Working Capital Loans

Grow Your Business With Intelligent Financing Solutions

Lendvo is a special finance company that caters to the online business community. We started our company when we saw how much our friends were struggling to get financing for their digital business. After all we are in the 21st century and so much business happens online. The funny thing is that traditional banks are stuck in the old days and have a really hard time to make heads or tails out of online sellers. Well, we knew there had to be a better way and when we couldn’t find one we started Lendvo. We specialize in providing loans to online businesses of all shapes and sizes to help their business grow!

Working Capital Financing Rates, Terms & Process

Here are some of the key points about the financing solutions we can provide. For your specific terms please fill out an application or contact us with any of your questions.

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Financing Amounts

  • We are able to provide financing solutions of up to $100,000 per working capital loan.

Custom Terms

  • We specialize in being able to underwrite digital business models and assets. This allows us to work with you to create a solution that fits your needs.

Financing Rates:

  • Rates for working capital financing can range depending on the metrics of your specific business. Rates start at 1.5% per month.

Loan Duration:

  • We pride ourselves on providing capital very quickly and in a flexible manner. We can structure loans ranging in length from as short as 1 month to as long as 2 years.

General Overview Of Working Capital Loans

Working capital is equal to current assets minus current liabilities. Businesses rely on their working capital to pay for everyday expenses. To put it into a real-world example, consider an online merchant who bills customers for shipments. Add the amount of money owed by the customers to the merchant’s current inventory value, and subtract that total from what the merchant owes to suppliers and any workers. The resulting money is working capital.

Current Assets – Current Liabilities = Working Capital

When a company grows, it starts to tie up a considerable amount of money in working capital. The working capital also includes any bank accounts or financial accounts held by a company. In the previous example, consider what may happen with the merchant if there are a lot of past-due customer accounts when an annual slow period during the summer is approaching. What happens if the online merchant also needs money to pay for restocking shipping supplies and paying several workers? The merchant needs a loan.

Now, consider another example where the merchant is doing well financially but needs a little extra money to expand business operations. The merchant needs funds to hire new workers and pay for extra online marketing. Since it will take some time for the new workers and marketing efforts to increase customer orders and income, a short-term loan makes sense. If a business needs money to pay for day-to-day operations when revenue is down or to expand when the business is doing well, a working capital loan is a good solution.

When To Use Working Capital Loans

Many small business owners dip into their own savings accounts or nest eggs to pay for everyday business expenses during slow times. Their reasoning is to cover operational costs without incurring debt. However, having a loan to repay responsibly is a good way to build a credit history, and it saves small business owners from having to empty out their personal emergency funds or savings accounts. When a business owner starts thinking about dipping into personal accounts or putting off one financial obligation to meet another, it is time to consider a working capital loan.

The Working Capital Loan Process

To better understand if a working capital loan is right for individual business needs, it is important to know how they function, how the application process works and how they are repaid. The following sections cover some of the most common questions asked about working capital loans.


The first step is submitting an application. When unsure if a working capital loan is the best option, apply for general financing with open funding options. Applications are usually processed quickly, and it may take up to a week for approval. Applicants who submit all necessary information immediately usually receive a quicker response for a working capital loan. The application process requires submitting some basic information about the business, the business owner, income, assets, liabilities and financial needs. There is a credit check, and applicants should have a strong credit rating to be approved for a reasonable interest rate and an ample loan amount.

Loan Amounts

Loan amounts vary depending on a borrower’s ability and likelihood to repay. Businesses with the ability to pay back a sizable loan may borrow up to $100,000. The lender determines eligibility and what amount to offer after reviewing the application and supporting documentation.


Interest rates start as low as 1.5 percent for working capital loans. A specific interest rate depends on several aspects of an individual business, which is determined based on documentation. For borrowers who want a faster funding solution without sacrificing a good interest rate, this type of loan is a favorable option.

