Working capital loans are designed to cover everyday business costs, such as payroll, inventory, and rent. They typically run for 1-2 years and, for loans under $100k, often don't require collateral.
Because the lender deposits the funds directly into the client’s account, they'll need to see how the funds will be used to generate income—and that your client’s business is operating profitably—before they can approve the application.
Types of loans
Through Working Capital DIY, you’ll have access to two core products: term loans and overdrafts.
Let's go through the common features and benefits of these products, so you can have richer, more informed conversations about working capital loans with clients.
Term loans
Best for a one-off and specific need—for instance, if you need extra stock for the holidays or are planning a new office fit-out.
Features
- Interest from 8% simple interest to 20%+
- Borrowing from $5k-$1m
- Funding in as little as 24 hours from submission
- Terms usually 12–24 months (up to 36 months with select lenders)
- Low-doc assessments available up to $150,000
- Interest rate generally fixed for the term
Benefits
- Fast access to funds with a (relatively) straightforward approval process
- Short-term financial commitment which no long-term debt burden
- Less interest accrued as the loan term is relatively short
- Demonstrating ability to repay a loan can boost the client's credit score
- Fees and interest paid are tax deductible
- Unlike credit cards, where interest continues to accrue even if you fall behind on repayments, usually principle and interest repayments are standard with most facilities
Line of credit/Overdraft
Best for an ongoing, recurring loan need—like covering quarterly invoices or seasonal operating expenses (insurances or event production, for example).
Features
- Revolving facility
- Repayments usually based on the amount drawn
- When unused, only a small maintenance fee is paid (typically weekly, monthly, or annually)
- Repayments can be interest-only or principal and interest
- Loan terms of up to 60 months available
Benefits
- Flexible facility, with funds available whenever needed
- Interest charged only on the amount used
- Longer advertised loan terms
- Can be stacked with term loans
- Provides security to address ongoing cash flow needs as they arise
- Typically priced slightly lower than term loans
- Ability to redraw