SBA Loans vs. Working Capital Loans: Compare Business Funding
SBA loans vs. working capital loans — long-term low-rate capital compared to fast operational financing.
SBA Loan: SBA 7(a) and 504 loans are government-backed programs offering some of the lowest rates and longest terms available for qualifying small businesses. Working Capital Loan: A working capital loan covers day-to-day operational expenses — payroll, rent, supplies — giving businesses the cash flow cushion they need to operate smoothly.
SBA Loan vs. Working Capital Loan — side by side
| SBA Loan | Working Capital Loan | |
|---|---|---|
| Typical amount | $50,000 – $5,000,000 | $10,000 – $500,000 |
| Typical term | 5 – 25 years | 6 – 36 months |
| Rate | Prime + 2.25% – Prime + 4.75% | 10% – 40% APR |
| Minimum time in business | 2 years | 6 months |
| Minimum credit score | 650+ | 550+ |
Which is right for your business?
- SBA Loan tends to fit best when you need business acquisition or real estate purchase.
- Working Capital Loan tends to fit best when you need payroll or rent.
Frequently asked questions
What is the SBA CAPLine program?
SBA CAPLine provides revolving lines of credit up to $5M for working capital needs, including seasonal lines, contract lines, and asset-based lines. It functions like a conventional revolving credit line but with SBA backing, which can improve rate and terms for qualifying businesses.
