Best Working Capital Loans in 2024

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Working Capital Loans

Working Capital Loans for Small Business

Working capital is the total money you have when you subtract your company’s current liabilities from your assets, and helps you to understand how much money you have to work with outside of your normal commitments.

For example, you may own a company that has $300,000 in assets (cash, materials, inventory, accounts receivable) and $180,000 in liabilities (wages, taxes, utilities, and current debts due to be paid within the next year), so you have $120,000 in working capital.

Ideally, you want to keep your working capital high to help you keep your business out of financial trouble if something unexpected happened, or if you wanted to put more money into your marketing or growth. However, this isn’t always possible, especially in the early years of your business. If you find your working capital is low, you may choose to use a working capital loan.

Applying for a working capital loan is fast and easy:

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What is a working capital loan?

A working capital loan is one that’s designed to give you additional working capital – in other words, they’re used for everyday business operations. You may use it to cover rent, payroll, advertising, and other regular payments.

Top working capital loan lenders

FundBox: best for working capital loans

FundBox Business Loans


Funding: Borrow $2,500 - $150,000
Minimum Credit Score: 600
Loan term: 12-24 months
Funding turnaround: as fast as next business day

Fundbox requires minimal documentation and access to a revolving line of credit without origination or maintenance fees. Borrowers are not required to have collateral (with exception of larger credit lines which are subject to a personal guarantee).

OnDeck: best for obtaining a fast working capital loan

OnDeck Business Loan Review


Funding: Borrow $5,000 - $250,000
Minimum Credit Score: 600
Loan term: up to 36 months
Funding turnaround: as soon as same business day

OnDeck offers fast business loan options such as term loans, business lines of credit, and SBA PPP loans and funding as fast as 24 hours. Minimum requirements include: at least 1 year in business, 600 credit score, $100,000 in gross annual revenue and a business checking account.

SBA (7a loan): best for businesses which are already established

SBA 7a

SBA 7(a) loan

Funding: Borrow up to $5,000,000
Minimum Credit Score: 650
Best For: SBA loans
Funding turnaround: Varies.

The SBA 7(a) program features lenders such as Wells Fargo in their network and provides capped interest rates and long repayment term flexibility. Term loans and lines of credit access available. Typically, collateral will be required with a personal guarantee. Funding times vary and may be longer than most other lenders.

Credibility Capital: best for large purchase requirements

Credibility Capital

Credibility Capital

Funding: Borrow up to $500,000
Minimum Credit Score: 650
Best For: Term loans
Funding turnaround: Varies.

With Credibility Capital, borrowers with strong credit can obtain small business loans with attractive rates. A personal guarantee along with a business lien and revenue may be required to qualify. Note: This lender provides funding for all states except for North Dakota, Nevada, South Dakota, Vermont.

How do working capital loans work?

In most cases, a working capital loan is a loan you take out as a lump sum to cover a shortfall in your working capital. It is then paid back in the following weeks, months, or years.

What can a working capital loan do for my business?

A working capital loan can:

  • Pay for inventory
  • Refinance debt
  • Add team members
  • Pay for additional advertising
  • Help fund a marketing campaign
  • Cover everyday expenses
  • Purchase equipment
  • To offer you a buffer during a time of low cash flow

What are the different types of working capital loans?

Most working capital loans are forms of short-term financing, but you certainly aren’t limited to short-term financing options. Common types of working capital loans are:

  • Invoice factoring and financing: one of the most common forms of working capital loan is a form of short-term borrowing called invoice factoring or invoice financing. This is where you sell your invoice to another company for around 95% of the amount the invoice is for. Another form of invoice financing is where you borrow the money against an outstanding invoice, using it as proof that you’ll pay back the money when that invoice is paid.
  • Business term loans: A term loan is the most common form of loan, where you apply for a lump sum amount and pay it back in the following weeks, months, or years, plus interest.
  • Business lines of credit: this form of loan is where a lender agrees to lend you a maximum amount of money, and then gives you access to it so you can use it as and when you choose (like a credit card). Most of the time, you can reuse the credit when you pay it back, but sometimes you can only use the total amount of credit once and then the line of credit is closed.
  • SBA loans: SBA (Small Business Administration) loans are guaranteed by the government, and so are some of the most difficult to get. This guarantee helps encourage lenders to be more generous with how much they lend and the rates they offer.
  • Merchant cash advance: a merchant cash advance is where your card processor lends you money in a lump sum, and then you make automatic repayments every time you process a transaction. For example, if you get a cash advance of $5,000, you may pay it back as 15% of every transaction they process.
  • Business credit cards: business credit cards are no different from consumer credit cards, and can help you bridge the gap if your working capital is temporarily low.
  • Equipment loans: these are usually term loans that are secured against the equipment you purchase with the loan.

