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Compare Working Capital Loans

Loans for businesses of every size and industry, from top UK lenders including:

5 providers

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  • Portman Asset Finance logo
    Broker

    Portman Finance Group

    • Loans for any business purpose, from cashflow to new equipment, vehicles or expansion
    • Term business loans, recovery loans, short-term and flexible funding, asset finance, vehicle finance
    • Dedicated account managers to guide you, understand your business and find solutions tailored to your needs
    • Minimum annual turnover
      £100,000
    • Available amounts
      £10,000 - £2,000,000
    • UK Available terms
      3 months - 6 years
    See Deal
    • iwoca logo

      iwoca

      • Flexible finance for small businesses from £1,000 to £1,000,000
      • No long-term commitments and flexible repayments to fit your business
      • Apply online in minutes for a quick decision (some may take up to 24 hours). Applying won’t affect your credit score
      • Minimum annual turnover
        £10,000
      • Available amounts
        £1,000 - £1,000,000
      • UK Available terms
        0 months - 2 years
      See Deal
    • 2 more from iwoca
  • Barclays logo

    Barclays Unsecured Business Loans

    • A quick and straightforward way to finance your business
    • Fixed interest rates, so you'll always know what you'll be paying
    • Take a six-month repayment holiday at the start of the loan (interest will continue to accrue and will be included in your repayments). Only available on loans below £25,000
    • Minimum annual turnover
      No minimum
    • Available amounts
      £1,000 - £100,000
    • UK Available terms
      12 months - 10 years
    See Deal
  • Funding Xchange logo
    Broker

    Funding Xchange Working Capital Loan

    • Discover a wide range of the funding solutions and lender that can assist with the businesses working capital needs
    • Basic information is needed to start your inquiry, taking 3 minutes to receive a personalised list of offers
    • Minimum annual turnover
      £10,000
    • Available amounts
      £1,000 - £500,000
    • UK Available terms
      1 month - 6 years
    See Deal
    • Capify logo

      Capify

      • Flexible, reliable business funding from £5,000 - £750,000
      • Same-day funding options available
      • Check your eligibility online in two minutes
      • Minimum annual turnover
        £120,000
      • Available amounts
        £5,000 - £750,000
      • UK Available terms
        3 months - 2 years
      See Deal
    • 2 more from Capify

    • Suppliers that don't offer All Business Working Capital Loans but may offer suitable alternatives:

    • 365 Finance logo

      365 Finance Merchant Cash Advance

      Credit/debit card sales required
      • Pay back via a small % of future card sales
      • No security or business plans required
      • One all-inclusive cost. No admin fees, APRs or extras
      • Minimum annual turnover
        £120,000
      • Available amounts
        £10,000 - £400,000
      • UK Available terms
        4 - 18 months
      See Deal
    • YouLend logo

      YouLend Cash Advance

      Credit/debit card sales required
      • Optimise your cash flow and make repayments in line with your sales
      • No interest rate is charged, just a one-time fixed fee
      • Minimum annual turnover
        £36,000
      • Available amounts
        £3,000 - £1,000,000
      • UK Available terms
        1 - 18 months
      See Deal

Our comparison service features a selection of providers from whom we receive commission. This table is initially ordered according to our commercial arrangements. Use the sorting options at the top of the comparison table to order by other criteria.

Other comparisons

What is a business loan?

A business loan is a form of finance that can be used to help support and expand your organisation.

As with personal loans, you borrow a sum of money, and pay it back, with interest.

One of the most important differences between personal loans and business loans is that with a personal loan, you will be personally liable for repaying the amount you have borrowed.

With a business loan, as long as the appropriate company structure is in place, that responsibility falls to the business instead. This will not be the case, however, if you are a sole trader, or you have secured your business loan with a personal guarantee.

You can also typically borrow more through a business loan, while the interest payments on your business loan may be tax deductible unlike payments on a personal loan.

Types of business loan

Secured business loans

Secured business loans require that you put down an asset such as property as security. Secured loans often come with lower interest rates than unsecured loans as they represent less risk for the lender. They may also give you access to a larger loan amount over a longer term. However, secured loans come with the added risk that you could lose your assets if you miss the payments.

Compare secured business loans

Unsecured business loans

Unsecured business loans are a type of finance that does not require security. These types of loans tend to have higher interest rates because there is a greater risk of the lender losing money if you can't pay off what you owe. Unsecured business loans also require a good financial history and credit rating as evidence that the business will be able to repay the loan.

Compare unsecured business loans

Government loans

There may be government-backed business loans you can access. Examples include the Recovery Loan Scheme, introduced to help with the financial stresses caused by the Covid-19 pandemic, which has now been extended. What schemes are available can vary depending on government policy and changing economic circumstances across the country. So it can be useful to regularly check the Department for Business, Energy & Industrial Strategy's search tool for guidance on the business loan schemes available in your region.

