What are Working Capital Loans & Lines of Credit?
A working capital loan is short-term, revenue-based financing of $100K to $10M+ that funds in 2 to 10 business days, priced at 1.25%–4% per month. As of 2026, it's the fastest way to cover payroll, inventory, or growth-driven cash gaps when a bank can't move quickly enough, and at the same speed as a merchant cash advance it costs roughly half as much because the payment is monthly rather than a daily extraction from sales.
How It Works
A working capital loan is the fastest way to fund a healthy business when timing, not the underlying numbers, is the problem. Payroll hits Friday, a big invoice gets paid the 15th, and the bank's three-week approval cycle does not bend. This is the tool for that gap.
Lenders here look at your revenue and bank deposits over the last twelve months rather than at collateral. If the business is profitable enough to comfortably carry a fixed monthly payment, you qualify. As of 2026, loans typically run around 10–15% of annual revenue and fund in 2–10 business days.
It is easy to confuse this with a merchant cash advance, or MCA, but the difference matters. MCAs pull repayments daily or weekly straight from your sales, which can choke cash flow and rarely let you save by paying off early. The product we use is paid monthly and rewards early payoff, which cuts the real cost roughly in half.
Often, this loan is a bridge. We close it in days, then spend the next six to eight weeks building a permanent line, usually one secured by your unpaid invoices, that takes over once it is in place.
The right fit: a healthy business, capital needed in days, no large pool of commercial invoices yet to borrow against. The wrong fit: already juggling multiple MCAs, revenue trending down, or financing an acquisition. We will say so up front rather than waste your time.
Quick Facts
| Facility / Loan Size | Loan sizes from $100K to $10MM+, sized at roughly 10–15% of annual revenue |
|---|---|
| Funding Timeline | Funding in 2–10 business days; emergency payroll situations have closed in 24–72 hours |
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Key Features & Benefits
Loan sizes from $100K to $10MM+, sized at roughly 10–15% of annual revenue
Monthly payments, not daily or weekly extractions from sales like an MCA
Terms of 6–48 months, with revolving line structures available from select lenders
Funding in 2–10 business days; emergency payroll situations have closed in 24–72 hours
Pricing 1.25%–4% per month all-in; the best-priced revolving versions sit in the mid-teens true APR
Real prepay forgiveness on the better products: pay off early, save the unused interest
Subordinate options that don't require senior lien position (will sit behind an existing factor or ABL)
Underwritten on revenue history and deposit consistency, not on credit score gates or hard assets
Personal credit matters more here than in asset-based lending. A clean 680+ FICO meaningfully widens options
Used as the "step one" bridge while a slower asset-based facility (ABL, factoring, SBA) underwrites in parallel
A consistent 3-month run of healthy deposits is the practical gate. A soft December tells a story lenders don't want to see
Terms, costs and timelines
| Pricing (2026) | 1.25%-4% per month, roughly 18%-48% effective APR |
|---|---|
| Structure | Fixed monthly payment over 6-48 months. Revolving versions available from select lenders |
| Payment frequency | Monthly. No daily or weekly ACH extraction from sales |
| Early payoff | The better products forgive unearned interest, which can nearly halve the real cost. Confirm this in writing |
| What underwriting reads | 12 months of bank statements, weighted to the last 3. No appraisal, no field exam |
| Owner credit | Matters more than in asset-based lending. Clean 680+ widens the options meaningfully |
| Lien position | Subordinate structures available; will sit behind an existing factor or ABL |
| Serve fee | A success fee, earned only on closing. Agreed in writing before you sign anything. No retainers, no upfront costs |
How this plays out, with numbers
A specialty food manufacturer doing about $13MM in revenue lands shelf placement with a regional grocery chain. Filling it means roughly $900K of additional raw material and a second production shift, starting in three weeks. The company is profitable, has a $1.5MM bank line that is drawn to $1.3MM, and has never taken outside capital. The first offer to arrive is an advance: $1MM in 48 hours at a 1.32 factor rate, so $1.32MM of payback pulled at 12% of daily deposits. On the projected nine-month payback that is an effective cost north of 68%, extracted daily against receivables that pay in 45 days. It would fund the shelf placement and squeeze the cash the shelf placement depends on. What we place instead is $1.4MM of revenue-based financing at 2.1% per month over 30 months, funded in seven business days, with written forgiveness of unearned interest on early payoff. Monthly payment lands near $63K. In parallel, an asset-based facility goes into underwriting against the growing receivable book from the chain, and closes about nine weeks later at Prime plus 3%. The company retires the RBF at month eleven and, because the prepayment terms were real, pays roughly $214K of total interest rather than the roughly $390K the full 30-month schedule implied. Same speed as the advance, and a little over a quarter of the cost.
