Working capital lines of credit can help you cover operating expenses like inventory or supplies.
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Best working capital lines of credit
By Tara Mastroeni | Edited By Abigail Bassett and Janet Schaaf | March 28, 2024
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
| Lender | User ratings | Best for… | Max. loan amount | Term length | Min. interest rate | Time in business | |
|---|---|---|---|---|---|---|---|
| User ratings coming soon | Short-term funding | $250,000 | 6, 12 or 24 months | 3.00% to 9% 6-month loans 6% to 18% for 12-month loans 9% to 27.00% for 18-month loans | 12 months | Get business loan offers | |
| Not applicable | SBA working capital line of credit | $5,000,000 | 120 months | Capped at Prime +3.00% | 24 months | Get business loan offers | |
| User ratings coming soon | High-revenue businesses | $250,000 | 6 or 12 months | 6.20% for 26-week term | 24 months | Get business loan offers | |
| 5 stars | Same-day funding | $100,000 | 12, 18 or 24 months | 39.90%* | 12 months | Get business loan offers | |
| 5 stars | Newer businesses | $150,000 | 12 or 24 weeks | 4.66% for 12-week terms 8.99% for 24-week terms | 6 months | Get business loan offers | |
| User ratings coming soon | Businesses seeking longer loan terms | $100,000 for unsecured $250,000 for secured | Up to 36 months for unsecured Up to 60 months for secured | Not disclosed | None | Get business loan offers |
Learn more about how we chose our picks.
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Working capital line of credit lenders at a glance
American Express Business Line of Credit: Best working capital line of credit for short-term funding
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| Loan amounts | $2,000 to $250,000 |
| Starting interest rate |
|
| Term length (months) | 6, 12 and 24 months |
| Minimum credit score | 660 |
| Minimum time in business | 12 months |
| Pros | Cons |
|---|---|
Quick application process No prepayment penalty Shorter time in business requirement | Must link to a business bank account to determine eligibility Requires a personal guarantee Higher minimum credit score requirement |
With loan terms of up to 24 months, the American Express Business Line of Credit is a convenient choice for those looking for short-term funding. Its streamlined application process takes just minutes to complete, granting eligible borrowers up to $250,000 in funds with no prepayment penalties attached.Still, it may not be the best fit for all borrowers. A minimum credit score requirement of up to 660 means that it’s only a fit for those with good or excellent credit scores. Plus, as a business owner, you’ll be on the hook with a personal guarantee if your business can’t afford to pay back the loan.
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Small Business Administration: Best working capital line of credit for SBA products
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| Loan amounts | Up to $5,000,000 |
| Starting interest rate | Prime + 3.00% |
| Term length (months) | 120 months |
| Minimum credit score | 680 (recommended) |
| Minimum time in business | 24 months (recommended) |
| Pros | Cons |
|---|---|
Ability to choose between a term loan and line of credit Capped interest rates Borrowers who wouldn’t be approved by traditional lenders may qualify. | May require a personal guarantee Collateral may be required May have longer funding times than other lenders |
The SBA Working CAPline is an SBA 7(a) loan. It’s meant to help business owners who may not be able to qualify for traditional long-term credit sources by providing funding for cyclical growth or recurring needs. The flexible qualifying standards and capped interest rates make this line of credit an attractive option for many small business owners. But, in exchange, you’ll have to deal with personal guarantee and collateral requirements, plus a longer acceptance process and funding times.
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Bluevine: Best working capital line of credit for high-revenue businesses
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| Loan amounts | Up to $250,000 |
| Starting interest rate | 6.20% for the 26-week period |
| Term length (months) | 6 or 12 months |
| Minimum credit score | 625 |
| Minimum time in business | 24 months |
| Pros | Cons |
|---|---|
Same-day funding available Quick funding decision Decently competitive interest rate | High annual revenue requirement Not available in all states Higher minimum credit score requirement |
Bluevine is our best pick for high-revenue businesses because of its unique annual revenue requirement. Businesses must bring in at least $40,000 in revenue each month to qualify for the company’s working capital line of credit. However, businesses that can qualify may be able to access funds at reasonable interest rates and have the potential to receive same-day funding with relatively few fees. For instance, you won’t be charged for opening the account, maintaining it, closing it or prepaying your balance.
