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What is a working capital loan?
A working capital loan is designed to cover everyday business costs such as wages, rent and utility bills. It provides a handy injection of finance to ease cash flow and boost business growth.
Working capital is the money you need to pay for day-to-day operations and keep everything ticking over. Essentially, it’s the amount of cash left over when you deduct your outgoings from the money coming into your business.
If you’ve had a dip in revenue or operate longer payment terms, a working capital loan can tide you over until those invoices clear.
How does a working capital loan work?
Working capital loans act in a similar way to traditional business loans. You apply to borrow an amount of money upfront and repay it in agreed instalments.
A working capital loan is commonly used for short to medium-term business needs. However, it can also help you take advantage of business opportunities such as overseas growth, launching new products or expanding your team.
With that in mind, certain lenders offer higher-value loans on longer terms.
Apply online
Get a decision
Receive your funds
Here at Fleximize, for example, we provide working capital loans of up to £500,000 on flexible terms of 3-60 months, and with no hidden fees.
As one of the UK’s leading fintech lenders, we offer a simple online application process and can deposit funds in as little as 24 hours – saving any costly business disruption.
Business working capital loans from Fleximize
As unashamed small business champions, we know the importance of working capital and steady cash flow for UK SMEs. These companies are the backbone of our economy – and that’s why our flexible business loans put their needs first.
Here’s a helpful overview of our working capital loans:
- Borrow from £10,000 - £500,000 and repay it over 3 – 60 months.
- Apply online in minutes and get a decision and funding in as little as 24 hours.
- Competitive interest rates starting from 0.9% per month.
- Top-ups and repayment holidays available as standard
- Repay early at no extra cost – ideal for short-term capital boosts.
- Pay interest on your remaining balance instead of the total loan amount.
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What can a working capital loan be used for?
Working capital loans are typically used to pay for immediate business expenses such as unexpected bills, one-off marketing spends or additional stock. This is especially true for:
- Seasonal businesses, such as those in hospitality with summer peaks.
- Cyclical businesses, like manufacturing companies whose sales rise and fall depending on the demands of retailers.
- Companies dealing with long payment terms from large customers – this may be a supermarket or government organisation such as the NHS, for example.
A working capital loan can also free up cash for longer-term business expansion. With your regular outgoings taken care of, you might wish to use a loan to:
- Hire extra members of staff and pay for recruitment fees and training.
- Buy new equipment to increase production or take on larger contracts.
- Move to a larger space while covering the deposit and moving costs.
- Refurbish your existing premises, from soft furnishings and décor to extensions.
- Invest in marketing, whether online, in print or elsewhere.
If you want to know more about how we can support your business, give our friendly team a call and you'll get straight through to someone who can help, like Macauley. Or, if you're ready to apply, get started by clicking the button below.
0207
100 0110
Why choose Fleximize?
Since launching in 2014, we’ve become one of the UK’s leading alternative business lenders, providing over £350 million of funding to thousands of SMEs.
If you’re thinking of borrowing from us, here’s what to expect:
- Industry-leading flexibility: Our products are fit for any business and purpose, with great features like top-ups, repayment holidays and our Penalty-Free Promise.
- Personal service: Your dedicated relationship manager will find the right product, rates and terms for your needs. They will be your contact if you return for more funding too.
- Highly rated: Check out our excellent Trustpilot reviews and customer stories to find out what other businesses make of our service.
- Award-winning: Did we mention we’ve twice been named Best Business Finance Provider at the British Bank Awards, among other award successes?
Working capital loans to suit all sectors
We don’t like to discriminate at Fleximize – no matter your industry, we’ll assess your loan application on an individual basis, with a view to approving it in 24 hours.
A working capital boost for Spinback Productions
Devon-based Spinback Productions applied for a working capital loan from Fleximize to bridge the gap between producing its goods and receiving payment from clients.
After accepting a major project to provide hospitality gifts for the 2019 concert series at Wembley Stadium, managing director Stewart MacLeod turned to his bank for a business loan. Like many small businesses, his application was rejected as he didn’t have any tangible assets to secure the funding against.
Step in Fleximize. With our flexible lending criteria, we were able to offer Stewart an unsecured loan of £15,000 on a manageable repayment term – allowing him to fulfil the contract with Club Wembley, which covered concerts for the likes of Pink, Fleetwood Mac and The Spice Girls.
More Details: Spinback Productions video case study.
How much does a business loan cost?
The interest rates on our working capital loans start from just 0.9% per month – and you won’t have any hidden fees to worry about.
We also offer a Penalty-Free Promise, so if your cash flow enjoys a welcome boost, you can repay your loan early and save on interest. Unlike some other lenders, we’ll only charge you for the time you had the loan, rather than the whole term.
For a quick estimate of what your loan could cost, feel free to use our business calculator below, or apply online and we’ll be in touch with a tailored quote before you know it.
How to get a working capital loan
It couldn’t be easier to apply for a working capital loan with Fleximize.
It’s as simple as clicking the button below, filling out the short form and supplying the required documents.
