Working capital loans help you access the cash you need in order to fund everyday expenses. These business loans can help cover payroll, pay for day-to-day operations, or help keep your cash flow stable. Best of all, you may not need to put up collateral.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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A working capital loan is the ideal choice if you need to borrow quickly to increase cash flow and can’t wait on a traditional bank loan. The best working capital loans offer a quick approval timeline, which puts cash in your hand within 24 hours of loan approval. In contrast, some bank loans can takes months from application to approval.
In this review, our experts highlight the rates, fees and terms of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.
Best Working Capital Loans for 2023 - Full Overview
There are several leading business loans you can use for working capital. Each of the following lenders offers different benefits for business owners, as well as different applicant requirements.
American Express Business Blueprint™ - Best for Fair Revenue Requirements
Monthly fees: 3-9% for 6 month loans, 6-18% for 12-month loans, 9-27% for 18-month loans
Loan amounts ranging from $2,000 to $250,000
No prepayment penalties and no origination fees
Convenient application process
Pros & Cons
Fair annual revenue requirements
Fair credit score requirements
No prepayment penalties
Personal guarantee required
Monthly fee structure can be confusing
American Express Business BlueprintTM program hosts the American Express® Business Line of Credit product. The lender offers working capital in a form of business line of credit. American Express Business Blueprint prides itself on empowering small businesses and helping them get the funding they need to succeed.
Most lenders require high annual revenues to qualify for a working capital loan. American Express, however, requires an average monthly revenue of at least $3,000. This gives businesses a chance to increase their revenue by providing them with the money they need to do so.
American Express Business Blueprint provides lines of credit to small businesses ranging from $2,000 to $250,000. American Express does not charge originations fees or prepayment penalties, but rather a monthly fee on your balance. For 6-month loans, fees range from 3-9%. For 12-month loans, they range from 6-18%, and for 18-month loans, fees range from 9-27%. To qualify, you’ll need a business checking account or online payment platform, be in business for at least one year, be able to show at least $3,000 in average monthly revenue, and have a minimum credit score of 640. However, all businesses are unique and are subject to approval and review.
American Express Business Line of Credit is ideal for businesses looking to increase their profits but perhaps need a loan to do so. With fair monthly revenue requirements and flexible funding, American Express Business Line of Credit is an excellent choice for working capital loans.
Excellent customer reviews on independent review sites
Pros & Cons
Bad credit accepted
Fast funding times
Excellent customer service
Multiple phone calls required after application
Annual income requirement may be high
If your business has high revenue and you have been denied a loan elsewhere, Lendzi may be able to help you get the funding you need. Lendzi was founded in 2020 and caters to small businesses who may have trouble getting a loan. Not only that, but they have more than 2,000 5-star reviews from past and present customers, they offer competitive rates and terms, and they can get you your funding within 24 hours of loan approval.
You can get a working capital loan from Lendzi up to $400,000 with terms between three and 15 months. Factor rates start at 1.15 and credit score isn’t an issue with this type of funding, though the lender does recommend a score of at least 500. To apply, simply fill out the online application. Doing this will not impact your credit score. From there, a Lendzi representative will contact you to discuss your financing needs further. You will be guided throughout the process and together will come up with a funding solution. To qualify, Lendzi recommends a business history of at least six months and $180,000 in annual revenue.
Lendzi is our top pick for small businesses with high revenue who need a working capital loan. Whether you need additional funds to help cover operating expenses or are rolling out a new marketing plan, Lendzi can help you find the right solution and get you approved quickly.
Industry best factor rate for MCA - as low as 1.10
APR for the Line of credit product starts at 35%
Flexible repayment terms up to 16 months
Get funding in as little as 24 hours
Check your rate with a soft credit pull
Pros & Cons
Fast lending decisions and funding times
No collateral required
Large loan amounts
Not available for startups
Some industries will not qualify
Rates not disclosed prior to application
Backd was founded in 2018 and offers working capital loans up to $2 million. They tailor to businesses who want to stay in control of their finances, and work to create a unique loan specifically for your business. The online application takes just a few minutes to fill out and a lending decision is given almost instantly. If approved, funds can be in your account within 24-48 hours.
Backd working capital loans range from $10,000 to $2 million with terms up to 16 months. Payments are made daily, weekly, or semi-monthly. In addition, Backd offers a business line of credit ranging from $10,000 to $750,000. With this type of financing, you withdraw funds, pay them back, and can withdraw them again. To qualify for either option, you need to be in business for at least one year and have $100,000 or more in annual revenue.
If you’ve been denied elsewhere and are in need of a large loan amount, Backd may be able to get you the funding you need. As long as you meet their minimum qualifications, it’s worth applying for a working capital loan and seeing what they have to offer.
