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 small business financing needs. (See our methodology for more information about how we chose the best working capital loans.)
- Fast Funding: Get a decision as fast as 24 hours.
- Flexible Loans: Term, working capital, or real estate.
- Easy Apply: A simple, secure online application.
- 12 months in business
- $100,000 in annual revenue
- FICO 575
Terms apply.
Best working capital loans for small businesses
Best for lower credit scores
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. 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.
Offers many types of loans including long-term loans, working capital loans, business line of credit and merchant cash advance
- 500 credit score minimum
- Funds may be available within four hours
- User reviews praise customer service
- Prepayment discount available
- High monthly revenue required
- Potential for high factor rates
Best for fast funding
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. OnDeck also offers revolving business lines of credit as an alternative lending option. Over 700 types of industries can get funding through this lender.
Flexible credit and eligibility requirements make OnDeck attractive to businesses that may struggle to qualify elsewhere. But its accessibility and fast funding is countered by higher APRs, frequent (daily or weekly) repayment schedules and the need for a personal guarantee.
- Low minimum credit score requirement
- Can build business credit
- Same-day funding available for loans of up to $100,000
- APRs and origination fees can be high
- Daily/weekly repayment terms can impact daily cash flow
- Doesn't lend in Nevada, North Dakota or South Dakota
Best for PayPal users
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. These 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.
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. 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.
PayPal Working Capital Loan
Types of loans
Working capital business loan
Loan amounts
$1,000–$200,000 (up to $300,000 for repeat borrowers)
Terms
Borrowers must repay 5% or 10% of their total plus the fixed fee every 90 days until the loan is repaid.
Minimum credit score needed
No credit check required
Minimum requirements
Must have a PayPal Business or Premier account for 90 days and process at least $15,000 in annual PayPal sales ($20,000 for a Premier account)
Availability
Not available for businesses registered in North Dakota, South Dakota or Virginia.
Terms apply.
Pros
- Borrowers are charged a single fixed fee
- Payments are automatically deducted from your PayPal account
- Funding often disbursed within minutes of approval
Cons
- Must have a PayPal Business account
- Minimum repayment required every 90 days.
- Not available in all states
Best for unsecured loans
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. 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.
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
Best for larger loan amounts
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 570 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. 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.
Offers many types of loans including small business loans and revenue advance
- Higher loan limits than many competitors
- Low minimum credit score
- Next-day funding available
- Prepayment discount
- Borrowers can increase their loan amount after repaying at least 60%
- Charges a factor rate rather than a traditional APR
- Daily/weekly repayment schedule
- 3% origination fee
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.
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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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