A member of our team will then be in touch – possibly the same day – and if you tick all the boxes, the money could be in your account in as little as 24 hours.
Your common questions answered
Here at Fleximize, we aim to support as many businesses as possible. You can apply for a working capital loan with us if:
- You’re a limited company or LLP registered in the UK.
- You’ve been trading for at least six months. Most working capital lenders require a minimum trading time of one year.
- You have a minimum monthly turnover of £5,000.
We can lend a minimum of £25,001 to sole traders and non-limited partnerships with less than four partners.
We’ll look at several factors when reviewing your application, so a one-off blip affecting your credit history won’t necessarily stop you from getting a working capital loan.
Whether you need to tide things over or fund a growth opportunity, working capital loans offer several advantages for business owners.
If you’re struggling with cash flow due to seasonality or outstanding invoices, these loans can provide financial flexibility until payments come through.
With flexible terms – starting from three months with Fleximize – you can cover your day-to-day expenses without committing to long repayment schedules.
While some working capital loans can have higher interest rates than other finance options, our rates start from 0.9% regardless of the repayment term.
We also don’t specify what our loans can be used for, but other lenders might do, so it’s always worth checking the finer details just in case.
Our online application process is super simple and doesn’t require much in the way of documentation. Better still, it can all be done digitally.
We’ll just need some basic information about yourself, the business and any other directors, along with a general idea of your revenue and the purpose of the loan.
The only documents we’ll require are the following:
- Your most recent set of management accounts
- Business bank statements for the last three months of trading
- A revenue summary
You can upload these documents when applying – or if you’re one of the millions already using Open Banking, you’ll be able to share your bank statements in just a few clicks.
You sure can – and there’s better news: we won’t charge you extra for doing so.
Our Penalty-Free Promise means we’ll never surprise you with any unexpected fees, including for early repayment.
You can repay in full or part, and you’ll only pay interest on the time you had the loan rather than the whole term.
Interest rates on working capital loans can vary across the industry, but our rates at Fleximize start from a competitive 0.9% per month.
And, unlike some other lenders, we only charge interest on a reducing balance, rather than the total loan amount. This can make a big difference to the overall cost of your loan.
To see how a working capital loan could work for your business, why not try our business loan calculator, or feel free to get in touch for a tailored quote.
Both are viable options; however, we find that many of our clients can feel restricted by supplier credit limits and payment terms.
A loan can provide more flexibility in terms of longer repayment terms, and the amount available to borrow is generally a lot higher. For example, you can borrow up to £500,000 with Fleximize, on a repayment term of 3-60 months.
Working capital loans could also give you more bargaining power with suppliers, especially if you’d like to negotiate longer payment terms.
A working capital loan is specifically designed to help businesses with short to medium-term business needs, providing the finance they need to purchase stock in bulk, pay unexpected bills or deal with emergency expenses.
These types of loans tend to have more relaxed credit requirements and can be deposited quickly, which is ideal for businesses with time-sensitive funding requirements.
On the other hand, small business loans cover a range of other funding options – from asset financing and term loans to lines of credit and invoice finance.
This will be different for every business but establishing your ‘working capital ratio’ is a good place to start.
The working capital ratio – also known as the current ratio – is a calculation of your company’s ability to meet its financial commitments in the next 12 months.
You can calculate this by dividing your current assets by your current liabilities.
Current assets include cash, payments due from customers, and any assets that could be sold within the next 12 months.
Current liabilities are any debts – such as bills and loan repayments – that your business owes in the next year.
Ideally, you’ll be looking for a working capital ratio of 1.0 or higher, as this will show that you can cover your costs effectively.
As the term suggests, working capital management is a type of business strategy aimed at managing a company’s working capital.
It involves close monitoring of your business assets and liabilities to ensure you have sufficient working capital to meet your short-term operating costs and debt repayments.
Effective working capital management should put you in better control of your cash flow, but it can’t always protect against unexpected market fluctuations.
You can calculate working capital in two different ways:
- By subtracting a company’s Current Liabilities from its Current Assets
- By adding Accounts Receivable to Inventory minus Accounts Payable
For example, if a business has £100,000 in assets and £70,000 in liabilities, this leaves a working capital of £30,000. This is what the business has available to cover the costs of day-to-day operations.
No. These are two different metrics.
Profit is the money left over after deducting all expenses from your total revenue. It’s a measurement of financial performance. Business owners use it to see how well a company manages its costs and generates revenue.
Working capital is the funds and assets needed to operate efficiently. It measures short-term liquidity and operational efficiency. This shows if a company has enough short-term assets to cover its short-term liabilities.
Negative working capital happens when what a company owns is less than what it owes.
This is usually a bad sign, as your available assets won’t cover your debts. In other words, you might have salaries, bills, or suppliers to pay, but not enough money to pay them.
Being unable to pay short-term debts will stunt business growth. It can also suggest revenue streams are not as profitable as they should be or that steps must be taken to reduce costs. This is where working capital funding from Fleximize can help.
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