Working capital finance – Keep your business moving
Running a business requires consistent cash flow to cover day-to-day expenses such as payroll, stock, rent and supplier invoices. When income doesn’t arrive on time, or when your business grows faster than your cash reserves, working capital finance can provide the short-term funding you need.
With Funding Options by Tide, you can compare working capital finance solutions from 80+ UK lenders. We’ve supported over 17,000 SMEs, securing more than £1bn in funding.
What is working capital finance and how it works
What is working capital finance?
Working capital finance is a type of funding designed to cover short-term business needs. Instead of using it for long-term investments like property or machinery, it’s used to bridge gaps in everyday cash flow.
It helps businesses pay bills, staff, and suppliers, even when payments from customers are delayed. It can also support seasonal fluctuations or provide a buffer for unexpected costs.
How does working capital finance work?
A lender approves a facility such as a business loan, invoice finance, or revolving credit facility.
You access the funds when required – either as a lump sum or flexible drawdowns.
Repayments are made over an agreed term, usually with interest and fees.
Once repaid, you continue trading without disruption to your working capital cycle.
Types of working capital finance
Short-term loans
Flexible borrowing for cash flow.
Invoice finance
Invoice finance releases money tied up in unpaid invoices.
Revolving credit facility
Draw down funds when needed, repay, and re-borrow. A flexible alternative to a fixed-term loan.
Merchant cash advance
Merchant cash advance borrows against future card sales
Asset finance
Asset finance is used to fund vehicles, machinery and equipment.
Overdrafts
Flexible but often with lower limits.
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If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
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Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Is working capital finance right for your business?
Self-assessment checklist
£100k-£5m turnover: You might need working capital finance if you have seasonal sales, wait 30+ days for customer payments, need to purchase stock before busy periods or currently use personal funds for business expenses.
£5m+ turnover: You could need working capital finance if you’re comparing costs against existing credit lines, need faster access than traditional banking or want to diversify your sources of funding.
When it makes sense (with examples)
Working capital finance can make sense when you have temporary cash flow gaps rather than fundamental profitability issues.
For example, a £3 million catering business might need £150k for a large event contract, while a £15 million distribution company could use £800k to take advantage of bulk purchase discounts from suppliers.
When to consider alternatives
If your business consistently operates at a loss, traditional term loans might be cheaper for long-term investments like equipment or property.Companies with strong balance sheets might prefer to use their existing bank facilities. And those needing over £1 million might want to consider asset-based lending or mezzanine finance.
Red flags to look out for
Some lenders could end up costing you more than you expect. So consider avoiding lenders that offer guaranteed approval without proper assessment, unclear fee structures or upfront payments. Be particularly wary of costs exceeding 50% APR unless it’s for very short-term emergency funding.
Always make sure you understand the total borrowing costs including all fees.
Benefits of working capital finance
Pros and cons
Pros | Cons |
Smooths cash flow gaps | Short-term cost can be higher than long-term loans |
Keeps suppliers and staff paid on time | May require collateral or personal guarantees |
Flexible options from loans to invoice finance | Over-borrowing can strain future cash flow |
Often quicker to arrange than equity or long-term loans | Not designed for major investments |
Helps seize growth opportunities without waiting for invoices to clear | Interest and fees vary by product |
How does Funding Options work?
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We’ll ask a few questions about your business and the reason for your loan.
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How to apply with Funding Options by Tide
No fees for comparing and no obligation to proceed.
Tell us about your business and the funding you need.
Compare tailored offers from 80+ UK lenders.
Provide documents for underwriting.
Finalise your facility and receive funds quickly.
Why choose Funding Options by Tide?
Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
Compare 80+ lenders
Access a wide range of trusted lenders: from high street banks to alternative finance providers.
No fees or obligations
Our service is completely free to use. You’re in control of who you borrow from.
Fast, personalised results
Get real-time matches based on your business profile and funding needs.
Expert support when you need it
Our team is here to help — by phone, chat, or email.
Want to learn more about working capital?
Is working capital finance secured or unsecured?
It depends on the product. Loans can be unsecured, while invoice finance and asset refinance use business assets as security.
How much can I borrow?
This depends on turnover, credit profile and product type. Facilities can range from £1,000 to millions.
How quickly can I access funds?
Some facilities, like invoice finance or revolving credit, can be set up in 24–48 hours.
Is it suitable for startups?
It can be more difficult for startups without trading history, but some lenders may consider them. See business loans for new businesses.
What’s the difference between working capital finance and a business loan?
Working capital finance is short-term funding to cover day-to-day needs. Business loans can also fund longer-term investments.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Joe Morley
Business Finance Lead
Joe has been helping UK businesses secure the funding they need since 2015. Over the years, he’s supported hundreds of SMEs in accessing millions of pounds for everything from purchasing essential assets to unlocking working capital for day-to-day operations. As Head of Sales at Funding Options, Joe leads a large team of expert Business Finance Specialists dedicated to finding the right solution for every customer. His goal is simple - to make securing finance straightforward, stress free, and tailored to each business’s needs.