Business Loans For Working Capital

  • Market-leading rates
  • Longer repayment terms tailored to your business
  • Borrow up to 60% of your turnover

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Business Loan For Working Capital

Countless sectors face high operational costs: the use of expensive machinery, skilled workers and advanced technology is bound to strain your business capital.

A business loan for working capital can help improve your business’s cash flow and improve financial flexibility in the short term, which is especially useful for industries such as construction – finding a competitively-priced loan offer from a lender, however, is challenging without expert advice.

At Clifton Private Finance, our team of expert brokers are here to help: book a consultation today and discuss financing options – stress-free.

Business Loans Success Stories

Business Loan for Procurement Company
Area
Nationwide
Capital Raised
£1M
Date
January 2025
Asset Finance for a Battery Energy Storage System
Asset Finance for a Battery Energy Storage System
Area
Cheshire
Capital Raised
£750K
Date
January 2025
Commercial Bridging Loan to Refinance Hotel Before Sale
Commercial Bridging Loan to Refinance London Hotel Before Sale
Area
London
Capital Raised
£13.8m
Date
January 2025

 See All Business Finance Case Studies

Why Our Customers Trust Us

With expert guidance, business finance can provide an essential, versatile, cost-effective solution.

business finance rates

Market-Leading Rates

We provide access to market-leading rates for every client, thanks to our relationships with business finance lenders across the market.

Award Winning Team

Multi-Award-Winning Team

Our team of business finance advisers have years of experience and are qualified to the highest level. We're proud to have numerous customer service awards to our name.

 

independent advice

Fully Independent

As an independent brokerage, we focus on your best interests when comparing business finance options: from costs and terms to speed of service.

To book a free, no-obligation call with an adviser to discuss your options, contact us today.

Book Consultation

Our Experts

Our dedicated business finance team have deep industry knowledge and years of experience.

Meet The Team

Jon Moffatt

Jonathan Moffatt

Head of Business Finance

Ben Francis

Ben Francis

Finance Executive

James Ellcaott

James Ellacott

Commercial Finance Broker

How We Work

1. Get a Customised Quote

Our business finance brokers will get an understanding of your business and your requirements, look at your financial forecasts and accounts, and provide a sense-check on what product(s) will best fit your needs, as well as how much you could borrow, and what the costs and terms could look like.

2. Compare Options

When you’re happy with the proposed solution, we’ll go away and compare options across the market. We’ll often present a range of choices ranging from lowest cost to most flexible, and we’ll talk you through the pros and cons of each if it’s a close decision.

3. Submit Your Application

If you’re happy with the terms we can source, we’ll handle the paperwork and submit your application for you. We’ll handle any issues and questions that may arise from the lender, and we’ll keep chasing your application to ensure funds are released as quickly as possible.

4. Receive Funds

You receive your finance success! We’ll always be here for any ongoing questions or support you require during your loan term. 

Speak to a business finance specialist today

Get the funding your business needs to reach its full potential. We’ll guide you through the process and take care of the heavy lifting. 

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Authors

Guide to Unsecured Business Finance

with Jonathan Moffatt & Sam Hodgson

Last Updated: 16/02/2025

Growing Your Business

You will need working capital if you want to fund business growth, pay operational costs, or expand to new premises.

In many cases, a business won't have sufficient working capital without some form of financial assistance. Insufficient levels of working capital can put a business under pressure on a day-to-day basis.

Working capital can be defined as the cash available for business activity that isn't tied up in longer-term commitments. It is essential for keeping up with payments and making sure your business is not restricted when it comes to growth opportunities. 

On a balance sheet, working capital can be calculated as your business's current assets minus your current liabilities. 

If you need additional funding to bolster your cash flow, you may want to use business finance.

We can help you access the funding you need as quickly as possible. Our service provides cash advances and short-term and long-term finance solutions for small and medium-sized businesses that are registered in England, Wales or Scotland.

