National Funding business loans
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While there are several types of working capital financing, they generally come with short terms and don’t require any specific collateral. For this reason, business financing companies tend to have strict eligibility requirements.
Find out what options are available for your business by selecting information about your credit score, time in business and funding needs.
We update our data regularly, but information can change between updates. Confirm details with the provider you’re interested in before making a decision.
You can get a working capital loan by following these steps — though the order can vary depending on the type of business financing.
These are the main types of working capital business loans available through banks, online lenders and any other financial institution.
Short-term loans are one of the most common type of working capital financing. While long-term loans are designed to finance large projects, short-term loans are designed to cover operating costs.
These give you all of the funds at once, which you repay plus interest and fees in monthly or weekly payments. Usually you can borrow from $1,000 to $500,000, with loan terms between six and 36 months. Rates can start at around 4% APR — but can top 90% APR in some cases.
These are best for businesses that only occasionally need working capital. While many lenders offer discounts to repeat customers, it’s not as convenient as a line of credit.
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A working capital line of credit gives your company access a credit limit, which your company can draw from as needed to cover short-term business expenses. Usually working capital credit limits stop at around $250,000.
This type of financing comes with slightly higher rates and fees than a term loan. Often, each withdrawal turns into a short-term loan, which you repay in installments over a term of six to 12 months.
These are best for small businesses that frequently need access to cash. But it can also be useful to have on hand to cover emergency expenses.
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A Small Business Administration (SBA) loan is financing backed by the federal government. You can use most SBA loans for working capital, including the popular SBA 7(a) and Express loan programs. The SBA’s Working Capital CAPLine also offers small businesses financing specifically designed to cover everyday business operations.
SBA loans can run as high as $5 million in many cases. But how big of a loan your business can get depends on your business’s financial health. The application process can also take over a month, and lenders require a minimum personal credit score of 620.
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Merchant cash advances offer an advance on future credit and debit card sales for consumer-facing businesses. How much you can borrow usually depends on the past three to six months of revenue. And instead of having a loan term, you repay the advance plus a fee with a percentage of your daily sales.
Merchant cash advances are available to businesses in the startup phase and small business owners with bad credit. But it’s one of the most expensive financing options out there, with rates topping 300% APR in some cases.
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Invoice financing and factoring offer an advance on unpaid invoices for business-facing businesses (B2B). Invoice financing allows you to retain control of your accounts receivable as your customers pay them off, and is usually available for smaller amounts — say under $30,000 or $50,000. Invoice factoring involves selling unpaid invoices to a third party at a discount.
This type of business funding doesn’t rely on your credit score or time in business. But, like a merchant cash advance, it’s one of the most expensive financing options available and should be saved as a last resort.
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Microloans are are short-term loans from nonprofit lenders. Unlike most financial institutions, microlenders often offer financing to entrepreneurs who need working capital to start a new business. These often don’t require collateral or come with strict credit score minimums.
Usually you can borrow up to $50,000 with terms from six to 12 months. But these can take weeks to fund and rates often start a little higher than an online or bank loan.
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|Loan amount||$25 – $15,000|
You can use the funds from a working capital loan for almost any operational costs. Small businesses often use this type of business financing to pay bills, pay employees or refinance debt.
Many also use a working capital loan to take advantage of a new business opportunity or prepare for a seasonal increase in sales. For example, businesses often need extra working capital to pay for hiring expenses, inventory and advertising.
Your small business generally needs to meet the following requirements to qualify for a working capital loan.
You don’t necessarily need to meet all of these requirements to qualify. In fact, there are business financing options for every type of business — including startups and small business owners with bad credit. But you’ll have more of a selection to choose from if you meet these requirements.
A working capital loan can give your business funding to cover operating expenses or grow when your current assets aren’t enough. And there are a variety of business funding options for startups, established firms and all credit types.
But consider another type of business loan if you want to invest in a long-term project or make a large purchase. Compare more options with our guide to the best business loans of 2022.
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