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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 2, 2024, 2:22pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Working capital loans—short-term financing business owners can use to cover operational costs—are best for seasonal businesses and those that need an occasional cash infusion to stay afloat. Common working capital loans include terms loans, lines of credit, U.S. Small Business Administration (SBA) loans and invoice factoring. Find the best working capital loan for your business needs below.
Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.
19 lenders researched
16 data points evaluated
5 cateogires scored
FEATURED PARTNER OFFER
OnDeck
4.8
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
Best Working Capital Loans Of 2024
Best for Short-Term Loans
OnDeck offers flexible business lending options and fast funding. It provides an excellent short-term loan from $5,000 to $250,000 with repayment terms up to 24 months.
Best for Short-Term Loans
OnDeck
4.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
Best for a Lender Comparison Site
Lendio provides the best online business loan marketplace that helps business owners compare options from 75+ bank and non-bank lenders.
BEST FOR A LENDER COMPARISON SITE
Lendio
4.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Lendio is an online business loan marketplace that connects prospective borrowers with traditional banks and nonbank online lenders. By filling out one application, business owners are able to connect to over 75 lenders. Over its existence, Lendio has helped small business owners receive over $12 billion in funding nationwide.
Applicants may see Lendio as a one-stop shop. You can apply for business loans, lines of credit, SBA loans, equipment financing, merchant cash advances (MCAs), commercial mortgages, invoice factoring and business acquisition loans. However, because Lendio is a marketplace and not a lender, it doesn’t publish specific terms. Instead, you’ll have access to its lending partners, and it will help you find the best offer for your specific needs.
Pros & Cons
One application connects you to more than 75 lenders
Wide variety of loan products, including term loans, lines of credit and SBA loans
Some lenders charge prepayment penalties
Terms and funding times vary depending on specific lender
Details
Overview
Lendio is an online business loan marketplace that connects prospective borrowers with traditional banks and nonbank online lenders. Over its existence, Lendio has helped small business owners receive over $12 billion in funding nationwide.
Applicants may see Lendio as a one-stop shop. You can apply for business loans, lines of credit, SBA loans, equipment financing, merchant cash advances (MCAs), commercial mortgages, invoice factoring and business acquisition loans. However, because Lendio is a marketplace and not a lender, it doesn’t publish specific terms. Instead, you’ll have access to its lending partners while helping you find the best offer for your needs.
Eligibility
Minimum Credit Score: 560
Time in Business: Six Months
Minimum Annual Revenue: $50,000
Funding time
Applying through Lendio takes 15 minutes. After you review your offers and are approved by your lender, you can receive your funds in as little as 24 hours.
Best for Lines of Credit Backed by American Express
American Express® Business Line of Credit offers business lines of credit from $2,000 to $250,000 with no prepayment penalty.
BEST FOR SMALL AND LARGE LINES OF CREDIT
American Express® Business Line of Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
$2,000 to $250,000
APR range
N/A
Minimum Credit Score
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
660 FICO at the time of application
Editor’s Take
American Express Business Blueprint™ is best for its American Express® Business Line of Credit (formerly Kabbage from American Express and Kabbage Funding™), which gives business owners the chance to secure funding between $2,000 to $250,000. Repayment terms include six, 12, 18 and 24 months.
Line of credit customers incur a loan fee for each month they have an outstanding balance. Total monthly fees incurred over the loan term range from 3% to 9% for six-month loans, 6% to 18% for 12-month loans, 9% to 27% for 18-month loans and 12% to 18% for 24-month loans.
In addition to its line of credit, American Express Business Blueprint provides other tools beneficial to small business owners, including its own mobile app that provides comprehensive cash flow insights. All businesses are unique and are subject to approval and review.
Pros & Cons
No prepayment penalty
Four different repayment options
Offers small to large lines of credit
Monthly fees on unpaid balances
Requires personal guarantee
Lines of credit over $150,000 are only available to borrowers who meet additional criteria
Details
Eligibility
Minimum credit score: 660 FICO at the time of application
Time in business: One year
Minimum revenue: At least $3,000 per month
All businesses are unique and are subject to approval and review.
Turnaround time
Funds can take up to three business days to appear in your account, depending on your bank.
Best for Flexible Lines of Credit
BlueVine’s flexible lines of credit offer customers multiple payment structures. Loan amounts range from $5,000 to $250,000.