Benefits of a working capital loan

  • Flexibility - provides flexibility on how you plan for the future

  • Business Growth - provides options and potential for acting on opportunities as they arise

  • Cushion - a financial buffer when unexpected costs arise

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Working Capital Loans, How to Power Your Business with Essential Funding

Types of Working Capital Loan

Some examples of different types of working capital loans are:

  • Merchant Cash Advance - A funding method for businesses that rely on card transactions. They are repaid through a percentage of a business's card transactions and can be well-suited to hospitality and retail-based businesses. 
  • Invoice Finance - Businesses that rely on invoices as their main source of payment can borrow against their unpaid invoices. This can work as a source of immediate funding while invoices are processing. 
  • Business Credit Card - A credit credit in a business's name, usually with a fixed borrowing amount. Like with many credit cards, this funding is often unsecured and can have higher interest rates. 
  • Business Line of Credit - This type of funding can work similarly to a bank overdraft, where the borrower can withdraw a flexible amount of funding. These can be secured but is dependent on the lender. 
  • Term Loan - Finance borrowed in a lump sum and paid back in instalments over a period of time. Depending on the lenders, Term Loans may or may not be quite collateral. 

Read blog: SaaS Finance | How to Get SaaS Funding & How it Works

What are the Benefits of a Working Capital Loan?

Working capital loans can provide essential funding to support daily operations, compensate employees, and address unexpected expenses. This additional financial flexibility can help businesses seize growth opportunities.  

Working capital loans have many advantages:  

  • They can provide financial assistance during lean periods, which can help you keep up with business expenses.
  • Repayment schedules can be flexible so that you can choose your loan terms based on your needs.
  • Working capital loans can be used for different purposes, such as purchasing inventory, upgrading equipment, or funding marketing campaigns.
  • Working capital loans are designed for speed, providing businesses with much-needed cash within a short timeframe.
  • By addressing cash flow gaps, working capital loans help you manage day-to-day operations more effectively, ensuring smooth business continuity.

 

Working Capital Loans, How to Power Your Business with Essential Funding  

Working Capital Loan Requirements

There are a number of key things lenders consider when applying for a working capital loan. Knowing them before you apply could increase your chances of getting approved.   

Firstly, lenders will want to know your business’s financial health and cash flow stability.  

In order to assess these factors, lenders will want to get an idea of your:  

  • Business history and revenue - Lenders often prefer businesses with a proven track record of at least six months to a year. They will assess your turnover to determine your ability to repay the loan.   

  • Credit score - Lenders assess your personal and business credit scores to evaluate your repayment history and creditworthiness. Maintaining a good credit record can significantly improve your chances of loan approval.  

  • Financial documentation - Be prepared to provide financial statements, tax returns, bank statements, and other relevant documents to verify your business's financial health. Lenders will want to see your business's profit and loss statements, balance sheets, and cash flow statements will be reviewed by lenders. They use these to assess your ability to generate revenue and manage expenses effectively.  

  • Business plan - Some business lenders may require a detailed business plan that outlines your objectives, strategies, and financial projections. 

  • Collateral (for secured loans) - If you're applying for a secured working capital loan, you may also need to provide collateral.

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What to Consider When Applying for a Working Capital Loan

It's important to be aware that entering any loan is a financial commitment. If you are already experiencing financial issues, a working capital loan could be an additional financial burden. 

It's important to plan your cash flow and evaluate the best funding option for your specific needs. And if you're unsure, it's beneficial to consult a professional to get tailored financial advice.

What to be aware of:

  • Unsecured working capital loans typically have higher interest rates than secured working capital loans.
      
  • Taking on additional debt means you'll have to make regular loan repayments, impacting your cash flow in the long term.

  • Meeting the requirements for a working capital loan can be challenging for businesses with poor credit or limited operational history.

  • It can be helpful to know what funds you'll need and how they can be used before you apply for a working capital loan. 

  • Keeping your net profits in mind when making these decisions can ensure that you don’t overreach your borrowing amount and can allow you to maintain a manageable budget.

  • It's also important to know that lenders may all have different interest rates, repayment terms, and opportunities for flexibility.

Case study: Our case study below details how we raised £300K working capital for the expansion of a pharmaceutical company

Working capital loans, how to power your business with essential funding case study

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How to Calculate Your Working Capital Needs 

It can be important not to apply for a larger loan than you need for your business. The sweet spot is just enough funding to offer the financial freedom you need for your business without any unnecessary financial strain.  

But how can you know exactly how much working capital funding you need?  

Here’s how you can calculate what size working capital loan you need:  

  • Calculate current assets - Add up the value of your business's cash, accounts receivables, inventory, and any other short-term assets that can be converted into cash within one year. 

  • Calculate current liabilities (debt & expenses) - Add up accounts payable, outstanding bills, and other short-term liabilities due within a year.  