Positive reviews on sites like Trustpilot and Better Business Bureau (BBB)
No collateral needed
Daily or weekly repayments
Personal guarantee required
No mobile app
National Funding working capital loans come with an early repayment discount. You can lock in a 7% discount on your remaining balance if you pay off your business loan in full within the first 100 days. This can make it more affordable to boost cash flow and fund the cost of everyday expenses like rent, payroll, and utilities or get you through slow seasons.
National Funding’s working capital business loans range from $5,000 to $500,000 with repayment terms between four months and two years. The pay rate starts at 1.10. To pursue a working capital loan, you’ll need a minimum credit score of 600, a business track record of at least six months, and $250,000 or more in annual revenue.
If your business is financially stable and you could use some cash to pay for everyday expenses, a working capital loan from National Funding might be a solid choice. This is particularly true if you know you’ll be able to repay it in full within the first 100 days and qualify for the early repayment discount.
Bluevine offers a business line of credit up to $250,000 that can help you get the working capital you need. This option is ideal for business owners who may want to dip into capital repeatedly without having to apply for a loan each time. Bluevine also deposits and withdraws funds directly from a linked checking account, which can provide speed and convenience. Bluevine runs a soft credit pull when you apply to help avoid negative changes to your credit.
Bluevine’s line of credit comes with a simple online application process and a decision within five minutes. Loan amounts range from $5,000 to $250,000 with rates starting at just 4.8%. As you pay off your line of credit, your available credit automatically replenishes up to your maximum loan amount for you to use again.
Bluevine also stands out in terms of customer service. The lender offers person-to-person customer support in addition to its online platform, which can go a long way when you have an issue getting paid or with repaying your loan.
Bluevine is an alluring option for businesses that can afford the faster repayment period, and for those who want a line of credit versus a term loan. Their customer service and loan totals can help you get the funds you need with minimal hassle.
Biz2Credit is known for offering a fast turnaround time between application to funding. In most cases, Biz2Credit can get funds deposited within 72 hours after loan approval. This makes the lender an ideal funding source if your small business needs fast access to capital.
Biz2Credit’s working capital loans are its most flexible in terms of minimum credit score. You will need $250,000 in annual revenue and six months of operating time to qualify.
Biz2Credit loans also come with significantly higher maximum loan amounts—up to $2 million. Interest rates are competitive, but qualifying for a loan can be harder here than with other lenders.
Biz2Credit offers high maximum loan amounts, but also requires substantial annual revenue from your business. Their application process is more stringent, but rates will be more competitive and funding times are fast once approved.
Fundbox offers two business loans that can help provide you with working capital: A term loan and a line of credit. For either loan, the application only requires a soft credit pull, which does not impact your credit score. Plus, Fundbox is also more flexible with credit scores than traditional lenders.
Part of this flexibility is due to how the company deposits your loan proceeds and how it collects on your debts. They push money directly into your checking account and withdraw from your account automatically for repayment. This underlying tech streamlines the payment process, which is part of why Fundbox is more lenient with lower credit scores.
Fundbox offers up to $150,000 for both their term loan and line of credit. For term loans, Fundbox offers a 24 or 52 week repayment plan. For the line of credit, you choose a 12 or 24 week repayment plan each time you draw on your loan. Interest rates begin at 4.66%, but your rate could be higher depending on your credit score, among other factors. Businesses only need to have been in business for six months before applying for a loan.
Fundbox makes it easy to get a loan to boost your cash flow—even if your credit is a sensitive subject. Plus, Fundbox gets cash in your hand quickly. Decisions are made in as little as three minutes from application submission, and funds can be in your account as soon as the next business day. This is helpful if getting working capital is a time-sensitive matter, which is true in many cases.
If you need a working capital loan up to $5,000,000 and don’t have time to wait around for approval from a bank, look no further than GoKapital. Simply fill out their easy online application and receive a lending decision within 24 hours. If approved, funds are usually deposited the same day.
GoKapital was founded in 2013 and is on a mission to help entrepreneurs get the funding they need, regardless of industry, credit score, or time in business. In addition to working capital loans, GoKapital offers business lines of credit, merchant cash advances, equipment financing, SBA loans, and even real estate investment loans. Whether you’re looking to purchase new equipment or buy another location, GoKapital is on your side.
Working capital loans from GoKapital range from $20,000 to $5 million with terms of two to 10 years. The minimum credit score needed is just 500; however, you will need $240,000 or more in annual revenue to qualify. In addition, you also need to be in business for a minimum of two years. If you don’t meet these requirements, GoKapital offers other forms of financing that may better suit your needs.
GoKapital working capital loans are best for medium-sized businesses in need of a large amount of capital quickly. Applying will not affect your credit score, so if you meet the minimum requirements, we recommend giving GoKapital a chance to fund your business’ needs.
Loan features: This includes working capital loan terms, repayment options, and loan amounts. Most are short-term business loans, meaning they require repayment over 12 months. You may also be able to get a business line of credit, which offers you a sum of money to borrow against during a set period.
