Working capital — the money your business needs to cover day-to-day operating expenses — is the lifeblood of any company. When working capital runs short, payroll gets tight, inventory runs low, and growth opportunities are missed. Here are all the options available to small businesses for working capital funding.
Traditional bank term loans: rates of 6 to 15 percent APR, amounts of $25,000 to $500,000, terms of 1 to 5 years. Requirements: 680 or higher credit, 2 or more years in business, strong financials, often collateral required. Timeline: 2 to 8 weeks. Best for established businesses with strong profiles that need predictable monthly payments.
SBA working capital loans: rates of 6 to 10 percent APR, amounts up to $5 million (SBA 7a), terms up to 10 years. Requirements: 680 or higher credit, 2 or more years in business, detailed financials and business plan. Timeline: 30 to 90 days. Best for businesses that can wait for the lowest available rates.
Business lines of credit: rates of 8 to 50 percent APR, credit limits of $5,000 to $500,000, revolving (reusable). Requirements: 600 or higher credit for online lenders, higher for banks. Timeline: 1 to 7 days for online, 2 to 4 weeks for bank. Best for businesses with ongoing, variable working capital needs.
Merchant cash advances: effective rates of 40 to 150 percent APR (expressed as factor rates of 1.10 to 1.50), amounts of $5,000 to $500,000, terms of 3 to 18 months. Requirements: 4 or more months in business, $10,000 or more monthly revenue. Timeline: 24 to 48 hours. Best for businesses that need capital fast and cannot qualify for cheaper options.
Invoice factoring: rates of 12 to 48 percent annualized, amounts based on invoice values, ongoing facility. Requirements: B2B clients with 30 to 90 day payment terms. Timeline: 3 to 5 days for setup, then 24 hours per invoice. Best for B2B businesses with outstanding receivables.
Business credit cards: rates of 15 to 25 percent APR, credit limits of $5,000 to $100,000. Requirements: personal credit of 650 or higher for business cards. Timeline: instant for existing cards, 1 to 2 weeks for new applications. Best for small, frequent purchases and building business credit.
The right choice depends on three factors: how fast you need the money, how much you need, and what your qualification profile supports. Work through these questions honestly, and the best option usually becomes clear.