The Top 5 Best Working Capital Loans for Small Businesses in 2018
Working capital is essential for any functioning business; without enough of it, business owners can’t afford to pay their employees, fill orders, or even keep their lights on. Even if a business has thousands (or millions) in unpaid invoices, if they don’t have enough cash to operate, they can easily find themselves in big trouble.
In theory, working capital can be calculated by taking any business assets that can be converted into cash within 1 year, and subtracting any business liabilities that will be due within that same time period. However, in practice, a business might need working capital in days, not months— and that’s why a working capital loan is often the best way for a business to get the financing it needs. Below, we’ll mention some of the best working capital loans out there, and how they might be able to help your small business thrive.
While we might be a little biased, SBA loans are actually a great source of working capital financing for small businesses. Many borrowers choose the SBA 7(a) loan for working capital, while borrowers who need loan amounts of under $50,000 may find that an SBA microloan better suits their needs. SBA microloans can be particularly helpful for smaller businesses and startups, as they don’t have the strict credit requirements that characterize most SBA loans.
Kabbage is a small business financing service that permits working capital loans of up to $250,000. Unlike many other lenders, Kabbage uses a variety of information to help calculate a borrower’s creditworthiness, not just their credit score. That makes it much easier for newer businesses to get the financing they need.
LoanBuilder, which is a service provided by PayPal, offers working capital financing in amounts between $10,000 and $50,000. LoanBuilder loans have factor rates, instead of traditional APR, which means that borrowers will have to repay a fixed amount of interest, no matter how fast they pay back their loan.
StreetShares, which offers working capital financing in amounts up to $100,000, is known for its speedy turnaround time; loans can be approved and funded in as little as a few days.
FundBox is specifically designed for businesses with unpaid customer invoices, and can provide working capital loans of between $1,000 and $100,000. Unlike many other working capital lenders, FundBox has no minimum credit score or annual revenue requirements. Plus, it doesn’t require businesses to have been around for a long time either; businesses can get approved with as little as three months of records in a compatible accounting software.