BEST FOR FLEXIBLE LINES OF CREDIT BlueVine
Bluevine
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Bluevine is a financial technology company that provides financing solutions to small businesses nationwide. It specializes in business lines of credit and checking accounts. As of December 2021, Bluevine no longer offers invoice factoring as one of its financing methods.
Small business owners looking to access a line of credit on an as-needed basis can receive funds from $5,000 to $250,000. Bluevine offers two payment structures: Flex 6 or Flex 12. Customers who choose Flex 6 make weekly payments over 26 weeks while Flex 12 customers make monthly payments over 12 months. What’s more, after 45 days of payment on Flex 6, or 90 days of payment on Flex 12, you may be eligible for a credit line increase.
Bluevine also charges weekly or monthly fees for its line of credit. Standard pricing is 1.7% per week or 7% per month for line of credit draws.
Note: Bluevine’s line of credit is available in most U.S. states except Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories.
Pros & Cons
Receive a decision within five minutes and instant funding with a Bluevine business checking account, or receive funds within 24 hours
Lines of credit up to $250,000
Low credit score requirement
No mobile app for its line of credit
Monthly revenue requirement
Not available to businesses in Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories
Details
Eligibility
Eligibility varies on the specific program a business owner chooses.
Weekly plan
Minimum credit score: 625
Time in business: Two years
Minimum revenue: $40,000 monthly or $480,000 annually
Business type: Corporation or LLC
Bankruptcies: No past bankruptcies
Monthly plan
Minimum credit score: 650
Time in business: Three years
Minimum revenue: $80,000 per month or $960,000 annually
Business type: Corporation or LLC
Turnaround time
After you submit your application, you can receive a decision in as quickly as five minutes and instant funding with a Bluevine business checking account. Borrowers who don’t have a Bluevine business checking account can receive funds within 24 hours.
Best for Small-to-Mid-Sized Businesses
National Funding offers small business loans and equipment financing with early pay-off discounts that can help business owners save.
BEST FOR SMALL- TO MID-SIZED BUSINESS
National Funding
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
National Funding offers working capital small business loans from $5,000 to $500,000 with terms of four months to two years, paid daily or weekly. Borrowers can use their funds for all working capital needs, including inventory, payroll, marketing, taxes and more. National Funding also offers equipment financing up to $150,000 but applicants must have a minimum personal credit score of 575 to qualify for that financing method.
Unlike most business lenders, National Funding offers early payoff discounts. Small business loan customers who repay their total remaining balance in full within the first 100 days of the contract will automatically receive a 7% discount off the total remaining balance. Equipment financing customers who repay the total remaining balance early, at any point during the term, will automatically receive a 6% discount off the total remaining balance.
Pros & Cons
Financing up to $500,000
Early payoff discounts
Most loans are funded within 24 hours of approval
Requires daily or weekly payments
Potentially high borrowing costs
Requires minimum gross annual sales of $250,000
Details
Eligibility
Minimum credit score: 600 (575 for equipment financing)
Time in business: Six months
Minimum sales: $250,000 per year
Turnaround time
Most loans are funded within 24 hours of approval, subject to receipt of required documentation, underwriting guidelines and processing time by your bank.
Best for Quick Approvals
Fundbox’s AI-powered platform offers business owners quick approvals and funding as early as the next business day.
BEST FOR QUICK APPROVALS
Fundbox
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Fundbox is an AI-powered business lending platform that speeds up the application, decision-making and funding process. It offers decisions within three minutes and funds as soon as the next business day.
Prospective borrowers have two business financing options through Fundbox. Business owners can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks. Your available credit goes back up as you repay your line of credit.
Pros & Cons
No prepayment penalty
Low minimum annual revenue requirement
Next-business-day funding
Only short-term repayment terms are available
Does not disclose APRs
Details
Eligibility
Minimum credit score: 600
Time in business: Six months
Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
Best for Established Business
Funding Circle offers established businesses affordable loans from $25,000 to $500,000 with no minimum annual revenue requirements.
BEST FOR ESTABLISHED BUSINESSES
Funding Circle
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
From participating partners via businessloans.com’s website.
