Working capital finance

What it is

Working capital is the cash that keeps the business ticking between paying for things and getting paid. When that gap gets tight, working capital finance fills it. It is not for buying a van or a building, that is what asset and property finance are for. It is for stock, wages, suppliers, marketing and growth.

The shape we see most weeks, described rather than a client case: a groundworks subcontractor invoices the main contractor on 60-day terms and pays its own crew every Friday. It is profitable on paper and short of cash every second week of the month. A working capital facility sized to about six weeks of wages closes that gap, and the cost of it is small against the price of turning down the next contract. Timing, not trade, is usually the problem.

Your options

If you invoice other businesses on credit terms, also look at invoice finance, which releases cash from unpaid invoices and often works out cheaper for that situation.

Where the gap opens and closes rather than sitting open, a revolving credit facility charges interest only on what is drawn, so the cost follows use rather than the limit. That page works the utilisation arithmetic, which is the part a headline rate hides.

What it costs

Term loans are usually priced as an interest rate, so the cost is clear: the rate, any arrangement fee, and the total payable over the term. Revenue-based finance and merchant cash advances are often quoted as a factor or fee rather than an interest rate, which can look cheap until you work out the equivalent annual cost. Always ask for the total amount repayable.

Pricing varies widely by product and lender. Banks and prime lenders sit at the lower end, online and alternative lenders higher, and the riskiest cases higher still; merchant cash advances and revenue-based finance are quoted as a factor on the advance rather than a rate. Where you land depends on turnover, trading history, profitability and the director's credit, and we give you the lender's figures for your case rather than a market average. A monthly figure on its own tells you nothing, so we put the total payable for each option side by side. The cheaper one is the one that is cheaper for you, not the one with the smaller monthly.

What the panel actually offers

Pricing is easier to judge with the spread in front of you. At £10,000 unsecured, 30 lenders on our panel have a product covering the amount with a median published floor of 21.3%. At £50,000 it is 47 lenders at 17%, and at £250,000 it is 35 lenders at 14.5% (checked September 2026). Rate ceilings across the same products reach 70.8%, and terms run from 1 to 120 months.

Some lenders publish how they price and it is worth reading. Momenta Finance quotes its business loans as a variable rate, with an interest-only period of up to 12 months on unsecured lending if you ask for it. Allica Bank publishes its business loan terms in full on its own pages.

Where the panel is easier than the high street is on criteria rather than price. 21 of our 55 unsecured lenders will look at a business trading under a year, 39 do not require a homeowning director and 24 accept minor adverse credit older than 24 months (checked September 2026). Compare that with Momenta's published rules, which need two years of trading, £350,000 of turnover and at least one homeowning person of significant control, and cap borrowing at typically 15% of annual turnover. Both positions are reasonable. They just describe different businesses.

Ownership in this market changes fast and it changes appetite. Playter has been a Shawbrook Bank brand since December 2025 and, since 6 May 2026, is the origination route for new Shawbrook unsecured business lending. Its own terms set default interest at 24% a year compounding daily, plus a 5% administration fee subject to a £40 minimum after seven days, and its contractual per-transaction ceiling is £150,000 rather than the larger figures in the marketing. None of that is hidden. It is just in the schedule rather than on the homepage.

The honest limitation on working capital: it is the easiest money on the panel to arrange and the easiest to misuse. A facility that funds a known gap and clears inside a year is doing its job. A facility that funds the gap left by the last facility is a signal, and we say so on the call rather than after the money lands.

Who it suits

A trading business with receipts a lender can see, short of cash because of timing rather than losses. Lenders read the last six months of bank statements before they read anything else, and most unsecured lenders want twelve months of trading; under that, the products that repay from card or bank receipts are the realistic route. A business that is short of cash every month regardless of timing has a margin problem, and more borrowing makes that worse. We say so when we see it.