Application process: How much information lenders require in your application. This also includes whether or not the lender needs to run a hard-pull or soft-pull of your credit score, and how long it will take to receive your funds.
Interest rates and fees: Interest rates vary between lenders, as do fees associated with taking out a loan.
Qualification process: The credentials lenders require from applicants, including minimum credit score, annual revenue, and business history.
Customer support: Whether or not a lender offers access to live support representatives, as well as the availability of support across different channels. This also includes the amount and usefulness of supplemental information and tools.
Online user reviews: What others have to say about their borrowing experience with a lender based on feedback from independent review sites.
Perks and bonuses: Other benefits associated with borrowing from a certain lender, such as payment flexibility, advertising transparency, and advanced technology.
A working capital loan provides you with the funds you need in order to pay for a variety of business expenses. Unlike some loans that require you to use funds for a specific purpose, working capital loans are more flexible and can be used for a broader array of purposes.
Why Should a Business Get a Working Capital Loan?
The Voice of Small Business in America Report shows that businesses that don’t receive the funding they need are forced to make cuts in technology and equipment investments (29%) and owner’s compensation (29%). Further, 48% said that they had trouble expanding into new markets, while 42% said that they had to take on more work themselves instead of hiring employees or contractors.
Working capital loans are a good option when you need to keep your business operations running, purchase equipment, or cover other costs like payroll. Qualifications for working capital loans are usually less stringent than other term loans, which makes them an attractive option for small business owners with less than excellent credit, or for whom a traditional bank loan isn’t likely.
A working capital loan can also be a better fit if time is of the essence and waiting for a term loan from a bank isn’t feasible. Most loan decisions are made within minutes, and funds are dispersed within 72 hours from loan approval.
Types of Working Capital Loans
There are a few types of small business loans that can be used to fund capital:
Short-term working capital loans provide small businesses with a lump sum of money with a set repayment schedule.
Business lines of credit offer a set amount of money that you can pull from repeatedly during the life of the loan. Similar to a credit card, you only pay interest on the money you use.
SBA loans provide up to $5.5 million to be used as working capital or to buy fixed assets like real estate and equipment. These term loans are guaranteed by the Small Business Administration.
Merchant cash advances allow you to pay back your loan through debit and credit card sales. These loans may be a good option for businesses with relatively low credit scores but solid annual revenue.
How to Qualify for a Working Capital Loan
Each lender has its own requirements for getting a working capital loan. Prerequisites may also vary depending on which loan type you decide to pursue. For example, an SBA loan may offer lower fees and longer repayment terms but will require more paperwork and processing time, while a business line of credit may be a better choice for a smaller, short-term loan.
In general, expect the following requirements from lenders:
Minimum credit score: 500-640
Time in business: 6+ months
Annual revenue: $100,000+
Depending on the loan type and lender, you may also have to provide collateral and/or a personal guarantee.
How to Get a Working Capital Loan
Most online lenders make it easy to apply for a working capital loan through their website. Some offer apps or online dashboards that simplify the process of tracking your application and managing your account if approved.
A typical application process looks like this:
Gather your documentation including your tax ID number, financial statements, and banking information. Depending on the loan type, you may also need to prepare a business plan and provide a personal guarantee stating that you are responsible for paying off the loan.
Apply online by following the lender’s instructions. Often, you will be assigned a representative who will guide you through the process.
Receive your loan offer. Review the fine print, paying close attention to the loan terms, interest and payments due, and any other requirements.
Sign your offer and receive your payments. Many lenders will link directly to your business bank account, speeding the funding process.
Working capital and term loans are very similar business financing, with working capital loans often taking the form of a term loan. The main difference is working capital loans do not come with rules around how you spend the money and what you spend it on. With other term loans, such as equipment financing, your lender may require you to demonstrate what you’re spending the money on. A working capital loan, however, can be used for a variety of purposes.
Both options don’t normally require collateral, which is an asset that backs the loan. However, if you have collateral you can use, it’s worth mentioning to the lender as that may score you a lower interest rate with a secured loan.
Working capital loans can be a great option for small business owners who need quick access to capital with a fast approval process. There are a variety of lenders who can help you get the cash you need while working with your credit score and business history.
Frequently Asked Questions(FAQ)
Are working capital loans a good idea?
These business loans can help small business owners cover short-term business expenses like payroll, inventory, or rent. This type of business financing is a good option for companies experiencing a temporary shortfall. However, if the business doesn’t improve, borrowers can find themselves saddled with debt.
What are the dangers of working capital loans?
Many types of working capital loans come with high interest rates, which can add up if borrowers are not able to make timely payments on business financing.
Can you get a working capital loan with bad credit?
Business owners can get a working capital loan with a credit score of 500+. Lenders consider factors like time in business and annual revenue in their approval process.
What is the interest rate range on working capital loans?
Interest rates on these loans vary widely by lender and working capital loan type. You may find APRs as low as 4.6% and as high as 36%.