Top Working Capital Loans For Small Businesses


Working Capital Loans: Meaning 

A working capital loan is a loan taken by small businesses to finance their daily work doings. These are not long-term assets, instead, they are short term needful investments. Working capital loans for small businesses are proved to be quite fruitful. As small businesses don’t need a lump sum amount to run their firm, working loans should be their first preference. Financial institutions provide financial cover including payrolls, debt payments and rents. 

How does a working capital loan work? 

Many firms find it difficult to generate a stable revenue throughout the year, especially small businesses. Manufacturing companies provide their products at a cyclic rate which meets the needs of retailers. The fourth quarter has the most sales as it is around the holiday season. 

By the end of the year, retailers reduce their manufacturing purchases and focus on selling already produced inventories. Manufactures with such seasonality rates take working capital loans to pay wages and additional operating expenses. The loan is supposed to be repaid by the end of the manufacturing season. Some capital loan types include invoice financing, term loan, line of credit and short-term borrowing. 

Eligibility criteria for working capital loans

The eligibility for working capital loans differs in different financial institutions. The regulations are most common but there are some credit scores that particular financial institutions follow. Given below are some common eligibility criteria for working capital loans for small businesses:  

1)Applicant Age 

The firm owner applying for a working capital loan should be of a minimum of twenty-one years of age. The age should not exceed sixty-five years of age on the maturity of the loan. These are some common regulations for almost all financial institutions. 

2)Business Types 

Some financial institutions are sensitive to the nature of the business that applies for capital loans. Not all business types are approved for such loans. Elements considered while approving such loans include firm partnerships, public and/or private companies, proprietors, trading sectors, and business owners engaged in services. 

3)Profit and loss turnovers 

There is a certain amount of annual turnover required while applying for working capital loans. Such turnovers are important while considering repayment of debt. The annual price differs in every financial institution. It is advised to have maximum turnovers possible. 

4)Financial history 

A stable, as well as a credit history, should be maintained. The credit history of profits is examined by financial banks. The chances of loans getting approved are higher when the credit history is reasonably high. There should be no default on past loans. 

5)Income sources 

The source of income of the business is also cross-checked when loans are applied. Every earning source is qualified as an income source, whether it comes from investments, rents or other passive incomes. 


This is one of the most critical criteria while applying for capital loans. Financial efficiency, profit and loss statements, balance sheets and tax returns are cross-checked. These factors determine the repayment of loans. 

7)Ownership of collateral 

Financial institutions often consider ownership of potential collateral property. These properties could include residential houses, shops, farms etc. Working capital loans for small businesses thoroughly consider such factors.

Top working capital loans for small businesses: 


Lendio is an e-marketplace which connects potential buyers and sellers. They include traditional banks and other online non-banking institutions. Lendio is one of the top picks for small business owners and is known for the exposure it provides. After applying through Lendio the processing time takes 15 minutes. Funds are receivable in under twenty-four hours. 


The brand OnDeck was founded in 2006 and has gained reputable popularity in the business lending market. Their best-known feature is same-day funding. The repayment terms are different for the amount borrowed. The minimum line of credit has a twelve-month repayment term. However, they need a minimum credit score of six hundred to apply. 

3)National Funding 

National Funding has price limits with its repayment terms which range from four months to two years. The borrowed amount can be used for payrolls, taxes, inventory and marketing ads. They have early pay-off discounts for small businesses. Working capital loans for small businesses usually get a 7% early sign-up discount. Loans are usually approved within twenty-four hours after application. 


Fundbox is one of the only AI-powered money lending platforms. There are various financing options for money borrowers. The repayment term ranges from twelve to twenty-four weeks. They have an advantage program which allows combined balances as well as cash flows. This also has the rule of minimum credit of 600. 


Kabbage is powered by American Express and is a newly abled lending service which started in December 2021. They have six-month term credit lines with twelve-month charge fees. Kabbage also provides other profitable features on its mobile applications. They have a minimum credit score of 640 and they also need a valid business checking account. 

Working Capital Loans: Why should you consider one? 

Working capital loans for small business owners are ideal. Businesses which are struggling with financing payrolls, inventories, and supplies. The amount loaned can also be used to expand business expenses and equipment. Following are some common conditions where one might consider a working capital loan: 

i)Operational money for payroll and rent is needed by small businesses. Working capital loans are short-term investments needed for operational daily needs. If you are a freshie in the business market and have not yet established funds to cover operational needs, then you might want to consider applying for working capital loans. 

ii)If your small business has seasonal or cyclic sales which get exhausted by the end of the holiday season this is an ideal solution for you. Such firms cannot establish a long-term credit amount as their sales are dependent on the fourth quarter of the season. Their funds get exhausted by the end of the year.

iii)Cyclic or seasonal manufacturers run out of revenue during regular months. The finances then become tight as the revenue is now decreased. To overcome such small operational burdens, businesses apply for working capital loans. 

Working capital loans for small businesses are profitable options. Make sure to check all regulations before applying. 

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