A representative structure, sized to a typical file. Details are generalized, we do not publish client specifics.
When this is the wrong answer
Half of being useful is being clear about what does not work. If one of these describes you, the honest path is below, and it may not run through us.
If you have $1MM+ of receivables from creditworthy business customers, an asset-based line or invoice financing at Prime plus 1%-5% is a fraction of the cost of revenue-based financing and the facility grows with sales instead of amortizing away. Do not buy RBF because it is faster if the cheaper facility can be in place in three weeks. We will usually structure both: RBF now, the cheap facility underwriting in parallel.
Adding a term loan on top of a stack is stacking, whatever it is called. The conversation you need is a consolidation that pays those positions off and closes them. That is a different page and a different lender set.
Revenue-based underwriting reads trailing deposits, so a declining trend prices badly or declines outright. If there is collateral, an asset-based facility looks at what you own rather than at the trend, and is the better door.
RBF is sized to 10%-15% of revenue, which almost never covers a purchase price. Acquisitions want SBA 7(a) for the price and a bridge for the timing gap.
Below that the revenue-based options thin out and most of what will look at you are advances. Still worth a conversation, because sometimes there is an asset to lend against that changes the answer entirely, and if there genuinely is not, we will tell you rather than put you into something we would not want to sign ourselves.
Working Capital Loans & Lines of Credit - Common Questions
Get answers to the most common questions about working capital loans & lines of credit
See It In Action
Real companies using Working Capital Loans & Lines of Credit to solve their capital challenges
$1.475MM Bridge for Medical Practice M&A
A surgeon needed $1.475MM in bridge capital before closing his hospital acquisition. We funded it in 2 weeks. A lesson in mentorship and partnership.
Oct 7, 2025
How Long Does Business Financing Really Take?
Business financing timelines vary wildly. Some deals close in days, others take months. Here's exactly what to expect at each stage.
Jan 24, 2026
Subordinated Bridge for Data Center Operator
Data center company needed fast, flexible liquidity to cover construction overruns before their Q1 equity capital close.
Dec 19, 2025
How It Compares
Side-by-side breakdowns of Working Capital Loans & Lines of Credit against the structures it most often competes with
SBA Loan vs Working Capital Loan
SBA loans are the cheapest small-business capital out there at Prime + 2–3%. Working capital loans fund in days at 1.25–4% per month. Here is how to choose.
Working Capital Loan vs Line of Credit
A working capital loan is a one-shot lump sum on a monthly payment. A line of credit revolves so you only pay for what you draw. Here is how to choose.
Equipment Financing vs Sale-Leaseback
Equipment financing funds a new purchase. A sale-leaseback extracts cash from gear you already own. Two products, two very different uses.
Other Funding Solutions
Invoice Financing
Invoice factoring is the practice of selling unpaid B2B invoices to a factor for 75%–95% of face value within 24–48 hours, then receiving the balance (minus a 0.25%–1% fee per invoice) when the customer pays. As of 2026, pricing typically runs Prime + 1–6%, facility sizes range from $250K to $100MM, and the facility scales automatically with sales. Approval looks at your customers' credit rather than your tax return, which is why it works for growing companies whose financials don't yet tell the full story.
Learn more about Invoice Financing →Equipment Leasing
& Financing
Equipment leasing and financing covers $100K to $50MM+ of machinery, vehicles, or technology over 3–7 year terms, with advance rates of 70%–85% of liquidation value and pricing of Prime + 3–10%. As of 2026, financing the asset directly is almost always cheaper than drawing on a working-capital line for the same purchase. Sale-leaseback structures let you extract 50%–70% of the equity from equipment you already own without adding a new debt covenant.
Learn more about Equipment Leasing & Financing →Asset-Based Lending
Asset-Based Lending (ABL) is a revolving credit line, typically $250K to $25M priced at Prime + 1–5%, secured by a combination of accounts receivable (70%–90% advance), inventory (50%–75% advance), equipment, and sometimes real estate. As of 2026, ABL is the standard replacement for a maxed-out bank line when a company has hard assets but doesn't fit a traditional credit box. Most bank ABL desks start at $3–5M minimums, which is why deals below that size usually need an advisor with multiple lender relationships.
Learn more about Asset-Based Lending →