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OnDeck: Best working capital line of credit for same-day funding
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| Loan amounts | $6,000 to $100,000 |
| Starting interest rate | 39.90%* |
| Term length (months) | 12, 18 or 24 months |
| Minimum credit score | 625 |
| Minimum time in business | 12 months |
*This rate reflects the estimated starting APR offered to at least 5% of OnDeck customers. It doesn’t reflect the minimum APR offered by the company.
| Pros | Cons |
|---|---|
Same-day funding available Shorter time in business requirement Lower annual revenue requirement | Lower funding cap Doesn’t publish starting interest rate Requires a business bank account |
OnDeck’s standout features are its ability to provide same-day funding and its relatively lenient qualifying standards. Compared to some other lenders, the company’s $100,000 minimum revenue requirement and 12-month time in business requirement seem fairly attainable.However, you’ll be subject to a lower funding cap. In addition, OnDeck doesn’t publish its starting interest rate, which can make it hard to estimate how much you’ll pay for the privilege of borrowing.
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Fundbox: Best working capital line of credit for newer businesses
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| Loan amounts | Up to $150,000 |
| Starting interest rate | 4.66% |
| Term length (months) | 3 or 6 months |
| Minimum credit score | 600 |
| Minimum time in business | 6 months |
| Pros | Cons |
|---|---|
Shorter time in business requirement Relatively low starting interest rate Lower minimum credit score | Lower funding cap Short loan terms Only available to businesses based in the U.S. |
Fundbox’s working capital line of credit is the best choice for newer businesses because of its short time in business requirement. In addition, its lower minimum credit score requirement, competitive starting interest rate and lack of a prepayment penalty also make it a solid choice for businesses of all ages. Unfortunately, though, this funding is only available for U.S.-based businesses and this line of credit only extends to $150,000, which is lower than some of the other lenders on this list.
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Truist: Best working capital line of credit for businesses seeking longer loan terms
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| Loan amounts | $3,500 to $250,000 |
| Starting interest rate | Not disclosed |
| Term length (months) | Up to 60 months |
| Minimum credit score | Not disclosed |
| Minimum time in business | None, but additional paperwork may apply if you’ve been in business less than 24 months |
| Pros | Cons |
|---|---|
Longer loan terms available No annual revenue requirement No time in business requirement | Doesn’t disclose minimum credit score requirement Doesn’t disclose starting interest rate information Larger loan amounts will require collateral |
Truist is our top working capital line of credit pick for businesses seeking longer loan terms because its terms extend to 60 months. When paired with the fact that the company doesn’t have hard-and-fast annual revenue requirements or time in business requirements, it could also be a smart pick for businesses that can’t qualify for more traditional financing.That said, Truist chooses not to publicize many of its eligibility requirements, which can make it hard to tell if you qualify. Additionally, if you want to take advantage of its longer loan terms or larger loan amounts, you’ll need to be prepared to put up collateral to secure the loan.
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What is a working capital line of credit?
A working capital line of credit is a type of business line of credit that’s meant to cover short-term operating expenses. You can use a working capital line of credit to cover costs, such as rent and utilities, inventory, supplies, emergency expenses or payroll.
Typically, working capital lines of credit are not used to cover large one-time purchases. If you need that type of funding, a business term loan is likely going to be a better fit instead.
On this page
- What is a working capital line of credit?
- Types of working capital line of credit
- How to get a working capital line of credit
- How to compare working capital line of credit
- Pros and cons of working capital line of credit
- How we chose the best working capital line of credit
- Frequently asked questions
How does a working capital line of credit work?
A working capital line of credit is a type of revolving business funding. Unlike a working capital loan, where you receive the funds in a single, lump-sum payment, this type of financing allows you to borrow money on an as-needed basis, up to a set credit limit.
