Working Capital Loans
A working capital loan is a smart solution to cover your business's short-term needs or day-to-day operating expenses.
Working Capital Loans
A working capital loan is a smart solution to cover your business's short-term needs or day-to-day operating expenses.
✅ What is a working capital loan?
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Short-term financing designed for small businesses
Helps cover unexpected costs or boost cash flow
Flexible repayment terms based on loan type
Payments may be taken weekly from sales
Some lenders may require daily or weekly payments from your credit card sales or direct payments from your business checking account.
Types of working capital loans
Small business working capital loans can help manage essential expenses such as payroll, day-to-day operations, inventory, and more. Below are some of the most popular financing options to explore for your working capital requirements.
Short-Term Business Loans: These loans provide an upfront lump sum to support your working capital needs. Loan amounts typically range between $250,000 and $1.5 million or more, with repayment periods usually set between 3 and 24 months.
Business Lines of Credit: Ideal for ongoing cash flow needs, this flexible option allows you to draw funds as required, up to a set credit limit. Interest is only charged on the amount you actually use.
Merchant Cash Advances (MCA): While not technically a loan, an MCA gives your business a cash advance in return for a share of your future revenue—often from credit card sales. Repayments are made daily or weekly as a portion of those sales. Be aware: the cost can be high due to the factor rate.
SBA Loans: The U.S. Small Business Administration offers working capital solutions through its CAPLines program—a variation of the SBA 7(a) loan acting as a credit line. These loans typically come with favorable terms and can help cover a wide range of business expenses.
Pros and Cons of Working Capital Loans
Pros
Offers flexible financing for various business needs
Fast approval and funding available from online lenders
Available to many businesses, even with different eligibility standards
Cons
Potentially high interest costs, especially with factor rates
Frequent repayment schedules, such as daily or weekly, may apply
Some loan options may require collateral or a personal guarantee
Determine how much you need.
Make a list of your business’s most urgent needs and estimated operating costs. Decide if you require a lump sum upfront or ongoing access to funds as needed. Use a business loan calculator to estimate your borrowing capacity and ensure the weekly or monthly payments fit your budget.Check your eligibility.
Review lenders’ requirements on their websites. Common factors include your personal and business credit scores, time in business, and annual revenue. Some loans may also require a personal guarantee or collateral.Compare lenders.
Consider options from traditional banks, credit unions, and online lenders. Compare interest rates, repayment terms, and fees to find the best fit for your business.Gather necessary documents.
Prepare your business plan, personal and business bank statements, tax returns, and any relevant licenses to speed up the application process.Submit your application.
Applications are often quick and automated, typically completed online. Your lender may contact you for additional information and next steps.
🔍 How to get a working capital loan
How to Apply for Working Capital Financing: Key Steps
Feel free to use our Equipment Finance Calculator
**Note: For exceeding 120 no. of payments, a group of 12 payments will be combined into a single payment number for better chart visibility.
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Calculator Disclaimer
The repayment amount shown using this calculator is an estimate, based on information you have provided. It is provided for illustrative purposes only and actual repayment amounts may vary. To find out actual repayment amounts, contact us. This calculation does not constitute a quote, loan approval, agreement or advice by My Finance. It does not take into account your personal or financial circumstances.
🏷️ How to compare working capital loans
If you receive multiple working capital loan offers, consider the following factors when picking the loan that best fits your needs:
Interest rate
Additional fees
Repayment term
Loan amounts
Time to fund
Lender support
How we chose the best working capital loans
We reviewed more than 15 lenders to determine the overall best seven working capital loans. To make our list, lenders must meet the following criteria:
- Minimum time in business: Options available for businesses that have been operating for six to 24 months.
- Minimum credit score: Personal credit score requirements of 680 or below.
- Loan amounts: Funding amounts ranging from $5,000 to $5 million, with minimal restrictions on loan uses or purposes.
- Rates and terms: We prioritize lenders with competitive fixed rates, fewer fees and flexible repayment terms of at least three months.
- Repayment experience: We consider each lender’s overall reputation and business practices when making our list. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide unique perks to customers, like free business coaching, early payoff discounts and loyalty rewards.