A working capital loan is a type of small business loan used to finance daily operational expenses, such as rent, utilities, payroll and inventory. Unlike traditional business loans, these loans are generally short-term and typically need to be repaid in less than two years. They serve a similar purpose to business lines of credit, but rather than receiving a revolving line of credit, your business receives funds in a lump-sum payment.
Below, CNBC Select rounded up the best working capital loans that offer quick funding and cater to a variety of needs. (See our methodology for more information about how we chose the best working capital loans.)
Best working capital loans for small businesses
Best for lower credit scores
Credibly
Types of loans
Long-term loans, working capital loans, business line of credit and merchant cash advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $400,000
Terms
3–15 months
Minimum credit score needed
500+
Minimum requirements
Must have been in business for at least six months and have average monthly revenue of at least $15,000
Terms apply.
Pros
- Offers multiple options for small business financing
- Can get approved within four hours
- Low minimum credit score requirement
- Provides loan amounts of up to $400,000
- Funds deposited as soon as the same business day
- Considers overall business health as an approval criteria
Cons
- Requires an average monthly revenue of at least $15,000
Who's this for? Credibly is ideal for those with lower credit scores, accepting applicants with credit scores as low as 500. Other eligibility requirements include being in business for at least six months, which is fairly standard, and having an average monthly revenue of at least $15,000.
Standout benefits: Prospective borrowers can pre-qualify without hurting their credit score and get approved in less than four hours. If approved, you can receive the funds as quickly as the same business day.
Best for fast funding
OnDeck
Types of loans
Term loan
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $250,000
Terms
Up to 24 months
Minimum credit score needed
625
Minimum requirements
In business at least 1 year, $100,000 annual revenue, business bank account
Terms apply.
Pros
- Potential for same-day cash disbursement (only available in certain states, for term loans up to $100,000)
- Top-tier A+ rating with the BBB
- Low minimum credit score
- Fixed monthly payments
- 100% Prepayment Benefit option, so you can pay your loan off early without any penalty or fee
Cons
- Doesn't lend to businesses in Nevada, North Dakota or South Dakota
- Early prepayment fee if you don't qualify for the 100% Prepayment Benefit
Who's this for? OnDeck can be appealing to those who need funding in a pinch. Its application process can be completed in minutes and funds can be deposited into your bank account the same business day, depending on your state and loan amount.
Standout benefits: OnDeck has a relatively low minimum credit score requirement of just 625, and allows prospective borrowers to pre-qualify without hard credit pulls. It also occasionally offers limited-time cash-back bonuses for new borrowers who are approved for a loan product and accept funding.
Best for PayPal users
PayPal Working Capital Loan
Types of loans
Working capital business loan
Better Business Bureau (BBB) rating
A
Loan amounts
$1,000 to $250,000
Terms
None specified; borrowers pay a portion of their sales until the loan is paid off
Minimum credit score needed
No credit check required
Minimum requirements
Must have a PayPal account since approval is based on your business's PayPal account activity
Terms apply.
Pros
- Charges a single fixed fee
- Borrowers can choose a higher or lower repayment percentage; choosing a higher repayment percentage can lower the fee you're charged
- Repayments are automatically deducted from your PayPal account
- No early repayment fee
Cons
- Must have a PayPal business account with account activity to be considered
- Repayment percentage cannot be changed once you receive the loan
Who's this for? The PayPal Working Capital Loan is geared toward existing PayPal Business or Premier customers as eligibility is based on your business's PayPal sales history. Because PayPal does not perform a credit check to determine approval, this can also be a good choice for business owners with low credit scores.
Standout benefits: Rather than charge ongoing interest, loans come with a flat fee that's paid over the life of the loan. There are also no late fees or any other additional fees you'll be required to pay.
Best for unsecured loans
National Funding
Types of loans
Working capital loans, short term loans, equipment financing loans
Better Business Bureau (BBB) rating
A+
Loan amounts
Up to $500,000
Terms
Up to 5 years, depending on the loan type
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least six months and have at least $250,000 in annual sales
See our methodology, terms apply.
Pros
- Offers a higher funding amount at $500,000
- No-cost application
- Application approval in as little as 24 hours
- Doesn't require collateral
- Offers an early payoff discount
Cons
- High annual sales requirement to qualify for the loan
Who's this for? National Funding offers working capital loans with no collateral requirement. Instead, National Funding can provide funding with a personal guarantee, which is a document that the borrower signs stating that they will repay the loan if their business were to default on the balance.
Standout benefits: Eligible borrowers can get as much as $500,000 in funding, which is more than what many other lenders offer.
Best for larger loan amounts
Fora Financial
Types of loans
Small business loan, revenue advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $1.5 million
Terms
Up to 15 months
Minimum credit score needed
500
Minimum requirements
Be in business for at least six months; have $15,000 per month in revenue; no open bankruptcies
Terms apply.
Pros
- Offers higher funding amount compared to other lenders
- Considers lower credit scores
- Approval and funding in 24 to 48 hours, according to the lender's website
- Borrowers can increase loan amount after paying back at least 60% of the original loan amount
- Offers a prepayment discount
Cons
- Short loan term of just 15 months
Who's this for? Fora Financial offers eligible borrowers anywhere from $5,000 to a whopping $1.5 million in funding, which is considerably more than what many other lenders offer. It also requires a minimum credit score of just 500 and does not conduct any hard credit inquiries, which can be appealing to those with bad credit.
