Question 1

What is a working capital loan?

Accepted Answer

A working capital loan is short-term financing designed to cover a business's day-to-day operational expenses, such as payroll, rent, inventory, marketing, and utilities, when cash flow is temporarily insufficient. Working capital loans are typically repaid within 6 to 18 months and are based on the business's revenue and cash flow rather than real estate collateral.

Question 2

How much can I borrow with a working capital loan?

Accepted Answer

Working capital loan amounts typically range from $25,000 to $2,500,000 depending on the lender, the business's monthly revenue, and the business's time in operation. Many lenders offer funding up to 10 to 20% of annual revenue. The loan amount is based on the business's ability to repay, not on collateral value.

Question 3

What are the interest rates for working capital loans?

Accepted Answer

Working capital loan rates vary widely depending on the type of financing. Traditional bank working capital lines of credit may range from Prime + 1% to Prime + 5%. Alternative lenders and MCA (merchant cash advance) providers charge factor rates of 1.15 to 1.50 (equivalent to 15 to 50% APR). The rate depends on the borrower's credit, time in business, and monthly revenue.

Question 4

What credit score is needed for a working capital loan?

Accepted Answer

Most working capital lenders require a minimum credit score of 550 to 600 for alternative financing, and 680+ for traditional bank lines of credit. Some MCA providers have no minimum credit score requirement but charge higher rates. The business's monthly revenue and time in business are often more important factors than the credit score.

Question 5

How fast can I get a working capital loan?

Accepted Answer

Working capital loans from alternative lenders can be funded in 24 to 72 hours. Traditional bank lines of credit typically take 2 to 4 weeks. The speed depends on the lender, the loan amount, and the completeness of the application. Online lenders use automated underwriting for faster decisions.

Question 6

What is the difference between a working capital loan and a merchant cash advance (MCA)?

Accepted Answer

A working capital loan is a traditional loan with a fixed interest rate and fixed monthly payments. A merchant cash advance (MCA) is an advance on future credit card sales, repaid through a daily or weekly percentage of credit card receipts. MCAs are faster and easier to qualify for but significantly more expensive (factor rates of 1.15 to 1.50). MCAs are not technically loans and are not regulated the same way.

Working Capital & Equipment Loans

Available Products

Unsecured Term Loan

Business Line of Credit

SBA Working Capital (7a)

Equipment Financing

Merchant Cash Advance

A/R Factoring

Common Use Cases

Inventory Purchases

Payroll & Staffing

Marketing & Growth

Equipment & Technology

Debt Refinancing

Franchise Startup

Frequently Asked Questions

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