Working Capital Loans Explained: Everything You Need to Know

Every business, no matter how successful, goes through cash flow ups and downs. Maybe sales are slow this season, or maybe you just landed a big contract that requires extra inventory and payroll before you get paid.

That’s where a working capital loan can save the day. Designed to cover everyday expenses, working capital financing helps businesses stay afloat and grow—even when cash is tight.

In this guide, we’ll explain what working capital loans are, how they work, their benefits, and how to qualify.

What Are Working Capital Loans?

A working capital loan is short-term financing designed to cover day-to-day business operations. Unlike long-term loans used for buying real estate or heavy equipment, these loans help manage:

• Payroll
• Rent or utilities
• Inventory purchases
• Marketing campaigns
• Seasonal slowdowns

Think of it as a financial cushion that keeps your business running smoothly.

How Working Capital Financing Works

The process is simple:

1. Apply for a Loan – Submit your financials and business info.
2. Get Approved Quickly – Lenders review revenue and cash flow more than credit.
3. Access Funds Fast – Many working capital loans fund within 24–72 hours.
4. Repay in Short Term – Repayment terms usually range from 6–24 months.

Types of Working Capital Loans

1. Short-Term Business Loans

Lump-sum cash repaid with fixed payments over a set period.

2. Business Line of Credit

Flexible funding—you draw only what you need, pay interest only on what you use.

3. Invoice Financing

Advance cash against unpaid invoices (great for slow-paying clients).

4. Merchant Cash Advance

Future credit card sales are used as repayment. Fast but often more expensive.

5. SBA Working Capital Loans

Government-backed loans with favorable rates but longer approval times.

Benefits of Working Capital Loans

1. Improved Cash Flow

Cover expenses without waiting for customer payments.

2. Fast Approvals

Alternative lenders like Chasewood Financial can approve and fund loans in days, not weeks.

3. Flexibility

Use funds however your business needs—payroll, inventory, or marketing.

4. No Long-Term Debt

Since terms are shorter, you’re not stuck with payments for years.

5. Business Growth Opportunities

Helps you jump on opportunities like bulk inventory discounts or new contracts.

Who Should Consider a Working Capital Loan?

• Seasonal businesses (retailers, tourism, construction)
• Small businesses that experience delayed customer payments
• Growing companies that need a short-term boost
• Startups struggling with early expenses

Working Capital Loan Example

A retail store needs $50,000 to buy seasonal inventory.

• Loan approved in 48 hours.
• Term = 12 months.
• Monthly payments = $4,500.
• The store sells inventory, makes a profit, and easily repays the loan—without missing sales opportunities.

FAQs About Working Capital Loans

Q1: Do I need collateral for a working capital loan?

Not always. Many loans are unsecured, though stronger applications may get better rates with collateral.

Q2: Can I get a loan with bad credit?

Yes—lenders often focus on revenue and cash flow more than credit score.

Q3: How much can I borrow?

It depends on your revenue, but loans typically range from $10,000 to $500,000+.

How to Apply for a Working Capital Loan with Chasewood Financial

At Chasewood Financial, we make working capital loans simple, fast, and accessible.

Approval in as little as 24 hours
Flexible repayment terms
Loans tailored to your cash flow needs

Need extra cash flow for your business? [Apply for a working capital loan today] and keep your business moving forward.