Compare payroll funding for small businesses

Spark growth or smooth a bumpy ride to the top with financing to cover payroll.

As the holiday season creeps up, you’re thinking about how you’ll pay the seasonal help you’ll need at your store or pay your team as you ride out a financial bump. But your cash flow could be slow for the season or tied up in invoices your clients are slow to pay.

You know that paying your employees is paramount to the success of your business. Here’s the lowdown on flexible ways to finance your payroll with as little stress as possible.

OnDeck Small Business Loans

OnDeck Small Business Loans

Among the largest online business lenders offering term loans and lines of credit at competitive fixed rates.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Loan Term: 3 to 36 months
  • Simple online application process with fast decisions
  • Dedicated loan specialists and loyalty benefits
  • Must have been in business for at least one year with annual revenue of $100,000+
  • Must have a personal credit score of 500+

    What is payroll funding?

    Payroll funding isn’t one business financing tool. Rather, it’s a group of viable solutions for businesses looking for the cash flow to pay employees on time. These options can provide security for business owners and employees, ensuring that paychecks are funded and on time. Many businesses use payroll funding companies to cover invoices, fill in the gap during the off-season and to hire new employees.

    How do I finance my business’s payroll expenses?

    Here are four relatively simple ways to get funds to pay your employees on time:

    • Invoice factoring. The most common form of payroll funding allows you to sell your business’s unpaid invoices to another company for a percentage of their value. You won’t be on the hook for repayments, but you could lose 10% or more of your services or products invoiced.
      Four types of invoice factoring explained
    • Invoice financing. This option gives you an advance on your unpaid invoices that you pay back along with a small percentage on top.
      How invoice financing works and how much it costs
    • Lines of credit. This borrowing option helps you cover day-to-day expenses when business is temporarily slowed. You take out and repay only what you need, as you need it.
      Best business lenders for lines of credit
    • Short-term business loans. In a pinch, you can use a short-term business loan to cover your payroll expenses. But quick access to cash often comes at a steep price. You could end up paying heavy fees and high interest rates.

    Compare top online business lenders for payroll funding

    Rates last updated October 18th, 2017
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    Swift Capital Business Advance
    Fund Your Business with a Working Capital Advance – Fast. Simple. Affordable.
    You must be an American citizen or a permanent resident of the US with a personal FICO score of 500 or higher. Your business must be at least 1 year old and making at least $100,000 in annual revenue.
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 6 months old and have monthly revenue of at least $15,000.
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    Must have personal credit score of 650 or higher; Must be a US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000 or more; No outstanding tax liens and no bankruptcies or foreclosures in the past 3 years
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months.

    Compare up to 4 providers

    Benefits and drawbacks of payroll funding


    • Promotes business growth. If used responsibly, payroll funding could allow you to hire new staff that will eventually increase your revenue.
    • Helps in a rough patch. Options can help you cover payroll when business is down or your sales temporarily dip.
    • Debt-free options. Invoice factoring can provide quick cash with no repayments.
    • Quick turnaround. Depending on the financing you choose, you can typically get funds on short notice.


    • Can be expensive. You can lose up to 40% of your invoice amounts with invoice factoring, and short-term loans can come with astronomical fees. Make sure the cost of payroll funding is worth it in the long run.
    • Can’t fix bigger problems. It’s tempting to turn to financing when your business isn’t doing well, but taking on extra debt can potentially accelerate your downward trend.
    • Can hurt customer relationships. When you sell your invoices to another company, you’re effectively selling your customer contact. This has potential to damage relationships.

    What are my alternatives to payroll funding?

    Getting a business loan to finance payroll expenses isn’t the only option for businesses struggling with payroll expenses. Increase your cash flow without borrowing by:

    • Making room for payroll in your finances. There’s a chance you do have enough money to cover your payroll expenses, if you can move things around.
    • Looking for investors. You’ll lose a percentage of your business, but you could stand to make even more money by increasing your staff.
    • Cutting down on unnecessary staff. It’s not ideal solution, taking out a loan could be a lot more expensive in the long run than letting a few employees go.
    • Diversify your revenue sources. If invoices are a major hurdle to paying your staff on time, consider investing resources into finding more reliable sources to cover your overhead expenses.

    Bottom line

    Payroll funding is a way for businesses to retain or hire new staff while making sure that payroll expenses are covered no matter what.

    But it’s not your only option. Do the math to make sure that payroll funding is worth it. If you find that the numbers check out, compare your financing options to find the best fit for your business needs.

    Frequently asked questions about payroll funding and invoice factoring

    It depends. You might have a difficult time finding a payroll funding company that will work with a startup. If you do find a company to work with you, you could end up with high interest rates or unaffordable terms. Learn more about startup loans.

    Maybe. Even though payroll funding is for business and not personal use, you could run into some trouble finding a payroll funding company if you have poor credit. Learn more about bad credit business loans.

    With most invoice factoring companies, you can choose which invoices to factor — but you stand to get better rates the more invoices you choose.

    Anna Serio

    Anna Serio is a writer who loves to eat, travel and save money.

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