Working Capital Loans

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Working Capital Finance

What is Working Capital Finance? 

Working capital refers to the funds used by your business to cover its short-term operational needs, such as paying employee wages, buying stock, and covering rent or outstanding invoices.  

It is called ‘working capital’ because the money is available to use immediately, and it isn’t tied up long-term in other parts of the company.  

Working capital finance is a way to borrow money to boost the amount of working capital you have to work with. 

It is a crucial aspect of financial management, as it makes sure your company can manage its everyday finances without any cash flow problems.  

KEY POINT: Working capital finance helps with the day-to-day operations of your business. 

Why Do I Need to Consider Working Capital Finance?   

By understanding the concept of working capital finance and exploring various financing options, you can make more informed decisions about your business that will help you better manage your own working capital needs.  

Your business has its own unique set of circumstances and goals, so choosing the right option is an important step, whether it’s through short-term loans, lines of credit, or other financing alternatives.   

With proper working capital management and finance, you’ll be able to improve the financial stability of your company and cope with economic uncertainties more confidently. 

KEY POINT: If your business is seasonal, working capital finance can help bridge the gap in income during quieter periods. 

What are the Main Sources of Working Capital Finance? 

There is a wide range of financial sources available to businesses to help keep operations running smoothly. Some common options include: 

How Do I Choose the Right Working Capital Finance Option? 

There are many factors to think about when choosing the best working capital finance option for your business – its size, cash flow patterns, and growth prospects are just some of them.  

Here are a few tips to help you get started: 

KEY POINT: It’s worth remembering that working capital loans and other financing options can be linked to a business owner’s personal credit, so any late or missed payments can damage your credit score.             

What are the Pros and Cons of Working Capital Finance?  

It’s important to research each option carefully to make sure you understand the benefits and risks associated with them. We’ve listed a few main points here to bear in mind. 

Pros: 

Increased liquidity 

Working capital finance provides your business with the funds you need to cover short-term operational costs, making sure cash flow and day-to-day operations run smoothly. 

Flexibility 

Working capital finance can be tailored to meet your specific business needs based on the nature of the business. 

Quick access to funds 

Approval for working capital finance is often much quicker than for traditional loans, meaning that your business is free to deal with any immediate financial needs or take advantage of growth opportunities almost straight away. 

Risk protection 

Working capital finance can help protect your business from the risks associated with late payments from customers, unexpected expenses, or unforeseen circumstances that have an impact on your cash flow. 

Cons: 

Cost of finance 

Working capital finance can come with higher interest rates or fees, which means you will pay more overall to borrow the money and this might affect your company’s profitability. 

Potential debt burden 

Taking on debt through working capital finance can increase the overall debt load of your business, which may reduce the chances of future borrowing applications being successful. 

Collateral requirements 

Some working capital finance options may need you to put up collateral, such as assets or inventory, which can be a barrier for your business if it doesn’t have enough assets to put towards the loan. 

Impact on creditworthiness 

If your business fails to make repayments on time or in full, your credit score can be affected,  potentially making it harder for you to borrow more money in the future. 

KEY POINT: Make sure any financial product you choose is fully affordable and beneficial to your business.   

FAQs 

How do I get working capital finance? 

Once you have researched the options available to you, you can use a comparison website or contact an independent financial advisor to help you choose the best product for your needs.   

Banks and other financial organisations offer many different types of business loans and credit options. 

Government support can also be an option, particularly for smaller businesses. 

How are working capital loans worked out? 

Lenders will look at the assets and liabilities of your business – money in and money out. They will use this information to work out how much they can safely lend you. 

The amount you can borrow will depend on how creditworthy your business is and your ability to make the repayments. 

The interest rate and repayment terms will vary depending on the type of loan and your circumstances.   

Working Capital Finance with Cashflow Solutions

Our business finance finder service can help you find the right working capital finance for your situation:

We can help if you are looking for:

A cash injection into your business when you need it

Our service is aimed at helping business owners source much-needed working capital for almost any business reason, so whether you are looking to make a payroll payment, purchase stock or new equipment or refurb your business premises, a working capital loan is something we can help with.

British Business Bank

Working in partnership with our lending partners backed by the British Business Bank to deploy funds to support business growth and working capital

Why use us

Helping you avoid common pitfalls

  • Quality of Applications

    Too many SMES get rejected by lenders because they don’t invest time in their loan proposals – we can do that for you.

  • Credit scoring

    Too many SMES make multiple unsuccessful applications and then damage their credit score – We will only approach the lender where you have maximum chances of acceptance on the best terms available.

  • Loans which your business does not qualify for

    Through our connections we have over 100+ lenders who specialise in different areas of business finance. We will help match you with the right lender or equity partner.

Excellent service, They went the extra mile to obtain additional funding for our company.

We're here to help you

0204 532 1044 Any questions, give us a call.