Standout benefits: Borrowers can apply for additional funding paying off at least 60% of the original loan amount and save money with prepayment discounts.
More on our picks for best working capital loans
Credibly
Credibly is an online fintech lending platform specializing in short-term small and medium-sized business financing. It offers working capital loans of up to $400,000 with repayment term lengths ranging from three months to 15 months.
Other financing options Credibly offers include merchant cash advances, business lines of credit, long-term loans, equipment financing, SBA loans and invoice factoring. Its loans can be used across over 300 industries, including consulting, landscaping, gas stations, food and service, healthcare, hospitality and more.
Loan amounts
$5,000 to $400,000
Loan terms
3 to 15 months
Eligibility requirements
Specific requirements may vary, but you'll generally need at least six months in business, a credit score of over 500 and an average monthly revenue of $15,000 or more.
OnDeck
OnDeck is an A+ Better Business Bureau (BBB)-rated online lender that prides itself on its simple application process and fast funding times. Term loans are available from $5,000 to $250,000 with repayment periods of 12 to 24 months. OnDeck also offers revolving business lines of credit as an alternative lending option. Over 700 types of industries can get funding through this lender.
Loan amounts
$5,000 to $250,000
Loan terms
12, 18 or 24 months
Eligibility requirements
At least one year in business, a 625 personal FICO score, $100,000 business annual revenue and a business checking account.
PayPal
PayPal Working Capital Loans are available to eligible PayPal Premier customers with at least $20,000 in annual PayPal sales and PayPal Business customers with at least $15,000 in annual sales. First-time borrowers can apply for $1,000 to $150,000 in funding, while repeat borrowers can get as much as $250,000. Eligible borrowers must also not have an outstanding balance on an existing PayPal working capital loan.
According to PayPal's website, borrowers should receive their funding within minutes of approval. Borrowers must either repay at least 5% or 10% of their total loan amount plus the fixed fee every 90 days until the loan is paid off. These payments are automatically deducted from your business's PayPal account as a portion of your sales, and you can still make additional payments with no prepayment penalties.
Loan amounts
$1,000 to $250,000
Loan terms
None specified; borrowers pay a portion of their sales until the loan is paid off
Eligibility requirements
Must have a PayPal business or Premier account for at least 90 days
National Funding
National Funding offers a variety of types of loans that serve businesses across a range of industries, including beauty and wellness, agriculture, restaurants and more. This lender has provided businesses with over $4.5 billion in funding and has an A+ rating from the BBB.
Loan amounts
Up to $500,000
Loan terms
Up to 5 years, depending on the loan type
Eligibility requirements
Must be in operation for at least six months and have at least $250,000 in annual sales
Fora Financial
Fora Financial is a New York-based lender with an A+ BBB rating, a simple application process and quick funding. In addition to standard term loans, it offers a revenue advance option, which is essentially a merchant cash advance, where loan payments are a percentage of your sales.
According to Fora Financial's website, funding can be used to cover almost any business expense, across a variety of industries, from retail, to medical, construction, restaurant and beyond. Once a prospective borrower applies, a Capital Specialist will be in contact to discuss the details of the loan request.
Loan amounts
$5,000 to $1.5 million
Loan terms
Up to 15 months
Eligibility requirements
Must be in business for at least six months, have monthly revenue of at least $15,000 and have no open bankruptcies
FAQs
What is a working capital loan?
A working capital loan is a type of short-term business loan used to cover daily business operating expenses, including rent, utilities and payroll.
What credit score do you need for a working capital loan?
The exact credit score you need you need for a working capital loan depends on the lender. Some lenders accept applicants with lower credit scores but keep in mind that a low credit score could subject you to higher interest rates.
How long is the term for a working capital loan?
Working capital loan terms vary by lender, but because these loans are considered short-term loans, they generally must be repaid within two years or less.
How much can you borrow for a working capital loan?
Every lender has different maximum funding amounts for working capital loans. Borrowers can typically apply for anywhere from $5,000 to $250,000, though, some lenders provide even more than that.
Bottom line
Working capital loans can help small business owners keep operations running smoothly during temporary cash flow shortages. Many of the top working capital loan lenders offer quick approvals and fast funding, but as with any other loan, it's important to take your time to compare offers from several lenders. Make sure you understand the terms you're agreeing to, including the repayment period, interest rates and any fees you may be charged.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every small business loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best working capital loans.
Our methodology
To determine our picks for the best working capital loans, CNBC Select analyzed several U.S. loans offered by both online and brick-and-mortar lenders. We narrowed down our rankings by only considering traditional loans, including term loans, equipment loans, commercial real estate loans, microloans and franchise loans. For this roundup, we didn't evaluate business lines of credit, invoice factoring/financing, merchant cash advances since they either have a long application process (like SBA loans) or act differently than a traditional term loan, which gives you a lump sum that you pay back over a fixed period.
We compared each small business loan on a range of features, including:
- Minimum and maximum loan amounts
- Length of term
- Credit score needed
- Application requirements
- Streamlined application process
- Fund disbursement
- Customer support
- Better Business Bureau rating
- Customer reviews, when available
The rates and fee structures for small business loans are subject to change without notice, and they often fluctuate per the prime rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee that the interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness.
To take out a small business loan, lenders will generally conduct a hard credit inquiry and request a full application, which could require both personal and business proof of income, identity verification, proof of address and more. You may also need to put up collateral, which can include business equipment, real estate or personal assets.
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