Business loan questions · Sorbus Finance
Can I Get a Business Loan for Working Capital?
Choose the structure by the shape of the cash gap: a term loan can suit a defined one-off amount with a clear repayment plan; revolving credit or an overdraft may fit a fluctuating need; invoice finance may fit cash tied up in eligible unpaid invoices. For broader cash-flow funding options, start with the existing Cash Flow Business Loans page. A lender assesses the cause and affordability; borrowing is not a fix for a continuing deficit.
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What this means for your business
Working capital describes cash used in day-to-day trading, but it does not identify one finance product. Select by the pattern: a known one-off amount with a clear repayment source may be compared with a term loan; a recurring, variable requirement may call for revolving credit; an overdraft can cover short account fluctuations but may be reviewed or repayable on demand under its terms; invoice finance is linked to eligible invoices and their debtor profile.
For an overview of the existing cash-flow lending proposition, go to the Cash Flow Business Loans page. This question page is a route selector, not a replacement product pitch. Before discussing any option, map supplier, payroll, tax and other payment dates against expected customer receipts, identify the peak gap, and determine whether it repeats or is tied to invoices. A lender will assess the cause, account conduct, affordability and the product’s terms.
Hypothetical example: a contractor regularly pays labour and materials before customer invoices are settled. If a particular eligible invoice is the source of the gap, it can compare invoice finance; if cash needs rise and fall across several costs, it can compare a revolving facility or overdraft; if it needs one known sum for a defined period, it can assess a term loan. It should compare costs and repayment obligations under delayed-receipt scenarios rather than assuming one structure fits every cycle.
What a lender may examine
- Whether the need is one defined lump sum, a fluctuating recurring gap, an account-level shortfall or cash tied up in eligible invoices.
- Cash-flow forecasts, existing commitments and whether the business can meet repayments while continuing to trade.
- Bank-account conduct, current overdraft use and the terms or review points of existing facilities.
- For invoice finance, the invoice profile, debtor concentration, payment terms and eligibility under the proposed facility.
- The reason for the shortfall and whether it is temporary or reflects recurring costs exceeding income.
A practical example
Hypothetical example: a business compares four routes for a cash gap. A single, quantified payment need with a defined repayment source points to assessing a term loan; a gap that expands and contracts with trading points to comparing revolving credit; a short account fluctuation may call for reviewing an overdraft’s terms; a gap attached to eligible unpaid invoices points to comparing invoice finance. If it is a general cash-flow requirement, the existing Cash Flow Business Loans page is the primary next step.
Illustrative scenario only, not a lender quote, case study or indication of approval.
When a business loan may make sense
- The cash gap has a clear cause and the chosen structure matches whether it is fixed, variable, overdraft-related or invoice-linked.
- The business can explain repayment from trading cash flow and test the effect of delayed customer receipts.
- The business remains viable after borrowing and is not relying on fresh debt to cover recurring losses.
When another finance product may fit better
- Cash Flow Business Loans
Primary existing guidance and product route for business cash-flow funding.
- Business loan or overdraft?
Compare a fixed borrowing term with a revolving facility for fluctuating needs.
- Business loan or invoice finance?
Useful when unpaid invoices are the main source of cash tied up.
Eligibility considerations
- A lender may look for evidence of viable trading and a credible repayment source.
- Trading history, account conduct, credit profile and current debt can affect appetite.
- Some facilities depend on the nature of customers, invoices or seasonality.
- The lender decides criteria, affordability and terms on the complete application.
Information to prepare
- Recent business bank statements, filed accounts and current management accounts.
- A weekly or monthly cash-flow forecast that identifies the peak funding gap.
- A schedule of existing loans, overdrafts, supplier credit and other liabilities.
- Customer invoices, contracts, purchase orders or supplier terms supporting the forecast.
- A clear explanation of the cause, proposed amount, duration and repayment source.
Risks, costs and limitations
- Scheduled repayments continue even if customer receipts are delayed.
- Repeatedly borrowing for routine costs can mask an underlying margin or pricing problem.
- A term loan may be a poor fit for a fluctuating need and create a payment after the gap ends.
- Overdrafts can be reviewed or recalled under their terms; availability is not permanent.
- Fees, security, guarantees and total repayment vary by product and lender.
This is general guidance, not a lender's offer or a promise of eligibility. Each provider applies its own credit policy, checks, pricing, security requirements and terms. Borrowing creates a repayment obligation; review the total cost, fees and any personal guarantee before proceeding.
How Sorbus Finance can help
Sorbus Finance is an independent broker, not a lender. We can help identify whether your requirement is a defined lump sum, a fluctuating facility need, an overdraft requirement or cash tied up in eligible invoices, and direct you to the existing Cash Flow Business Loans guidance where appropriate. We can discuss lender-specific options across our panel of 150+ UK lenders and explain their terms; approval is not guaranteed. In almost all circumstances, Sorbus does not charge an upfront broker fee; if an exception applies, any fee will be disclosed before you proceed. Discuss your funding requirement or run the free Business Finance Health Check.
Sorbus Finance is an independent broker, not a lender. We can discuss options from a panel of 150+ UK lenders. There is usually no upfront broker fee; any proposed arrangement and commission will be disclosed. An enquiry is without obligation. Funding, rates and terms are subject to the lender's assessment and are never guaranteed.
Frequently asked questions
Can I use working-capital finance to pay wages?
A lender may consider finance for legitimate business operating costs, potentially including wages, but it will assess the purpose and ability to repay. If payroll cannot be met because income is consistently insufficient, new debt may not resolve the underlying issue. Be candid about the cash-flow position and consider professional advice if liabilities are at risk.
Which type of finance should I consider for working capital?
A term loan can suit a defined lump sum with an identifiable repayment source. Revolving credit or an overdraft may suit a changing need, although overdrafts can be reviewed or repayable on demand under their terms. Invoice finance is linked to eligible unpaid invoices. For the existing product route and broader cash-flow guidance, see Cash Flow Business Loans.
Can a new business get a working-capital loan?
Some lenders consider newer businesses, but limited trading history can make it harder to evidence cash flow and repayment capacity. A lender may look closely at the business plan, owners’ experience, contracts, capital and personal credit. Criteria vary and no approval can be assumed.
How can I estimate the working-capital amount needed?
Create a cash-flow forecast showing actual dates for receipts and payments, then identify the lowest projected balance and test delays to income. Include tax, supplier deposits, wages, existing repayments and a sensible contingency. This produces a more grounded funding discussion than estimating from annual turnover alone.
When might a revolving facility or overdraft suit better than a term loan?
They may be worth comparing when the requirement rises and falls rather than being one known sum, but their availability, fees, review rights and repayment terms differ. An overdraft may be repayable on demand under its terms. A term loan instead creates scheduled repayments on a set advance, including if receipts arrive later than expected.
What if the cash-flow gap comes from unpaid invoices?
Invoice finance may be relevant where eligible invoices to suitable customers are the main source of cash tied up. It works differently from a general loan and fees, advance mechanics, debtor eligibility and customer notification can vary. Compare it with other options using the actual invoice profile.