Start up business loans

The Start Up Loan Scheme is a government-backed fund that currently offers personal loans of up to £25,000 to UK businesses owners that have been fully trading for less than 36 months or those looking to start a business. You can apply for free, and there are no early repayment charges. If your application is successful, you'll also get up to 12 months of free mentoring. Government Start Up Loans have a fixed annual interest rate of 6% and must be repaid over a period of one to five years.

Compare start up business loans

Small business loans

Small business loans are for start ups and small businesses to access funding. They can be used for a variety of purposes from hiring new staff to managing cash flow. As with all loans, small business loans are repaid over an agreed time period with interest. Large business loans tend to be cheaper than small business loans because there is less perceived risk with lending to a bigger company.

Compare small business loans

What is a working capital loan?

A working capital loan is simply a business loan that is designed to help a business cover a temporary shortfall in their cash flow, or working capital.

Working capital is broadly defined as the amount of cash a business has available to spend on the daily running of their operations, and is calculated by subtracting current liabilities, such as rent, bills, wages and payments owed, from current assets over the next 12 months.

Sometimes businesses may not have sufficient working capital to pay for their regular expenses. A working capital loan aims to offer a solution to this problem by providing businesses with short-term finance that will boost their working capital and allow them to pay for what they need.

Businesses can use a working capital loan for a variety of purposes, such as:

  • everyday expenses, e.g. rent, bills or the payroll
  • paying suppliers
  • buying equipment
  • covering emergency expenses
  • paying for stock

Essentially, the loan aims to help businesses manage their finances by improving their cash flow.

Bear in mind that working capital loans are not intended for long-term investments in your business, but to cover short-term needs.

Pros and cons of working capital loans

Pros

  • You can apply for and receive funds relatively quickly. Some providers will even send you funds within 24 hours of approval.
  • Most lenders won’t set restrictions on what a working capital loan can be used for, so you have some flexibility in how you spend it.
  • They are short-term so you pay them off fairly quickly. Most working capital loans are unsecured, so the property of your business is not at immediate risk. However, you should still check with the provider as some loans will be secured and/or require a personal guarantee.

Cons

While working capital loans can offer much-needed help to businesses, there are certain points you need to bear in mind.

  • A working capital loan is designed to offer short-term funding. The terms for working capital loans can be as short as a few months, so you need to be confident that your business would be able to repay the loan in full relatively quickly.Working capital loans can have higher interest rates, so compare providers and see what deals your business potentially qualifies for.

How to get a working capital loan

  • Make sure you check the eligibility criteria for working capital loans, as lenders may require you to have a minimum number of years trading and a separate business bank account.

  • If your business qualifies, you can then apply for a working capital loan online by submitting relevant information about you and your business.

  • Lenders are likely to want to know details about your trading history, your average turnover, the size of loan you want to apply for and what you want to use the loan for.

  • They will use this information, as well as your business’s credit score, to make a decision on your application.

  • If successful, you will normally receive the loan relatively quickly, sometimes within 24 hours.

Working Capital Loan FAQs

What is a good working capital?

The level of working capital that is “good” will vary between businesses and industries. A working capital ratio of around 2.0 is considered good, while anything below 1.0 is seen as cause for concern.

How is your working capital ratio calculated?

You can work out your working capital ratio by dividing the assets your business currently has by its current liabilities. Business assets might include money in your business account, your inventory, and other assets that can be converted to cash relatively quickly. Examples of liabilities could include rent, bills, debts, and taxes. Dividing your assets by your liabilities will give a number that shows your working capital ratio. A higher number is generally better for your business and shows it is in good financial health.

Do you want high or low working capital?

If the working capital of your business is too low, it means your business could struggle to pay day-to-day expenses. Having a high level of working capital shows your business is in a healthy position with enough cash in reserve to invest and expand.

Does a working capital loan affect my personal finances?

A working capital loan is linked to your business, so shouldn’t affect your personal finances. The exception is if you provided the lender with a personal guarantee that you would repay the loan if your business couldn’t. Read more on how business loans could affect your personal finances.

How long will it take to get a business loan for working capital?

This will depend on the lender, but you can normally receive a working capital loan soon after your application is approved. Working capital finance is designed to be a quick solution for businesses which need a cash flow boost and some providers will make a decision within 24 hours.

Do I need a business account to apply for a business loan?

This can depend on the lender, but many providers will only offer loans to businesses that have a separate business bank account.

Can I get working capital finance with bad credit?

You may be able to get a working capital loan with bad credit from some lenders, but other lenders may be more reluctant to approve your application or set higher interest rates. You may improve your chances of getting accepted if your loan is secured against an asset or you provide a personal guarantee.

Can I pay off my business loan early?

Yes, most providers will allow you to pay off your loan early. Check if you would have to pay any early repayment charges if you choose this option.

Can I get a working capital loan to start a business?

Not normally. Working capital loans are designed to help existing businesses with their cash flow, rather than giving startups an injection of cash to get their business off the ground. Many lenders will require businesses to have a certain number of years’ trading history to qualify for a working capital loan.

If you need finance to fund your new business, a startup business loan is likely to be more suitable.