  • Your working capital = your current assets  your current liabilities 

  • Assess additional funding requirements - Consider any upcoming expenses or investments your business needs to make. Consider these to anticipate any further working capital you may need. 

  • Once you have a good idea of the amount of working capital you'll need, you can approach lenders with a clear insight into how much funding your business requires.

Are Working Capital Loans Secured or Unsecured?

Working capital loans can be secured or unsecured. A secured loan requires collateral, such as property, and usually offers lower interest rates and higher borrowing limits.  

Unsecured loans don't require collateral, but their interest rates can be higher. Some examples of unsecured working capital loans include lines of credit and invoice financing. 

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Working capital loans, how to power your business with essential funding

How Can Working Capital Loans Help Small Businesses?

Small businesses can face unique financial challenges, so the quick and flexible nature of working capital loans can benefit these business structures. 

Working Capital Loans can:  

  • Bridge cash flow gaps during slow seasons or when waiting for client payments. 
  • Fund necessary inventory purchases, enabling businesses to meet customer demand and maintain a competitive edge. 
  • Support marketing and advertising initiatives, helping small businesses expand their reach and generate more revenue. 
  • Provide capital for equipment upgrades or technology investments, enhancing operational efficiency and productivity. 
  • By addressing these specific needs, working capital loans can help small businesses to grow and thrive.

Industry and Business Performance 

Different industries and business structures each present their unique obstacles. Your business's industry and profits will play a role in your loan application. Lenders pay attention to your business's performance trends to assess the risk associated with the loan.  

They may look at factors such as market demand, competition, and your business's track record within the industry.  

  • The loan amount and repayment terms - The loan amount you request and the proposed repayment terms play a role in the approval decision. Lenders want to ensure that the loan amount aligns with your business's needs and that the repayment terms are feasible based on your cash flow.  

  • Business plan and purpose of the loan - A well-structured and clear business plan that explains the purpose of the loan and how it will benefit the business can positively influence its approval. It demonstrates your preparedness and strategic thinking.  

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Best Practices for Repaying Working Capital Loans

Managing your loan repayments efficiently is essential to make sure your business is operating smoothly.   

Consider the following best practices when repaying working capital loans:  

  • Create a repayment plan - Develop a clear repayment plan that aligns with your business's cash flow. Ensure that the repayment amounts are manageable and fit within your budget.  

  • Prioritise loan payments - Make loan repayments a priority to avoid late fees or penalties. Allocate funds specifically for loan repayments and set up automatic payments if possible.  

  • Monitor your cash flow - Continuously monitor your cash flow to ensure that you have sufficient funds to cover loan repayments. Adjust your repayment plan if necessary to accommodate any changes in your cash flow patterns.  

  • Communicate with your lender - Contact your lender as soon as possible if you are having difficulty repaying your loan. They can offer flexible options or work out a solution to help you navigate any temporary setbacks.  

  • Avoid unnecessary debt - While it may be tempting to take on additional loans, carefully evaluate the impact on your overall financial health. Taking on excessive debt can strain your cash flow and hinder business growth. 

Case study: Read our case study below to find out how we secured a £150k business loan for an expanding gym

working capital loans, how to power your business with essential funding case study

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Getting The Most Out of Your Working Capital Loan 

working capital loans, how to power your business with essential funding

Assess your borrowing needs 

Before applying for a working capital loan, it can help to analyse your business's financial situation thoroughly. By doing this, you can identify your specific funding needs and determine the exact amount required. This could help you avoid borrowing more than necessary and can minimise interest costs.  

Working capital loans, how to power your business with essential funding

Understand the terms and conditions  

Any financial product will have its benefits and clauses to be aware of. It can be helpful to read the loan terms thoroughly and ensure you're aware of any fine print.

If you’re unsure what direction to take, it is always beneficial to get help from a financial professional who can advise on the best course of action for your business and help you understand the terms of your commitment.  

Pay attention to interest rates, repayment schedules, associated fees, and potential penalties. Make sure you are comfortable with the terms before signing the contract.  

Working capital loans, how to power your business with essential funding

Monitor cash flow and adjust repayment plan if needed 

It can be advisable to keep track of your cash flow and ensure you can meet your loan repayments comfortably. If your circumstances change and you anticipate difficulties in repayment, discuss potential adjustments with your lender.   