$25,000 to $500,000
As low as 7.49%
660
Editor’s Take
Funding Circle has been a direct lender specializing in small business loans since 2010. It has helped 135,000 businesses in 700 industries and lent $20.2 billion globally. We chose Funding Circle because it provides fast, affordable loans with a simple application process and funding in as little as 48 hours. Prospective borrowers have three options: business term loan, line of credit or SBA loan.
Funding Circle term loans range from $25,000 to $500,000 with repayment terms from six months to five years. If you choose to apply for a business line of credit, you can access credit lines between $6,000 and $100,000. However, Funding Circle doesn’t specify its line of credit repayment terms. You can also apply for Funding Circle SBA loans, which range from $25,000 to $500,000 with terms up to 10 years.
There is one main drawback of Funding Circle: There’s a one-time origination fee on each loan ranging from 3.49% to 6.99% of the approved loan amount.
Pros & Cons
Loans from $25,000 to $500,000
Funding in as little as 48 hours
No minimum annual revenue requirement for most loans
One-time origination fee between 3.49% to 6.99% of the approved loan amount
Requires two years in business, so it’s not ideal for startups
Not available to Nevada businesses
Details
Eligibility
Minimum credit score: 660 for most loans; 650 for SBA loans
Time in business: Two years
Minimum revenue: None for most loans; $400,000 per year for SBA loans
Turnaround time
Depending on the loan type, you can receive your funds within two days. However, SBA loan funding may take up to two weeks.
Best for Financing Up to $2 Million
Biz2Credit offers term loans up to $500,000, working capital financing up to $2 million and commercial real estate loans up to $6 million.
BEST FOR FUNDING OPTIONS
Biz2Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Revenue-based financing. Varies depending on product and qualifications
Does not disclose
575 or 650*
*See website for details
Editor’s Take
Biz2Credit is a digital funding platform that provides three funding options—term, revenue-based financing and commercial real estate (CRE) loans—ranging from Up to $1M+. It only takes a few minutes to apply.
Biz2Credit can connect business owners with revenue-based financing Up to $2M+ and term loans Up to $1M+. Revenue-based financing payments are flexible based on business performance, with a right to reconcile against actual business receipts while term loans are repaid through weekly, bimonthly or monthly payments over the course of 12 to 36 months. Biz2Credit also offers interest-only CRE loans from Up to $2M+ with terms between 12 and 36 months; payments are due monthly.
In the event that Biz2Credit cannot provide a financial product, it may present third-party options to qualified prospective borrowers. However, Biz2Credit confirms that “in the vast majority of cases, [it] will make a financing decision without referral to any external party.”
Pros & Cons
Revenue-based financing has flexible qualification requirements
Can pre-qualify for submitting an application
Offers term loans with weekly or biweekly payments
Does not disclose financing costs
Does not disclose turnaround time
High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
Minimum credit score: 650
Time in business: 18 months
Minimum revenue: $250,000 per year
Revenue-based financing
Minimum credit score: 575
Time in business: 6 months
Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
Consider these tips when comparing working capital loans:
Where possible, prequalify. Some business financing lenders offer a prequalification process. This means prospective borrowers can share details about their financing needs, revenue and other relevant information to find out what loan amounts, rates and repayment terms they may qualify for. This process typically only requires a soft credit inquiry, which has no impact on your credit score.
Determine how you want to receive your funds. Two of the most common ways you can receive and access your business funds are through a lump-sum payment or on an as-needed basis. If you want to receive your funds up front, choose a traditional working capital or term loan. However, if you want to use funds only as you need them, consider a business line of credit.
Consider the repayment terms and flexibility. Each business financing lender has its own repayment structures. While some types of financing require monthly payments, others may require daily or weekly payments. Take this into account when choosing your preferred lender and business loan.
Look out for additional fees. Some lenders offer fee-free business loans that don’t require borrowers to pay origination fees, late payment fees, prepayment penalties or any other common loan costs. However, this is not always the case. Be sure to confirm a lender’s fee structure when shopping for the best terms. Factor in additional fees into your decision-making process.
Evaluate the lender’s customer support options. If you’ve found a lender that’s prepared to offer the money you need at acceptable terms, consider the lender’s support options before signing the loan agreement. Customer support can make a huge difference down the line if you encounter issues with repayment. Research the lender’s customer service resources and read reviews to make sure it’s a good fit.
What Is a Working Capital Loan?
