Best Working Capital Loans for 2020

As a business owner, it can feel like you have the weight of the world on your shoulders, but a working capital loan can help you find extra funding when your company needs a helping hand. A working capital loan is a different kind of small business loan that is specifically used to give your daily operations some extra financial help.

A working capital loan can be exactly what you need to take your business to the next level, from payroll support and supplies to emergency repairs and advertising campaigns

Lending Partner
APR Range
Loan Amount
Term
  • Kabbage
    APR Range
    Varies
    Loan Amount
    Up to $250K
    Term
    6–18 months
    Check rates
    on lender’s secure website
  • Bluevine
    Bluevine
    APR Range
    15%–88%
    Loan Amount
    Up to $250,000
    Term
    Varies
    Check Rates
    on lender’s secure website
  • OnDeck
    Logo for OnDeck
    APR Range
    16.9%–99.4%
    Loan Amount
    $5K–$50K
    Term
    3–36 months
    Check Rates
    on lender’s secure website
In this article

    These are our picks for the best working capital loans for 2020.

    The 5 best working capital loans of 2020

    The best working capital loans at a glance

     APRLoan AmountTermsMinimum Credit Score
    KabbageVaries$2,000–$250,0006, 12 or 18 months560
    Fundation7.99%–29.99%$20,000–$500,00012–48 months620
    StreetShares9%–40%$2,000–$100,0003–36 months600
    Accion7%–34%$300–$1MUp to 25 years575
    PayPal Working CapitalVariesBased on Paypal accountVariesN/A

    Best for bad credit – Kabbage

    With an online application and fast funding, Kabbage could be the quick working capital loan that you need for your business.

    APR Range
    Varies
    Loan Amount
    Up to $250K
    Term
    6–18 months
    SimpleScore
    2.8 / 5.0
    close
    SimpleScore Kabbage 2.8
    Median APR 1
    Max Loan Size 3
    Product Variety 2
    Resources 5
    Fees 3

    Kabbage small business loans are a solid option for many funding needs, especially short-term loans for small or large amountsLoans are available for six-, 12- or 18-month terms with rate fees spanning from 1.5% to 10% of the principal loan amount. If you’re looking for a short-term financing option, six-month loans are available for as little as $500.

    It’s important to note that Kabbage loans are actually a line of credit. Loans are available for six-, 12- or 18-month terms with rate fees spanning from 1.5% to 10% of the principal loan amount. If you’re looking for a short-term financing option, six-month loans are available for as little as $500.

    The benefits of this are that you will only pay fees for the money that you actually use. Additionally, there are no prepayment penalties, making Kabbage one of the best solutions for short-term financing. The company also offers additional business services, including being a full-service payment processing solution.It’s important to note that Kabbage loans are actually a line of credit. The benefits of this are that you will only pay fees for the money that you actually use. Additionally, there are no prepayment penalties, making Kabbage one of the best solutions for short-term financing. The company also offers additional business services, including being a full-service payment processing solution.

    Kabbage Disclosure

    1. Kabbage Checking account opening is subject to identity verification.

    2. The annual percentage yield (“APY”) is accurate as of 7/15/20 and may change at our discretion at any time. The APY is applied to deposit balances on the funds within your primary Kabbage debit account and each individual Wallet. We use the average daily balance method to calculate interest.

    3. Beginning January 1, 2021, Kabbage Payments customers will pay 2.9% + $0.25 per card not present transaction. There is currently a 2.5% payment processing charge per gift certificate purchase from our partners that facilitate the service.

    Best for Veterans – StreetShares

    A military-first focus and flexible loan amounts make Street Shares a great pick if you have a newer business. After all, it’s important to share the wealth.

    APR Range
    9%–40%
    Loan Amount
    $2K–$100K
    Term
    3 months–3 years
    SimpleScore
    4 / 5.0
    close
    SimpleScore StreetShares 4
    APR 4
    Max Credit Line Amount 5
    Draw Period 4
    Resources 5
    Fees 2

    Based just outside of D.C., StreetShares has a special focus on veteran-owned businesses. Requirements are very reasonable; you only need to be in business for one year with only $10,000 in annual revenue. There is a convenient online application, and funding can be received in as little as 24 to 48 hours. Interest rates are higher than most other lenders, reaching as high as 39% in some cases. Loans are also limited to $250,000, and you will have up to 36 months for your repayment term.

    Best for New Businesses – Accion

    Accion is a champion for new businesses and startups, whether you need to expand your portfolio or hire new employees to keep growing.

    APR Range
    7%–34%
    Loan Amount
    $300–$1M
    Term
    Up to 25 years
    SimpleScore
    3 / 5.0
    close
    SimpleScore Accion 3
    Median APR 2
    Loan Amount 4
    Product Variety 1
    Resources 5
    Fees 3

    Accion is a lender specially dedicated to startups and newer businesses who need a cash infusion. Loans are available up to $1 million, by far the largest of any lender on our list, although your state may dictate your exact loan limits. What is really notable is the extensive repayment term of up to 25 years. The interest rates cover about the average range for a working capital loan and really run the gamut, so your credit score and business details will determine where you fall on such a wide range of rates.

    Best for online sales – PayPal Working Capital

    PayPal offers a new kind of loan structure that is based on your sales, and as the frontrunner of online sales, it makes sense for businesses who use the service already.