After you borrow the funds and repay the borrowed amount, you can withdraw against the line of credit again. Additionally, you’ll only pay interest on the amount that you’ve borrowed.
How to get a working capital line of credit
Here’s how to get a working capital line of credit in five steps:
1. Determine how much you need to borrow
Start by making a list of your company’s current operating expenses, plus any emergent costs that you need to cover in the near future. Then, use a business loan calculator to estimate your borrowing power and make sure that a new regular payment will fit comfortably within your budget.
2. Evaluate your eligibility
Each lender will have their own business loan requirements. However, as a rule of thumb, your loan application will typically be evaluated based on your personal credit score and business credit score, the amount of time that your company has been in business, and the amount of annual revenue you bring in each year.
3. Research potential lenders
Both traditional banks and online business lenders offer lines of credit. Be sure to research a few different options to find the lender that works best for you. Take some time to compare their interest rates, repayment terms and fees.
The list above should help you get started, but feel free to browse our library of small business lender reviews if you need more inspiration.
4. Gather the required documentation
Next, it’s time to pull together some financial documentation. Having all your paperwork on hand will go a long way toward speeding up the application process. Typically, you’ll need a copy of your business plan, your business bank statements, your business tax returns, your governing documents and any applicable business licenses. If you’re planning on choosing a secured loan, you’ll also need paperwork for the asset that you plan to use as collateral.
5. Apply for the line of credit
Applying for a working capital line of credit is usually fairly simple. It can often be done online and sometimes you’ll receive a lending decision just minutes after submitting your paperwork. In other cases, the lender may reach out to you later to ask questions or request additional paperwork.
How to compare working capital lines of credit
Shopping around for a working capital line of credit is essential to finding one with terms that work well for you. Here’s a look at what to compare as you sort through your different lending options.
Rates: Business loan interest rates are based on the strength of your business’s financial profile and can vary from lender to lender. Sometimes lenders may charge a factor rate instead.
Added fees: You’ll want to be sure to ask each lender what fees they charge. Working capital lines of credit often come with draw fees or monthly maintenance fees, which can add to your cost of borrowing.
Repayment terms: With working capital lines of credit, repayment can happen on either a monthly or weekly basis. Make sure you can afford to make the repayments on time to reduce the risk of default.
Credit limit: Some lenders offer higher credit limits than others. Make sure that you pick a lender who will lend you enough funding to meet your needs.
Funding time: A few lenders have the ability to deposit funds into your account the same day your application is approved. For others, the process can take a few days to complete.
Pros and cons of a working capital line of credit
Like any financial decision, taking out a working capital line of credit has its own advantages and disadvantages. Let’s take a look at what to expect.
| Pros | Cons |
|---|---|
Ability to withdraw funds as needed to cover expenses Only pay interest on the amount that you borrow rather than the total credit limit May offer a higher credit limit than a business credit card | Not meant for large purchases or long-term expenses May need to provide collateral or a personal guarantee Additional fees can increase the cost of borrowing |
How we chose the best working capital line of credit
We reviewed more than 15 lenders to determine the overall best six working capital lines of credit. To make our list, lenders must meet the following criteria:
- Minimum time in business of six months
- Minimum credit score of 600
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.
Best working capital line of credit summary
- American Express Business Line of Credit: Best for short-term funding
- Small Business Administration: Best for SBA products
- Bluevine: Best for high-revenue businesses
- OnDeck: Best for same-day funding
- Fundbox: Best for newer businesses
- Truist: Best for businesses seeking longer loan terms
Frequently asked questions
A working capital line of credit is a type of business line of credit that’s meant to cover operating expenses, like inventory, supplies, utilities, and payroll.
Most lenders prefer that you have a two-year business history before they approve you for a working capital line of credit. But it’s possible to find lenders with a shorter time in business requirement or even no firm requirement at all.
If you have an established business and a strong credit profile, you’ll have an easier time qualifying for a working capital line of credit. Startups and those with bad credit may need to choose their lenders carefully. Be sure to evaluate each lender’s requirements before applying to increase your odds of being approved.
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