Working Capital Loans: The Complete UK Business Guide for 2026
Everything you need to know about working capital finance — types, costs, eligibility, and how to choose the right option for your business.
What is Working Capital Finance?
Working capital is the lifeblood of any business. It's the money you need to cover day-to-day expenses. paying staff, buying stock, settling supplier invoices, and keeping operations running while you wait for customers to pay you.
Working capital finance bridges the gap between money going out and money coming in. It gives you access to funds quickly, typically within 24-72 hours, without requiring property as security.
Types of Working Capital Finance
1. Unsecured Business Loans
A lump sum borrowed over a fixed term (typically 3-36 months) with regular monthly repayments. No assets required as security. approval is based on your business performance, turnover, and trading history.
- Best for: Established businesses with steady revenue needing a predictable repayment structure
- Typical amount: £10,000 – £500,000
- Typical rate: 6-15% APR (varies by risk profile)
- Speed: Funds in 24-48 hours from approval
2. Revolving Credit Facilities
Like a business overdraft but from an alternative lender. You're given a credit limit and only pay interest on what you draw down. As you repay, the facility replenishes. giving you an ongoing safety net.
- Best for: Businesses with fluctuating cash needs. seasonal peaks, project-based work
- Typical limit: £10,000 – £250,000
- Key benefit: Flexibility. draw only what you need, when you need it
3. Merchant Cash Advances
If you take card payments, an MCA gives you a lump sum upfront in exchange for a percentage of future card sales. Repayments flex with your revenue. busy months you pay more, quiet months you pay less.
4. Invoice Finance
Release up to 90% of the value of unpaid invoices immediately, rather than waiting 30, 60, or 90 days for customers to pay. The finance company collects payment from your customer and releases the balance (minus fees).
Read our full invoice finance guide →
Who is Working Capital Finance For?
Working capital finance suits businesses that are:
- Growing faster than cash flow allows. winning contracts but needing money upfront to deliver them
- Seasonal. needing to stock up before a busy period (Christmas, summer, back-to-school)
- Dealing with slow-paying customers. B2B businesses waiting 30-90 days for invoices to be paid
- Launching new products or services. investing in marketing, R&D, or new hires before revenue arrives
- Managing unexpected costs. equipment breakdown, emergency repairs, sudden opportunities
How Much Does Working Capital Finance Cost?
Costs vary widely depending on the type of finance, your risk profile, and the lender. Here's a rough guide:
| Product | Typical Cost | How It's Charged |
|---|---|---|
| Unsecured loan | 6-15% APR | Fixed monthly repayments |
| Revolving credit | 0.5-2% per month | Interest on drawn balance only |
| MCA | Factor rate 1.15-1.45 | % of daily card takings |
| Invoice finance | 1-3% per invoice | Fee per invoice + monthly service charge |
Rates shown are indicative only and vary by lender, business profile, and circumstances. They are not quotes or offers.
Use our funding calculator to get an indicative idea of monthly repayments.
How to Qualify for Working Capital Finance
Most alternative lenders look for:
- 12+ months trading. some lenders accept 6 months with strong revenue
- £10,000+ monthly turnover (£120K+ annual)
- UK limited company or LLP
- No active CCJs over £500 (some lenders are flexible on older/smaller CCJs)
- Positive or improving trend. revenue growing, not declining
Importantly, alternative lenders are much more flexible than banks. If your bank has said no, it doesn't mean the answer is no. it just means you need a different lender.
Working Capital vs Bank Overdraft
Many businesses default to their bank overdraft for working capital, but this is increasingly difficult and expensive:
- Banks are reducing overdraft limits. post-2020, many SMEs have seen facilities cut or withdrawn
- Overdraft rates. typically 15-20% EAR, often higher than alternative lender rates
- Repayable on demand. your bank can recall the overdraft at any time
- Slow process. bank applications take weeks; alternative lenders take hours
How to Apply
Getting started with Greenlit Funding is straightforward:
- Check eligibility. answer a few quick questions about your business
- Get matched. we connect you with suitable lenders through bespoke matching with specialist lenders
- Speak to a specialist. a specialist will be in touch within 24 hours
- Get funded. if you proceed, funds can arrive in 24-48 hours
No credit check is run at the eligibility stage. Your credit score stays completely unaffected.
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