Best Working Capital Loans For Small Businesses In 2023

Applying for loans can be a time-consuming task, especially if you're not that familiar with the various lenders out there (and there are many). One way to get around having to do due diligence on multiple lenders is to use a loan aggregator like Lendio.

Lendio is a lending platform, meaning that they serve as a bridge between applicants and a pool of partnered lenders. When you apply to Lendio, you're effectively applying to all of the lenders in Lendio's lending pool. Lendio will then match you with a lender or lenders. Even better, Lendio does not charge applicants a fee for using its service.

There are no minimum borrower requirements for Lendio, but you can generally expect to have more matches the better your credit score is, the longer you've been in business, and the higher your monthly revenue is. Interest rates vary by lender and loan type.

When it comes to long-term loans for small businesses, it's hard to beat the terms of an SBA loan. With rates just a little bit above prime and repayment periods spanning years, SBA 7(a) loans are a low-cost way to get working capital. The downside? SBA loans can be time-consuming and labor-intensive to get.

SmartBiz aims to make that process a little easier, first by helping you determine whether or not you're eligible and secondly by taking you through the byzantine application process for an SBA loan. SmartBiz is not a direct lender, but instead works with a pool of SBA-approved lenders to get you your funds. You can also get a non-SBA loan through one of SmartBiz's partners.

To qualify, you'll need to have been in business for at least two years. You'll also need a credit score of at least 640 for an SBA loan and 660 for a bank term loan. For an SBA loan, you'll also need an E-Tran business credit score of at least 140. Bank term loans through SmartBiz can get you between $30,000 and $500,000 with a fixed interest rate of 6.99% to 24.99%. These have term lengths of 2-5 years. For SBA loans, check out our resources on the three types of SBA loans and SBA loan rates.

OnDeck is one of the older and more established online lenders, with a reputation for fast, versatile funding.

Through OnDeck, you can receive up to $250,000 to use as working capital for your business. OnDeck offers short-term loans and lines of credit for qualified borrowers. While borrowing from OnDeck is more expensive than turning to your local bank, the lender has less stringent borrower requirements, faster times to funding, and rates that are competitive with other alternative lenders.

You can choose a financial product from OnDeck that works best for your business. For projects that have a fast return on investment, consider a short-term loan, which provides you with up to $250,000 that’s repaid over three to 18 months. This is ideal for updates to your business location, funding a marketing campaign, or covering seasonal expenses. If you want a more flexible financing option for covering gaps in revenue or unexpected expenses, OnDeck offers lines of credit up to $100,000 with APRs starting at about 11% for qualified borrowers.

PayPal offers many services under its massive umbrella. For most of these, you have to have a PayPal account or otherwise be a part of PayPal's ecosystem. LoanBuilder is a notable exception and one that can be very convenient for businesses looking for quick, short-term working capital.

LoanBuilder's calling card is quick and easy financing with a simple fee model. You can borrow between $5,000 and $500,000 through LoanBuilder with a flat fee of 2.9% - 18.72%. There's no origination fee or additional costs so long as you make payments on time. Term lengths range from 13-52 weeks. To qualify, you need a credit score of 620, nine months in business, and a minimum annual revenue of $42,000.

While LoanBuilder's rates are quite good for short-term loans, you are required to sign a blanket lien, so make sure you know what you're walking into.

One of the hardest positions to be in as a prospective business loan borrower is to need money while not having enough business history to meet borrower qualifications. This is the position startups often find themselves in. But while it can be difficult to get financing as a startup, lenders like Accion still make it possible.

Accion is a non-profit lender specializing in business loans to under-served populations and business types. Borrower qualifications vary by state, but they're far more relaxed than you'll typically find in the industry. You just need a 550 credit score (575 in some states) and sufficient cash flow to repay the loan. Startups specifically also need to have less than $3,000 in past-due debt, a business plan, and a referral from one of Accion's partners.

You can borrow between $300 - $250,000 through Accion, at an APR between 7% - 34%. Origination fees range between 3% and 5%. Repayments are made monthly.

It's common to think of loans in terms of collateral, but the truth is that unsecured business loans are more or less the norm in the online lending market. These loans instead use cash flow to determine eligibility. Just be aware that even though these loans are unsecured, that doesn't mean your creditor won't go after your assets should you default.

Since they're so common, a good way to find an unsecured business loan that fits your needs is to use an aggregator service like Fundera. Fundera will shop your application around to its member lenders and find you matching offers.

Because Fundera itself doesn't directly lend, the company doesn't have any hard borrower qualifications. However, if you submit an application and aren't eligible for the types of loans you apply to, Fundera offers an eligibility tracker so you can see what you do qualify for. Fundera does not charge the applicant for using the service, though it's possible some of the costs it charges the lender may be passed onto you.