for your business, such as payroll, rent, utilities, purchasing inventory or covering seasonal lulls. You can use a term loan, line of credit, SBA loan or merchant cash advance for working capital purposes.

To purchase equipment, machinery, or property, consider equipment loans or commercial real estate loans.

Requirements will vary by lender, but you typically need a credit score of 670 or higher to qualify for the best working capital loan rates — although some online lenders offer working capital loans to those with scores as low as 500.

Lenders also consider how long your business has been in operation, most requiring six months to two years. Additionally, you must meet the lender’s annual revenue requirements by providing six months to two years of tax returns and/or bank statements.

While some lenders offer working capital loans for startups, as well as other small business working capital loans, newly established businesses might need to consider other funding options, such as business credit cards or crowdfunding for business.

Some alternative business lenders work with business owners with limited or poor credit. For example, Fora Financial’s minimum credit score requirement is only 500. However, these bad credit business loans tend to come with higher interest rates and less favorable terms than traditional bank loans.