Working Capital Loans - How to Secure Interim Funding for your Business

Learn more about working capital loans. Includes information on working capital business loans and small business working capital loans.

Updated on November 2nd, 2022

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A working capital loan is a short-term loan designed for businesses that experience periods of inconsistent revenue and require cash for operational expenses. Otherwise known as a business capital loan, these payments are used to cover anything from wages to short-term debt repayment.

Also Read:

How to Get a Small Business Loan - Read a step-by-step guide on how to get a small business loan.

What is a Commercial Loan? - Learn more about the different types of commercial loans.

Small Business Loans - Best Lenders and Loans - Discover the top lenders and loan options for small businesses.

Why We Chose LoanBuilder:

LoanBuilder provides fast funding, has a transparent pricing model with one single rate, and charges no upfront fees.

LoanBuilder has an easy online application process and a useful loan configurator tool that helps you estimate your borrowing costs.

Things to Consider When Evaluating Working Capital Loans:

  1. Working capital loans are used to pay for daily operational costs. You can use the working capital equation to help you determine how much you need to cover your costs.
  2. Pricing models vary by provider and can be very complex. Make sure you understand all the rates and fees, including additional fees and penalties.
  3. Understand the different types of working capital loans and identify which would best suit your business and financial needs. For example, if your business is cash-strapped because of slow-paying customers, you might want to consider invoice financing.

The Best Working Capital Loans:

Our Rank


Loan Range




$10,000.00 - $500,000.00

A subsidiary of PayPal that provides fast funding. Demands no origination fee and offers good rates.



$2,000.00 - $100,000.00

Automated lending platform that provides businesses with quick and easy access to small amounts of funding.



$5,000.00 - $250,000.00

Offers term loans and lines of credit at high rates but has looser qualification requirements than traditional lenders.




Ideal for businesses needing fast loans and cash advances for small amounts.



$1,000.00 - $100,000.00

Available to individuals with low credit scores. Offers fast loan approval and early repayment flexibility.


American Express Merchant Financing

$5,000.00 - $2,000,000.00

Fixed fee business loans for merchants who accept American Express cards. No origination fee and competitive rates.



$1,000.00 - $40,000.00

A peer-to-peer lending service with easy online application and fast processing times.


Balboa Capital

$1,000.00 - $250,000.00

Simple online application process, good rates, and requires no collateral.



up to $10,000.00

Bitcoin lending platform that provides fast and affordable loans. Not for start-ups.



$50,000.00 - $2,000,000.00

Has a simple application process and provides fast funding. Offers high interest rates.



$10,000.00 - $250,000.00

Has an easy online application process, is open to low-credit borrowers, and provides fast funding.


How do you calculate working capital on a loan?

Working capital can be calculated by using the current ratio.

Current ratio = current assets / current liabilities

What is the interest rate for working capital loans?

Working capital loan interest rates can range from 9.8% to 99%. LendingClub and FundBox have the lowest rates with 9.8% and 10%, while Kabbage and OnDeck loans can reach 99%. Many of these interest rates depend on the creditworthiness of the borrower, while LoanBuilder stands out with a fixed interest rate that is determined by a credit score.

What is a permanent working capital loan?

Permanent working capital is fixed working capital and is that level of net working capital below which it has never gone on any day in the financial year. This will influence the decision relating to the financing mix of the working capital loan.

What's the difference between the line of credit, invoice financing, and lump sum?

Line of credit financing sets a limit for how much money a company can borrow on credit at any given time. A company can borrow money from a lender as long as it doesn't exceed its maximum credit allowance. This is known as a working capital line of credit.

Invoice financing is a means of payment by which a company converts its accounts receivable into funds to pay off a debt.

A lump-sum payment is a form of financing where a single payment is made instead of installments.

What kind of information do lenders look at when determining my loan amount and interest rate?

The barriers to entry are generally few, but lenders will nonetheless want to know how likely a company is to pay back the capital loan they took out. In determining their trustworthiness and financial health, your business capital funding will be conditional upon meeting specific criteria.

Working Capital Loan Indicator

What are top indicators for approving a working capital loan?

  • Credit score with a minimum of 500.
  • Annual revenue greater than $50,000.00.
  • Time in business longer than six months to a year.
  • Time in business up to three years for loans exceeding $150,000.00.
  • Healthy financial figures such as good liquidity and profitability ratios.

Are startups eligible for working capital loans?

Small business capital loans are relatively accessible. Most lenders require a business to have a demonstrable average turnover and be operating for more than six months before they agree to a small business working capital loan. Lenders like Kabbage are specially designed to help small businesses with lower barriers for eligibility, ensuring easy access to small business working capital loans.

Are there any restrictions on what I can do with the loan?

Most lenders do not impose any limitations on a working capital business loan once it is approved. The money is yours to spend how you see fit. It is generally used to cover short-term operating expenses which help keep your business afloat, but there is nothing restricting you from spending the money on investments.

How can I get a PayPal working capital loan?

A PayPal working capital loan is relatively easy to obtain. PayPal sellers need to complete a short application process before accessing the funds in their PayPal accounts. Users can borrow up to $97,000 for their first loan.

How long does it take to have your business working capital approved?

Because of the auditing process, it can take between three days to a week to process your application before the money can be transferred to your account.

What is the difference between working capital, business loan capital and cash loan capital?

Business loan capital and cash loan capital are no different than working capital. Although there are many variations to the loan description depending on who you speak to, the industry-standard remains a "working capital loan."