    APR Range
    Varies
    Loan Amount
    Based on PayPal account
    Term
    Varies
    SimpleScore
    3.7 / 5.0
    close
    SimpleScore PayPal Working Capital 3.7
    Median APR N/A
    Loan Amount N/A
    Product Variety 2
    Resources 5
    Fees 4

    PayPal knows a thing or two about online business, so it makes sense that it would provide business capital, as well. With PayPal Working Capital, you basically borrow against your own sales. PayPal fronts you the capital upfront, and then you repay the loan with up to 30% of your daily sales. We also appreciate that PayPal caps this amount by adding a maximum of $125,000, so you don’t have to worry about high penalties if you have an incredible month of sales. To minimize your loan fees, you can elect to pay a higher percentage of your daily sales.

    Best for small- and medium-sized businesses – Fundation

    Fundation is a good option for small- and medium-sized businesses to lay the foundation to turn your business into a large-scale company.

    Fundation especially works with small-to-medium-sized businesses. While it is not the lender for new companies, if you have an already established business in need of quick funds, this could be great for you. You will need at least three employees and annual sales of over $100,000 to qualify. The rates are on par with industry averages, but Fundation grants loans up to $500,000. This is double what other lenders like Kabbage and StreetShares offer. There are also reasonable repayment terms that allow up to 48 months for repayment.

    What is a working capital loan?

    There are times when a business needs extra cash. Sales could be down, or your equity could be tied up in assets. Either way, a working capital loan can get you the cash you need quickly. These funds are designed to cover your daily expenses, like payroll, supplies and utilities. This is a different loan from the one you would use to purchase equipment or real estate because this is cash to keep your business operating.

    Working capital loans are generally smaller than other kinds of business loans, so they can also hold shorter terms and sometimes higher rates. Repayment can vary significantly, from terms that stretch over several years to daily payments that use a percentage of your daily sales.

    How should I choose the right working capital loan?

    When you look for a working capital loan for your business, there’s more to consider than just the amount that you need. Carefully consider your ability to repay the loan. Is it better to take a smaller loan that can be paid off quickly, or do you need an extended repayment term that gives you more time to grow your sales? There are also companies like PayPal that allow you to repay your loan through your daily sales.

    The eligibility requirements and application process are important, as well. Many companies, such as our picks here, allow for online applications and fast turnaround for funding.

    [Read: Small Businesses Can Apply For PPP Loans Again Thanks to a Second Round of Funding]

    When to use a working capital loan

    There are many reasons why your business may need a working capital loan. You may have fallen behind on your bills or need extra supplies for an upcoming busy season. The loan can help you make payroll next month or float your seasonal business during a quiet off-season. Another popular use for a working capital loan is for marketing or advertising that can raise your exposure and boost your sales. There may also be times when you need to take emergency precautions or deal with unexpected expenses that can affect your sales.

    Check Your Business Loan Rates

    View our top-rated lenders and find the best rates today. It’s quick and easy.

    The beauty of a working capital loan is that it is available in smaller amounts, so you won’t have to mortgage the house in order to keep your business afloat.

    How to apply for a working capital loan

    1. Determine how much you need. While there are many lenders who offer working capital loans, not all of them will offer the kind of terms that you need. Consider not only how much you need but how much you will be able to pay back, because interest will cause your total loan to exceed the actual borrowed amount.
    2. Be prepared. Before you apply, check your credit score to see where you stand. Your credit score and annual sales will be key determinants in whether you are approved for your loan, so gather all of the documents you will need. This includes everything from your credit report and bank statements to balance statements and tax returns. It is a lot of information that lenders will certainly require.
    3. Shop your options carefully. There are so many options out there for a working capital loan, but they will not all fit the distinct needs of your business. When you are looking for a lender, the loan terms and amounts will determine whether each company will work for you. Consider the eligibility requirements, as well as the application process and turnaround time for funding. Every bank has different requirements for how much you can qualify for and how long you will pay it back.
    4. Start the application process. Some companies allow you to apply online while others require you to apply over the phone or in-person at a branch. Many of our picks for the best working capital loans have fast, easy applications that can be completed entirely online, saving you countless hours and travel. You can also receive all of your documents and forms online for easy, secure processing that gets you your funding that much faster.

    We welcome your feedback on this article and would love to hear about your experience with the business loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore™

    We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2020.

     

    Why do some brands have different SimpleScore on different pages?

    Some brands offer a variety of financial products, which is why they have different SimpleScores on different pages. We rate individual products that brands offer — not the brand as a whole. 

    For instance, in our American Express personal loans review we rated the company a 4.25 out of 5 based on rates, loan amount, customer satisfaction, customer support and fees. In our review of the best small business loan rates, American Express earned a 3.4 out of 5 SimpleScore based on its business loan product. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of each brands’ services and how they compare to competitors’ products.

    Median APR

    Lenders with a lower median APR are awarded higher scores — because even if you’re APR is average, your business is not.

    Maximum loan size

    Lenders that dole out loans with high maximums are also rewarded with higher scores. It takes money to run a business, and businesses need access to as much capital as it takes.

    Product variety

    Need more than just a business loan? Lenders that offer more than one type of financial product for businesses score higher than others that don’t.

    Educational Resources

    We gave out higher scores to lenders that have the following subjects covered in their blogs: loans, marketing, employee and staff, and credit or finance resources.

    Fees

    Fees can add up fast and eat into operating costs –– that’s why we give a higher score to lenders that have fewer fees.

    Lena Borrelli

    Contributing Writer

    Lena Borrelli is a Tampa-based freelance writer who has worked with leading industry titans, such as Morgan Stanley, Wells Fargo, and Simon Corporation. Her work has most recently been published on sites like TIME, ADT, Fiscal Tiger, Bankrate and Home Advisor, as well as many other websites and blogs around the world.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.