Renegotiating repayment terms can help you avoid default and maintain a positive relationship with your lender.  

Working capital loans, how to power your business with essential funding

Maintain open communication with your lender   

It's important to maintain a good working relationship with your lender. It can be helpful to communicate any significant changes or challenges your business may face promptly. Building trust and transparency can lead to more favourable terms, potential refinancing options, or access to additional funding in the future. 

Working capital loans, how to power your business with essential funding

Evaluate the impact on your business   

Continuously assess the effect of the working capital loan on your business's financial health. Monitoring key performance indicators such as cash flow, revenue growth, and profitability can help you decide how to approach future funding options.

Has the loan delivered the expected benefits? Depending on the answer, adjusting your strategies accordingly can benefit your business in the long term. Remember to assess your funding needs, compare loan options, use the funds strategically, and maintain open communication with your lender.   

With careful planning and responsible financial management, a working capital loan can fuel your business's success and propel it towards long-term profitability.

Check Eligibility »

Working Capital Loans, How to Power Your Business with Essential Funding

How Do I Apply for a Working Capital Loan?

At Clifton Private Finance, our business finance specialists have access to various finance solutions from across the market. We can help you choose the right finance solution for your business requirements.

Our team of advisers will help you to source the most competitive cash flow funding solution.

Our business loan service provides:

  • Market-leading rates
  • Fast service - finance within 2 to 7 days
  • Access to specialist lenders 
  • Expert advice - professional service 

Next Steps

As a specialist property finance broker, Clifton Private Finance can provide a clear picture of the options available to you. We will assess your circumstances and arrange a finance solution tailored to your needs.

Our offices are based in Bristol and Cardiff.

We can help you access the funding you need as quickly as possible to avoid creating any financial issues. 

Frequently asked questions

You can find the most common questions asked about business loans below. If you have a question that isn't answered here, please email us at commercial@cliftonpf.co.uk

Since business loans are used across practically all industries, they're useful for anyone. In particular, they're most commonly used by small or medium businesses. For smaller businesses, the loan can be used to cover startup costs, including staff hiring and stocking inventory.

For medium or larger businesses, a business loan is useful for acquiring machinery and equipment used to grow and elevate the business.

The uses for a business loan, however, are wide and flexible, and can be used in a variety of ways to grow and enhance your business. 

Business loans offer an effective solution for businesses short on capital, but there are several risks involved with receiving loans. The primary risk of a business loan is its financial risk. Should you receive an offer from a lender that lacks flexibility, has a particularly high interest rate or has other factors that make it difficult to repay the loan, there is a risk of an impact on your credit score, loss of secured property, or fines.

 

Businesses use finance to pay for a variety of products, properties, and more. As a business, finance is commonly used to start up businesses, and cover upfront costs, including staff payroll, equipment and inventory stock.

Business finance is also used for expansion: if you're looking to improve the speed, efficiency, or capabilities of your business, and it's a fantastic way of securing funding to support growth by covering expensive equipment costs.

 

Business finance involves the direct involvement of brokers in organising financial transactions, business finance brokers liaise with clients and lenders to secure the best coverage of a requested loan amount, as well as the most competitive interest rate.

Accountants, however, are solely responsible for the documents and reporting of the transactions.

When it comes to business finance, a business loan is perhaps the most standard method of acquiring capital for your business. These traditional loans are highly flexible, with a broad range of applications to support the growth and development of your business.

The following is an example of a business loan application that is particularly common:

Scenario:

A construction company is looking to acquire equipment to undertake a large project, but they lack sufficient funds to purchase the equipment outright.

Instead, they consult with Clifton Private Finance, who find the very best market rate business finance deals and organise a £100,000 loan for the construction company.

Process:

After an initial consultation with one of our business finance brokers, the broker reaches out to a wide panel of lenders, offering a range of competitive offers to review. The broker receives an offer for the full amount with a competitive interest rate, allowing the owner to pay the business finance loan without greatly reducing cash flow.

Result:

With the purchase of the new equipment, the construction company can now complete the large project, and once complete, the large profit generated from the project itself is more than enough to cover the cost of the business loan.

Let us do all the hard work of finding the right product and lender for your circumstances. We secure business finance for applications of all types, and we negotiate competitive lending to meet your needs and timescales.

Jonathan Moffatt
Head of Business Finance

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