Loan Terms

While traditional loans may use vehicles or real estate as collateral, most working capital loans only use a borrower’s accounts receivable as collateral. However, some lenders have exceptions and may have stricter requirements for borrowers who are at a higher risk of defaulting. Repayment terms may be as short as a month or as long as 2 years. As a condition of funding, the loan must be signed and guaranteed by the borrower. If the business has multiple owners, they must all agree on the loan and sign.


There may be prepayment penalties. The loan can be paid off early or as agreed. However, there are penalties for not following the repayment terms of the loan. Lenders explain these terms and deadlines, and the terms and penalties are outlined in the contract as well. Be sure to read and understand them before signing.

Uses For A Working Capital Loan

Working capital loans are not ideal for purchasing large assets or for long-term funding. These loans are meant to be short and temporary. If a company expects a slow upcoming quarter because of late-paying clients, a working capital loan is a good solution. It is helpful for covering the deficit of making expansion attempts of buying more inventory or hiring more help until the business increases its client base and revenue. The list of possible uses is long. Lenders are happy to discuss possible uses for these loans with potential borrowers.

Advantages Of Working Capital Loans

For any business needing money to expand or simply pay day-to-day operating costs, there are several advantages in choosing a working capital loan. These are a few of the top benefits.

Protecting Company Ownership

With investor-based funding, a business owner would have to give up a portion of the company as part of the financing terms. This also means giving up the right to make independent decisions for the company. However, this is not the case with working capital loans. Borrowers receive funding without having to give up partial ownership or making decisions in how the business operates.

Fast Funding

One of the greatest advantages of working capital loans is how fast they are funded. Businesses may have the funds in the bank within a week. For business owners who are facing bill due dates that come with interest hikes or penalty fees for paying late, quick funding prevents more financial strain.

Ability To Meet Obligations

When business owners fail to pay their monthly bills over time, they often wind up filing for bankruptcy. It may not seem like a big deal to pay a few bills late. However, this usually leads to a downward spiral of putting off several financial obligations to meet others. Creditors impose late fees and increase interest rates. This causes a credit rating to drop.

When the business owner applies for a loan to get out of the ever-deepening hole of debt, it is harder to get a decent interest rate with a decreased credit rating. Paying more to get out of debt leads to bankruptcy in many cases. It is better to simply acquire a working capital loan as soon as money is needed to pay monthly bills. Since funding is fast, business owners can pay their bills immediately.

Short Repayment Terms

Signing a contract to make long-term payments can be disheartening for business owners. With working capital loans, the repayment terms are often measured in months. However, businesses with less financial freedom may have up to 2 years to repay.

Discretionary Freedom

Working capital loans are meant to pay for day-to-day operative expenses or expansion needs in the business. However, a lender will not tell a borrower to spend the money only on inventory or only on the payroll. The borrower is free to decide how to spend the funds. Since borrowers know the prioritized needs of their business and lenders do not, borrowers are responsible for using the funds wisely.

Credit Improvement

Having good credit is important for working capital loan approval. However, it is still important to maintain good credit and try to improve it whenever possible. If the borrower does not default and makes all loan payments on time, the loan will have a much more positive impact on the borrower’s credit history than if the borrower had paid several bills late instead.

Disadvantages Of Working Capital Loans

Every financial product has an upside and a downside. While there are many clear benefits of working capital loans, potential borrowers must also consider the disadvantages before signing a contract.

Possible Collateral Required

If a borrower does not have a high credit rating and a low default risk, a lender may only offer a secured working capital loan. To secure the loan, the borrower may have to put up assets as collateral. A home, a factory or even an online domain may suffice. Different lenders have different rules. However, they often accept property or assets that are still mortgaged or on loan for such agreements.

Possible High Interest Rates

Although interest rates are fair with working capital loans, they are typically higher than the rates of secured business loans. Borrowers must pay more in interest and principal over a working capital loan’s duration than they would with a low-interest secured loan.

Higher Monthly Payments

With a higher interest rate and a shorter repayment term, the monthly payments are higher with working capital loans than they would be with long-term loans with lower interest. However, this is only problematic when a business wants to take out a large amount of money. Although many businesses qualify for a larger amount, they often accept a smaller percentage of that qualification amount. Only take out the amount required to meet financial needs.