A working capital loan is financing a business can use to pay for day-to-day operations. This may include covering payroll, making debt payments, restocking inventory and staying current on rent. Working capital loans are typically offered by traditional banks, credit unions and online lenders.
Annual percentage rates (APRs) may be lower than for long-term business loans but can still range anywhere from 3% up to 99%. That said, qualification requirements also may be less stringent than for long-term business loans, especially through online lenders. Overall, working capital loans are ideal for seasonal businesses and other operations that need short-term access to funds.
How Does a Working Capital Loan Work?
Working capital loans are designed to help businesses pay for payroll, rent and other everyday business expenses. These are typically short-term loans that can help you manage your cash flow. Loans are generally issued as a lump sum and repaid with interest. However, there are other types of working capital loans—like business lines of credit—that you can use to access on an as-needed basis.
When You Should Consider a Working Capital Loan
A working capital loan may be helpful to business owners who are struggling to cover the day-to-day operational costs or need to finance temporary expenses for inventory, payroll or supplies. Keep in mind, however, owners shouldn’t use working capital loans to cover long-term expenses like expanding a business or financing expensive equipment.
Some situations where a business owner should consider a working capital loan include when:
The business needs money to cover payroll or rent until outstanding invoices are paid
Sales are seasonal or otherwise cyclical, and the business experiences annual dips in revenue
Manufacturing needs are greater during low-revenue months, and the business needs to cover production costs while finances are tight
Pros and Cons of Working Capital Loans
Pros
Funds can solve cash flow needs
Can help seasonal businesses cover season-driven dips
Loans amounts extend up to $2 million
Flexible qualification requirements
Cons
Most lenders require a personal guarantee
May come with short repayment terms
Some lenders charge high interest rates and other processing fees
Some working capital loans require weekly or daily payments
Types of Working Capital Loans
Working capital loans can help business owners fill gaps in funding, make up for seasonal fluctuations in revenue and cover payroll costs. What’s more, business owners can choose from several types of working capital loans to meet these varied needs, including term loans, lines of credit, SBA loans and invoice factoring.
1. Term Loans
A term loan is a type of financing extended by a bank, online lender or other financial institution that must be repaid over a set period of time—usually anywhere from a few months to 25 years. Loan amounts typically span from $2,000 to $500,000, and interest rates can range from 6% to 99%.
Business lines of credit let borrowers draw against a set amount of money on an as-needed basis. Instead of receiving money as a lump sum, a business owner can access the line of credit during the draw period, which usually lasts up to five years. Credit limits generally range from $2,000 to $250,000, and APRs extend anywhere from 10% to 99%.
3. SBA Loans
SBA loans are backed by the U.S. Small Business Administration and are intended to help small business owners start, maintain and grow their businesses. There are a number of SBA loan programs intended for different purposes, circumstances and applicant qualifications—each with its own loan amounts, terms and rates. Popular SBA loan programs for working capital include:
SBA 7(a) loans. The SBA’s 7(a) loan program is the administration’s primary business loan offering. Loans are available up to $5 million and can be used for working capital, but they are also appropriate for buying real estate, refinancing debt and purchasing business supplies. As of Nov. 3, 2021, SBA 7(a) loan interest rates range from 5.5% to 9.75%.
CAPLines. Part of the 7(a) program, CAPLines are loans meant to provide small businesses working capital for short-term and cyclical—or seasonal—needs. Borrowers can choose from the Contract CAPLine loan, a seasonal line of credit, a builders line of credit and a working capital line of credit—all with $5 million borrowing limits and maximum 10-year repayment terms.
SBA Microloans. SBA Microloans are available to eligible small businesses that need financial assistance to get started or expand. Funds can be used for working capital, as well as the purchase of equipment and machinery, inventory and other operational costs. Loan amounts are available up to $50,000, and rates vary by lender but range from 8% to 13%.
4. Invoice Factoring
Invoice factoring is the process of selling a business’ invoices to a third-party invoice factoring company for a fee in exchange for a portion of the outstanding balances—generally around 85% to 95% of the total value. Once the invoices are sold, the factoring company is responsible for collections. The business receives the remainder of the funds minus any fees once the factoring company collects the invoices.
Invoice factoring enables small businesses to get cash quickly without qualifying for a traditional loan and wading through a lengthy loan application process.
5. Merchant Cash Advances
If your business processes a large number of credit card transactions, a merchant cash advance may be a good financing option. With this type of working capital loan, a lender allows you to borrow money against a portion of your future sales.
