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Best Working Capital Loans of December 2021

Working capital loans can be used to finance short-term business expenses. Compare options from online and SBA lenders.
Steve Nicastro, Randa KrissNovember 1, 2021
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A working capital loan is a form of financing used to fund everyday business operations. These loans can provide the working capital you need to pay for short-term business expenses such as rent, payroll or restocking inventory.
Working capital loans are not used to finance long-term investments, like real estate or equipment purchases. Consider other small-business loans, like term loans, for such expenses.
Both banks and online lenders offer working capital loans — the right lender for your business will depend on your qualifications and how fast you need access to capital.

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LenderBest ForEst. APRMin. Credit ScoreNext Steps

OnDeck - Online term loan

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Best for Fast working capital loans9.00-99.00%600
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SBA 7(a) loan

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Best for Working capital loans for well-established businesses5.50-8.00%650
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Credibility Capital - Online term loan

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Best for Working capital loans for large purchases6.99-24.99%650
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Fundbox - Line of credit

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Best for Working capital line of credit10.10-79.80%600
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BlueVine - Invoice factoring

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Best for Working capital financing for unpaid customer invoices15.00-68.00%530
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Summary of Best Working Capital Loans of December 2021

Our pick for

Fast working capital loans

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OnDeck - Online term loan

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Est. APR

9.00-99.00%

Min. Credit Score

600

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires frequent (daily or weekly) repayments.
  • Requires business lien and personal guarantee.
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Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $100,000.
  • No bankruptcies in the past 2 years.
May fund quickly

Our pick for

Working capital loans for well-established businesses

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SBA 7(a) loan

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Est. APR

5.50-8.00%

Min. Credit Score

650

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.

Pros

  • Available as a term loan or line of credit.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Personal guarantee is required.
  • Collateral is typically required.
  • Longer processing times than online lenders.
Read full review

Qualifications:

  • Be a for-profit U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Financial qualifications determined by individual lender.
Lowest interest rate

Our pick for

Working capital loans for large purchases

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Credibility Capital - Online term loan

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Est. APR

6.99-24.99%

Min. Credit Score

650

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Requires high minimum credit score and revenue.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota or Vermont.
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Qualifications:

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • No bankruptcies in the past 5 years.

Our pick for

Working capital line of credit

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Fundbox - Line of credit

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Est. APR

10.10-79.80%

Min. Credit Score

600

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.

Pros

  • Cash can be available by the next day.
  • Low minimum credit score requirement.

Cons

  • Rates are high compared to traditional banks.
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Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.
May fund quickly

Our pick for

Working capital financing for unpaid customer invoices

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BlueVine - Invoice factoring

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Est. APR

15.00-68.00%

Min. Credit Score

530

BlueVine's invoice factoring can turn unpaid customer invoices into fast cash.

Pros

  • Finances larger invoices.
  • Cash can be available within the same day.
  • Accepts low minimum credit score and short time in business.

Cons

  • Not for businesses that do not invoice on net terms.
  • Loan amount is tied to the value of your invoices.
  • Dependency on customers to pay their bills on time.
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Qualifications:

  • Minimum credit score: 530.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $120,000.
Lowest credit score required

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What is a working capital loan?

A working capital loan is a type of short-term financing used to cover day-to-day business expenses, such as rent, payroll, utilities or inventory purchases. Working capital loans are designed to help businesses stabilize cash flow and manage operational costs, but are not suited for long-term expenditures.
Business working capital loans can come in several forms, including term loans, lines of credit, SBA loans and invoice factoring.

How to get a working capital loan

Working capital loans are available from a variety of sources, including online lenders, banks and credit unions. Banks and credit unions are options for established businesses with collateral and strong credit, while online lenders may provide options for borrowers with spotty credit histories.
Online or alternative lenders will typically charge higher APRs than banks and credit unions.

When is a working capital loan a good idea?

Working capital financing may be a smart move when your business needs cash to cover day-to-day operational expenses. The loans can provide a lifeline for seasonal businesses that experience a dip in sales, like landscapers, ski resorts and retailers.
This is a short-term loan to solve a temporary slowdown, so it isn't the best solution for business expansion or financing a long-term investment. If you need to borrow for those reasons, consider a long-term business loan instead.

Types of working capital loans

Term loans: While term loans are commonly used for financing an expansion, they can also be used for short-term working capital. Term loans provide a sum of cash upfront that is repaid over a set period of time with fixed, equal payments.
Business lines of credit: A line of credit provides more flexibility than term loans, as you get access to funds up to a credit limit and only pay interest on what you’ve borrowed. You can draw and repay funds as often as you’d like, as long as you make payments and don’t exceed your limit.
SBA loans: These loans are guaranteed by the U.S. Small Business Administration and issued through participating banks, credit unions and online lenders. SBA loans provide up to $5 million for working capital, expansion or equipment purchases.
Invoice factoring: If you have customers with unpaid invoices, this type of financing lets you turn the invoices into fast working capital. The factoring company buys your invoices for an upfront payment (minus a fee), and it gets paid when it collects from your customer.

Compare small-business loans

When looking for a business working capital loan, it’s important to compare all of your choices based on APR, which represents the true cost of the loan, including all fees.
For more options, check out NerdWallet’s list of small-business loans that are best for business owners. Our recommendations are based on factors including market scope, customer experience and lender trustworthiness.

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Last updated on November 1, 2021

To recap our selections...

Best Working Capital Loans of December 2021

Does your business need funding? Find your best loan options with Fundera by NerdWallet.

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