5 Best Working Capital Loans

Sometimes, your business needs some extra funding to bridge the gap between busy seasons. A working capital loan may be the right financial solution to keep your company afloat.

Before you commit to a particular lender, it’s critical to do your due diligence. That’s why Money has compiled a list of the best working capital loans available today. Our selections offer standout features that are worthy of your consideration.

Keep reading to see our reviews of the best working capital loan options.

Our Top Picks for the Best Working Capital Loans

• American Express — Best Overall
• Bluevine — Best for Quick Application
• Fundbox — Best for Bad Credit
• PayPal Working Capital — Best for Flexible Payments
• QuickBooks Capital — Best for Small Businesses

Best Working Capital Loans Reviews

Why we chose this company: American Express Business Blueprint (formerly Kabbage Funding) offers a convenient line of credit with strong financial backing.

The American Express Business Line of Credit provides qualified business owners up to $250,000 in working capital and allows them to take up to 18 months to pay off what they borrow. While the company requires at least a 640 credit score (the highest of the working capital loans we reviewed), its income requirement is the lowest we've seen: $3,000 per month, on average. That means this business funding option could be great for a startup.

This product doesn’t feature an APR or interest rate. Instead, you’ll pay a flat fee based on your current monthly balance and loan term:

• 6-month term: 2-9% of your monthly balance
• 12-month term: 7.5-18% of your monthly balance
• 18-month term: 15.75-27% of your monthly balance

Each draw on your line of credit is considered a separate loan with its own term and fee.

American Express doesn’t charge an origination fee or prepayment penalty. And if you qualify, your online application may get approved in minutes, and your funds disbursed within a business day of your loan offer.

Note: While the American Express Business Line of Credit is worthy of our top pick, some customers have had a bad experiences with the application process and the customer service department. We encourage consumers to do additional research before making a commitment.

Why we chose this company: Bluevine can approve qualified borrowers in as little as five minutes via an online application. Plus, if approved, you may be able to get same-day funding with a $15 wire transfer.

Bluvine's eligibility requirements are on par with other working capital loan products we've reviewed. Your credit score must be higher than 625, and your company must be at least six months old. Approved Bluevine customers can access a business line of credit of up to $250,000 issued through Celtic Bank, a Utah-Chartered Industrial Bank. They can then take up to 12 months to repay what they draw

Well-qualified borrowers could see an APR as low as 6.2%. Plus, Bluevine doesn’t charge origination fees, account maintenance fees or prepayment penalties.

Your payments will get auto-debited from your business bank account on a weekly or monthly basis. That way, you don’t have to worry about forgetting to pay your bill.

Why we chose this company: Fundbox can help borrowers with less than stellar credit access the capital their business needs. You only need a 600+ FICO rating to meet the lender’s credit score requirement.

Fundbox borrowers also need $100,000+ in annual revenue and to have been in business for at least six months to qualify for a line of credit. (The company’s term loan product is currently in beta testing.)

Its online application process is quick, and you may get a decision in as little as three minutes. If approved, you could get your funds the next business day. Loans may be issued directly through Fundbox or First Electronic Bank, a Utah-Chartered Industrial Bank.

Fundbox’s APR starts at 4.66% for 12-week terms. Your weekly payments will get auto-debited from your business bank account, and there’s no prepayment penalty if you pay off the loan early.

The company is also beta testing Fundbox Plus, a $99 per month subscription service. Members get a 52-week term option, 20% off weekly fees, a monthly auto debit option, the ability to delay their first payment for up to 28 days and priority customer service.

Pro tip: If you’d like to explore other business funding options, take steps to improve your credit score.

Why we chose this company: You can repay a PayPal Working Capital loan via a predetermined percentage of your PayPal sales each month. So, if you don’t make any sales through PayPal during a given month, you don’t have to remit a loan payment for that period.

Additionally,PayPal never checks your credit, and you may not need to submit any supporting documentation with your loan application.

The company’s main requirements are:

• Maintain an active PayPal Business or Premier account for 90+ days

• Make $15,000 in annual PayPal sales via your PayPal Business account ($20,000 with your PayPal Premier account)

• Have no outstanding PayPal Working Capital loans

If you’re eligible, you could get approved and funded by WebBank in minutes.

PayPal charges borrowers a fixed fee instead of interest. The fee is based on how much you borrow, your agreed-upon repayment percentage and your PayPal sales history. The company doesn’t share fee ranges, but it does say that the higher the repayment percentage, the lower the fee. PayPal doesn’t charge any other fees or prepayment penalties.

Caution: While you can skip making payments during the months you have no PayPal sales, PayPal requires that you pay at least 5-10% (depending on your loan agreement) of your loan every 90 days. That means if your PayPal sales are down for an extended time, you’ll have to remit funds from another source to keep your loan current.

Note: PayPal has received many online complaints regarding its products and services, some of which are about the working capital loan product. So, while we endorse the PayPal Working Capital loan as the best option for those needing flexible payments, we encourage you to do your due diligence before borrowing.

Why we chose this company: QuickBooks Capital is well-suited for small business owners because borrowers only need to make $50,000 in annual revenue to satisfy the lender’s income requirements.

Other QuickBooks Capital requirements include:

• 6+ months of bookkeeping transactions on a QuickBooks accounting platform

• A minimum credit score of 620

• No bankruptcies in the last two years

• No outstanding QuickBooks Capital loans

The application process is online and reviews your personal and business credit as well as your financial reports within QuickBooks. If approved, you can get funds within two business days.

Qualified borrowers can take out up to an 18-month term loan for as much as $150,000 through Intuit Financing Inc. Your interest rate will range from 9.99-34%, depending on your creditworthiness and other factors. QuickBooks Capital doesn’t charge an origination fee.