The lender will charge you a fee, known as a factor rate, that you’ll then pay in addition to the loan amount with credit card transactions. These loans can be expensive, but they have less strict borrowing requirements compared to other financing options and can be funded quickly.
How to Get a Working Capital Loan
The process for getting a working capital loan depends largely on the type of loan and the lender. However, there are a few steps you’re likely to encounter when applying for such a loan. Follow these general steps to get a working capital loan:
1. Evaluate your borrowing needs. If you suspect your business may benefit from a working capital loan, spend some time evaluating how much you need to borrow and for how long. Consider how much you can afford to make in payments each month and whether you need a lump-sum cash infusion or a line of credit you can access on an as-needed basis.
2. Check your business and personal credit scores. If your business has its own credit profile, lenders will evaluate both your business and personal credit scores. Before you apply, check your scores to evaluate your approval odds. It’s necessary to have a personal FICO Score of at least 530 to qualify for a working capital loan. However, a score of 600 or higher will qualify you for better rates and terms.
3. Research and compare lenders. Once you know how much you need to borrow and whether you’re likely to qualify, research lenders with loan amounts and qualification requirements that fit your needs. Compare banks, credit unions and online lenders based on available interest rates, repayment terms and fees. Then, spend some time reading customer reviews to evaluate each lender’s reputation.
4. Gather required documentation. Required documents may vary by lender. However, most financial institutions require business loan applicants to provide information about existing business loans and submit at least 12 months of personal and business bank statements, plus tax returns for a minimum of two years. You also may need to provide a detailed business plan—especially if you own a startup.
5. Submit a formal loan application. When your documentation is ready, submit a formal loan application through the lender’s website or at a branch. Procedures vary, but most lenders contact the prospective borrower via phone or email to request any additional information before processing the application, making a loan offer and sending it to underwriting. Many lenders also let you check your application status online.
Alternatives to a Working Capital Loan
A working capital loan may not be the best option for you and your business. There are alternative financing options that you can consider.
Business credit cards. For ongoing or unpredictable expenses, a business credit card can be a good option to cover short-term costs. Nonetheless, if you do choose to use a business credit card to finance your business, have a plan to quickly repay your debt and be sure to not overborrow. APRs can be above 28%, making them an expensive option if you don’t repay your balance in a timely manner.
Business grants. If your business can qualify, business grants can be one of the best options for funding your business. Business grants don’t need to be repaid, but they can have strict application requirements and often have competitive application processes.
Peer-to-peer lending. Peer-to-peer lending connects your business with appropriate investors, bypassing traditional lenders. Although peer-to-peer lending may not be a good option for all businesses, it can have less strict borrowing requirements than other lenders.
Methodology
We reviewed 19 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the nine best lenders based on the weighting assigned to each category:
Loan cost: 35%
Loan details: 25%
Customer experience: 20%
Eligibility and accessibility: 10%
Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Frequently Asked Questions (FAQs)
Are working capital loans a good idea?
Working loans can be a good idea depending on your business and its needs. If you need to finance temporary expenses on a short-term basis, working capital loans can be a good fit for your business, especially if you don’t meet the requirements for traditional, long-term loans. Nonetheless, long-term loans often come with lower interest rates, making them a cheaper option if your business qualifies.
Can you get a working capital loan with bad credit?
It is possible to get a working capital loan with a FICO Score of just 530, but it may prove more difficult than for more creditworthy borrowers. That said, borrowers with bad credit typically have better approval odds through online lenders than traditional banks and credit unions. Business owners with access to valuable collateral also may qualify for financing more easily than those limited to unsecured loans.
How do you qualify for a working capital loan?
To qualify for a working capital loan through an online lender, business owners should have a personal credit score of at least 530—though a score of at least 600 is most competitive, especially for traditional banks and lenders.
Lenders also look at how long an applicant has been in business, as well as the business’ financial records and business plan. This often means applicants must provide at least 12 months of personal and business bank statements and at least two years of tax returns as part of the application process.
What is a good interest rate on a working capital loan?
Interest rates on working capital loans vary based on the type of financing, the lender and the borrower’s personal and business credit profiles. In general, though, rates can range anywhere from 3% to 99%, depending on the lender, loan terms and applicant qualifications.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
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