What are the pros & cons of working capital loans?


  • You can ease cash flow issues
  • You won’t have to worry about running out of cash
  • It’s common to borrow for just a month or two during slow times or while waiting for accounts receivable to be paid
  • You can spend the money as necessary


  • You may throw good money after bad – it’s not nice to think about, but businesses do fail. You may be better off trying to find a different way to survive, especially if you might get yourself into personal financial jeopardy
  • If things don’t pan out just as you’ve planned, you may find it difficult to pay your bills and maintain the loan
  • The repayment terms are often short and the rates high

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What are the requirements to qualify for a working capital loan?

Most working capital loan lenders look for:

  • 3+ years in business (this isn’t always the case, but will drastically improve your chances of getting a loan)
  • A good business credit score
  • A good personal credit score (usually 600+ required)
  • A plan or proof that sales are on the way – if you’re waiting for invoices to be paid, even better

You may be asked to put up collateral for a working capital loan, which is an asset the lender can seize and sell if you fail to keep up on your repayments. This is usually property, inventory, equipment, or vehicles, but may include intangible assets.

A personal guarantee may also be required. This will make you legally responsible for the loan, rather than your business, if you fail to keep up repayments.

How much working capital does my small business need?

In the simplest of terms, you simply need enough assets that they exceed your liabilities.

For example, if you have $100,000 in assets and $70,000 in liabilities, your working capital should be $30,000 to stay in the green for the next year. That said, the more you have the better to ensure you don’t suffer shortfalls.

How is a working capital loan amount determined?

How much you’ll be offered for a working capital loan depends on your revenue, how much debt you have, if you have accounts receivable you are waiting for, your credit score, your monthly liabilities (outgoings), and whether or not the loan will be secured.

Are working capital loans a good idea?

Working capital loans have to be handled carefully. They can be a good idea, but they can also sink you into a hole you’ll struggle to get out of.

They’re a good idea if you have a short-term financial need you know, with relative certainty, will change. For example, it’s coming up to the holidays and you need more capital to purchase additional inventory for a big sale. Another good reason would be if you’ve recently invoiced clients on net-30 or net-60 terms, and you need a way to cover your expenses until those invoices are paid.

They’re not a good idea when your business is struggling, and you’re not sure why, or when that will change. The worst thing you can do in a bad financial situation is sink more money into it. If you can, think about how you can change what you’re doing, offer a new service or product. Seth Godin said, “When in doubt, raise money from your customers by selling them something they truly need.” Try to heed these words if you’re experiencing financial difficulty and think laterally.

How to get a working capital loan

Getting a working capital loan is relatively simple. You need to:

  1. Sit down and look at your company’s financial situation and figure out when you believe you’ll get the money you’re waiting for (such as a sale, invoices paid, a launch of a new product or service, and so on). Make sure you understand what non-negotiable expenses you have to cover in that period. Ideally, prepare your financial documents so you can share them with potential lenders.
  2. Check your creditworthiness – know your score and your business’s credit score.
  3. Do your research and decide which type of loan will work best for you. Can you take advantage of invoice financing, or are you better off looking into a merchant cash advance?
  4. Compare lenders and rates and find those that look like they’ll be a good fit. Look at their terms and find out what documentation they want to see.
  5. Get your documentation together.
  6. Apply to the lender you most want to work with. Remember not to rush this process and take your time to find the right lender. Going into this process with your eyes open will set you up for success.

Apply for a working capital loan

Have you decided a working capital loan is the right next step for your business? Make sure you’ve chosen the right type of loan for you and compare the rates of the best working capital loans here. When you find one that looks to be the right fit, it’s time to apply. You’ll soon have the funding that can help bridge the gap in your cash flow so your business can find success.

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