finance options - working capital loan

Working capital loans

Working capital loans are designed to help your business manage everyday operations smoothly. This page will give you everything you need to know about working capital loans and how it can benefit your business.

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Access working capital so you can focus on growth

Even the most successful businesses can face challenges when cash is tied up in everyday expenses, affecting profitability. These expenses, known as working capital, can sometimes require short term funding. If you’re looking to ease your cash flow or access finance to keep things running smoothly, a working capital loan could be the solution you need. If you’re ready to apply for a working capital loan, you can search and compare from 100+ lenders with Capitalise today. 

Features of a working capital loan

No requirement to specify the loan's purpose

Loan is paid out in days of approval

Customised to your business model

What is a working capital loan?

A working capital loan is a type of business finance that’s designed to cover the day-to-day expenses of running a business. This includes costs like rent, salaries, utilities, or stock. 

Unlike long term business loans used for larger investments or big purchases, working capital loans help you manage your business's short term needs. These loans can be either secured or unsecured, depending on the lender, whether you have high value assets available and how good your business credit score is. Secured loans require collateral, such as a property, or even personal assets like your home. On the other hand, unsecured loans don’t require collateral, but may come with higher interest rates due to the higher risk for the lender. 

When applying for a working capital loan, lenders will look at your business’s credit score and cash flow to determine your eligibility, how much you can afford to borrow and the terms of the loan.

Who is a working capital loan for?

A working capital loan can be used by any business looking to manage their operational costs. It’s a popular option for businesses with seasonal fluctuations, where there may be a gap in cash flow to cover operational costs in certain months. A working capital loan could be used for almost any business purpose, for example you could use it to: 

  • Buy more materials or stock
  • Ensure employees are paid on time in a slower sales period
  • Bridge a cash flow gap between accounts receivable and accounts payable
  • Expand your premises
  • Hire new employees

Why choose a working capital loan?

When you need short term funding quickly, a working capital loan can offer an easy way to access capital. It provides the necessary time to focus on what matters most, giving your business the best possible chance of success.

Advantages and disadvantages of a working capital loan


  • Can provide quick access to funds
  • Gives you flexibility in the use of the funds
  • Helps to manage your cash flow 
  • Ensures you have enough capital to cover unexpected expenses


  • Some working capital loans may require collateral or a personal guarantee
  • If you opt for short term unsecured working capital loan, interest rates can be higher due to the higher costs to the lender to onboard a new customer 
  • Shorter repayment terms may lead to higher monthly payments

How much can I borrow with a working capital loan? 

The amount you can borrow depends on various factors including:

  • Your business's revenue
  • Your cash flow and ability to meet monthly repayments 
  • How long you take the loan out for

To get an idea of how much you can borrow, you can use our business loan calculator. It will show you potential monthly repayments, helping you see what fits within your budget. To get a more accurate idea of your borrowing capacity, you can search for funding with capitalise to see what you could be eligible for. 


What are the different types of working capital loans?

There are several types of working capital facilities available, each are designed to meet different short term financing needs. Here are some common types:

Term loans: These are loans for a fixed amount over a set period, such as a £50,000 loan for 36 months. 

Business overdraft or a line of credit: These revolving facilities allow a business to borrow up to an agreed upon limit. The balance can fluctuate throughout the month but won’t exceed the maximum limit set by the lender.

Invoice finance or invoice factoring: This type of financing is linked to a percentage of your accounts receivable. It can apply to the entire sales ledger or specific invoices, allowing you to draw a percentage of the invoice amount before your customer pays.

Trade finance: This option allows businesses to purchase stock or finance overseas purchases with delayed payment terms.

Merchant cash advance: These loans are suitable for businesses that use card terminals, such as retailers, restaurants, or online traders. Repayments are based on a percentage of your sales, making it ideal for seasonal businesses.

Asset finance or property finance: These facilities are similar to a term loan but are secured against specific assets, like equipment or a property.

How to apply for a working capital loan

Applying for a working capital loan is easy with Capitalise. Here’s a step by step of what you can expect from the process:

1. Assess your business’ needs
Determine how much you need and what you’ll use the loan for. Having a clear purpose and idea of how much you want to borrow will help in the application process.

2. Check your business credit score
Lenders will assess your business’ creditworthiness. A good company credit score can help you secure better terms and rates, so it’s important to keep track of it if you’re considering applying for a loan. 

3. Gather some documentation
Be prepared to provide documents such as your annual financial statements and business bank statements.

4. Apply through our platform 
Complete your funding search with Capitalise to compare from 100+ lenders. Once you’re ready you can apply to up to 4 lenders in one application. 

5. Get a decision 
If approved, you can compare your offers from multiple lenders and see which best suits your business. 

6. Get cash in your account
If you choose to accept, you’ll need to provide proof of ID. Once approved, you can get funding in your business account in as little as 48 hours.  

Frequently asked questions about working capital

Yes, some lenders specialise in offering loans to businesses with poor credit, although you should bear in mind that the terms may be less favourable due to a higher risk to the lender.

It depends on the lender and loan type. Some loans are unsecured, meaning no collateral is needed, while others may require assets and property as security.

The term length of a working capital loan can vary. Typically, these loans range from a few months to a few years, with common terms being 6 months, 12 months, or 24 months. The specific term will depend on the lender and the loan agreement.

Many lenders allow early repayment, but it's important to check if there are any prepayment penalties. Early repayment can save you on interest costs.

If you need short term funding to cover operational expenses or manage cash flow gaps, a working capital loan could be a good option. 

Interest rates vary based on the lender, your credit score, and the loan amount. It’s important that you can compare your offers from different lenders to find the most favourable terms and loan most suitable for your business. 

The approval and funding time can vary depending on the lender and the type of loan. At Capitalise, we work with many lenders with fast approval times, meaning you could get funds in as little as 48 hours.