Loan payments get auto-debited from your business bank account weekly or monthly, and there are no penalties if you repay the loan early.

Note: QuickBooks also has several customer complaints online. However, we stand by the QuickBooks Capital loan as a potential fit for your small business.

Other companies we considered

OnDeck

Why we didn’t choose this company: While OnDeck offers fast funding, the company charges a high APR. Plus, borrowers may have to pay other expensive fees depending on their loan agreement.

Small Business Administration (SBA)

Why we didn’t choose this company: The Small Business Administration working capital loan can be an excellent solution for companies that need to borrow large sums and take several years to repay the debt. However, the loan application process is lengthy and complicated. Plus, the fee structure is complex and potentially expensive, depending on the lender.

BHG Financial

Why we didn’t choose this company: BHG Financial has a solid reputation in the financial industry. However, the company’s application and funding processes are slower than other lenders we reviewed, and its website lacks important information about the working capital loan product. Plus, you may be subject to a prepayment penalty for paying off your loan early.

Lendio

Why we didn’t choose this company: Lendio can be a good solution if you’d like to compare multiple business financing options in one place. However, loans from the marketplace could come with an interest rate as high as 60%, which is significantly higher than business credit cards. Plus, in 2020, the Federal Trade Commission ordered Lendio to stop making potentially misleading claims about coronavirus relief available to business owners.

Credibly

Why we didn’t choose this company: We liked Credibly’s low minimum credit score requirement and fast application process. However, the lender charges a high APR (when converted from a factor rate) and a 2.5% origination fee. Plus, your business must make at least $15,000 per month to qualify for a loan.

Working Capital Loans Guide

The following guide contains everything you need to know when shopping around for a working capital loan, including the different types of loans available and how they work.

Main things to know before choosing a working capital loan

The first thing you need to know before choosing a working capital loan is how much working capital you need.

Working capital refers to funds and assets available to your business for day-to-day operations. You have working capital if you own (current assets) more than you owe (current liabilities).

To determine your working capital needs, review all of your monthly business expenses. These could include:

• Rent
• Payroll
• Supplies
• Services
• Minimum debt payments

Then, calculate your potential shortfall per month, multiply it by the number of months until your next busy season starts, and add a buffer in case you underestimated your costs. That figure is your target loan amount.

Once you've determined how much working capital you need, you should learn some key facts about working capital loans.

Leslie Tayne, debt attorney and founding and managing director of Tayne Law Group, says that working capital loans can be easier to qualify for than traditional business loans. That's because the alternative online lenders that offer them generally have less stringent eligibility requirements.

That said, unlike other types of small business financing, working capital loans are tied to your personal credit. This means that missing payments or defaulting can seriously impact your credit score and your ability to borrow money in the future. Additionally, interest rates tend to be high to compensate for the higher risk.

"If your credit is in good shape, you may be able to get an unsecured working capital loan, meaning no collateral is required to get approved," says Tayne. "If you don't have good credit, however, you may need to secure the loan with an asset, which can be repossessed if you default."

What are the types of working capital loans?

Working capital loans are typically short-term loans or revolving lines of credit. With a short-term loan, you’ll borrow a lump sum and repay it over a set period — usually weeks or months. With a working capital line of credit, you’ll have a credit limit you can borrow against. You’ll only have to repay what you borrow, and each draw from the line will be considered a separate loan.

Invoice financing, invoice factoring or merchant cash advances can also be considered forms of working capital loans. With invoice financing, a lender gives you a loan based on the value of your unpaid invoices (accounts receivable). You’ll then repay the lender as your customers settle their invoices with your company. With invoice factoring, you’ll sell your outstanding invoices to a company for less than face value. That company will then collect the full amount due from your customers.

With a merchant cash advance (MCA), you’ll receive an advance on your future sales. You’ll then repay the debt with a percentage of your daily credit card sales via auto debit. However, short-term loans or lines of credit are generally safer than MCAs. This is because they're legally considered loans and state laws prevent lenders from charging predatory rates for them.

How do working capital loans work?

Working capital loans help you make ends meet during your business' slow periods. You borrow enough money to cover your day-to-day operating expenses until your next busy season. Then, once your cash flow improves, you can strive to pay off the debt before your next offseason hits.

While some lenders will consider your business' credit standing during the loan application process, many will also require a personal guarantee. That means if your company defaults on the loan, you must use personal assets to repay the debt.

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

Working capital loan requirements vary by lender. You generally have to meet a minimum credit score requirement, so lenders may check your personal credit score and credit history in addition to your business credit report and rating.

Besides your credit history and score, lenders will also review your annual revenue and time in business.

Pro Tip: Check your credit score before applying for your working capital loan.

How We Chose the Best Working Capital Loans

When choosing the best working capital loans, we considered factors like:

• Borrower needs: We favored lenders that met a particular borrower need, such as having a flexible payment arrangement or a low credit score requirement.

• Application and funding process: We favored lenders that made the loan application and funding process fast and simple.

• Lender reputation: We evaluated each lender’s reputation by sifting through customer reviews and researching the company’s standing with regulatory authorities.

We disqualified one of the companies we reviewed from our top list based on its reputation. Other lenders that received customer complaints made the cut because their working capital loan product is still a good option for some businesses.

During our research into the best funding options, we also consulted these expert sources:

• Consumer Financial Protection Bureau
• Federal Trade Commission
• Better Business Bureau
• Leslie Tayne, debt attorney

Summary of the Best Working Capital Loans of 2023

• American Express — Best Overall
• Bluevine — Best for Quick Application
• Fundbox — Best for Bad Credit
• PayPal Working Capital — Best for Flexible Payments
• QuickBooks Capital — Best for Small Businesses