Potential Qualification Problems

Some business owners may have a hard time qualifying for a working capital loan. A good credit rating and a good business credit history are both necessary. For new startups with a nonexistent credit history, approval is unlikely. Businesses with a poor or fair credit history may not qualify or may have to set up a special arrangement for approval.

Possible Negative Credit Impact

If the loan is repaid according to the terms, it will not necessarily be a negative item after it is repaid. Occasional loans that are repaid fully and on time can help build a better business credit history. Missing payments, defaulting or having to take out additional loans to cover the current loan can negatively impact credit. Also, it is not a good idea to take out frequent working capital loans to meet business expenses even if they are repaid on time. Having a history of a lot of loans in a short amount of time is not good for a company’s credit portfolio.

Is A Working Capital Loan The Right Answer?

The answer to this depends on each company’s unique needs. After learning how these loans work, their advantages and their disadvantages, it is easier to determine the answer. Use the following supplemental self-assessment questions to determine if a working capital loan is optimal.

Can I handle a short repayment term for the amount I need?

Do I have good credit and an established credit history?

Do I need $100,000 or less?

Can I handle paying the interest rate?

Do I need money within the next week or two?

Am I having trouble paying day-to-day operation costs?

Do I need money to fund the upcoming payroll cycle?

Will I have to put off bills to meet payroll if I do not seek a loan?

Do I need money to cover marketing expansion, new hires or more inventory to grow my business?

If “yes” is the answer to most of those questions, a working capital loan may be the right choice. When a working capital loan may not be the best loan product, there are several other funding options to consider. For example, it may be better to use special equipment financing or another type of financing when purchasing equipment for a business. When considering working capital loans, always remember the two main rules for smarter use and spending.

Rule 1: While in a solid financial state, use working capital loans to purchase inventory or hire new workers to expand the business.

Rule 2: When finances are tight or business is slow, use working capital loans to meet payroll or day-to-day financial obligations.

It is important to remember the main element of each of these spending rules, which is financial stability. Never switch the different spending priorities of these rules with their element. For example, it is not smart to use a working capital loan while finances are tight or slow to expand the business. When a company is struggling to make payroll or pay bills, expansion must be classified as a future goal and not an immediate need. Alternately, a business in a solid financial state would have no need to take out a loan for day-to-day expenses or payroll obligations. Doing so would not make sense from a credit-building point of view, and it would not make sense to set up an unnecessary arrangement that includes paying interest on top of the amount owed.

How To Get A Working Capital Loan

When a company’s spending priorities are in order and a working capital loan is the best funding option, the next step is finding a lender. While there are plenty of lenders online, it is important to work with a reputable one. These are a few questions to ask when evaluating a lender.

Are the application and approval processes secure and fast?

Does the lender offer more than one type of financing?

Will the lender help find the best funding option?

Does the lender offer a fair interest rate?

Will the lender offer a sufficient loan amount?

Does the lender offer customized financing?

Does the lender have a good reputation?

With Lendvo, the answer is “yes” to all of these questions. We take pride in being a reputable and reliable lending company. We offer several funding options, which we discuss with our potential borrowers. After an application is submitted through our secure platform, we review it promptly. Approval decisions are fast when applicants provide all required documentation and information. We offer affordable and fair interest rates, and we suggest the best options for each individual applicant. Our working capital loans may be as high as $100,000 for qualified borrowers. Since we are able to underwrite digital models and assets, we create a customized loan that works for the borrower.

Apply For A Working Capital Loan With Lendvo

If your business is digital, we can help you. We have helped many Amazon, eBay and online store merchants expand their businesses and meet their daily financial obligations. If you need funding quickly for your business, fill out an application for a quick response. A Lendvo representative will contact you quickly for a phone interview to help you determine the best option for your needs. We encourage you to contact us with any questions about our financing options or application process.