The short answer
Side-by-side comparison
| Working capital loan | Line of credit | |
|---|---|---|
| How money arrives | One lump sum | Draw as needed up to a limit |
| Repayment | Fixed schedule on the full amount | Only on what you draw |
| Reuse | No, apply again for more | Yes, as you repay |
| Common revenue guideline | about $17,500/month | about $17,500/month |
| Common time in business | often 6+ months | usually 1+ year |
| Common credit | 600+ | about 650+ |
| Best for | One known project | Recurring gaps, uneven timing |
MFE's comparison of working capital loans and lines of credit covers both from the funding side.
How each one works
Working capital loan: you receive the full amount minus any fee, then repay principal plus cost on a set weekly or monthly schedule. You pay for the whole amount from day one, whether you spend it all or not.
Line of credit: you are approved for a limit. Each draw has its own cost and repayment schedule. As you repay, the available limit refills. If you draw nothing, you usually owe little or nothing beyond any account fees in the agreement.
Check what your business qualifies for
Merchant Fund Express reviews working capital loan vs line of credit requests from $5,000 to $5,000,000. Scores from 500 are considered, and same-day decisions are common on complete files.
Check funding options with Merchant Fund ExpressIllustrative example: $60,000 need vs $25,000 at a time
Assumptions: a staffing agency expects to need about $25,000 at a time to cover payroll before clients pay. Option 1 is a $60,000 working capital loan with a 3% fee and 18 months of repayment totaling $73,800. Option 2 is a $60,000 line with one $25,000 draw, a 2% draw fee and 12-month repayment totaling $28,750 on that draw.
| Working capital loan | Line of credit (one draw) | |
|---|---|---|
| Amount taken | $60,000 | $25,000 |
| Fee | $1,800 | $500 |
| Net cash received | $58,200 | $24,500 |
| Total repayment | $73,800 | $28,750 |
| Monthly payment | $4,100 (18 months) | $2,395.83 (12 months) |
| Total cost | $15,600 | $4,250 |
Illustrative example only. If the agency really only needs $25,000 at a time, the line costs far less because it is not paying for idle cash. If it needs the full $60,000 at once for a single project, the loan is the cleaner fit.
These figures are illustrations, not offers. Real pricing, amounts and terms depend on the full file.
Who each one fits
Working capital loan fits: buying a large inventory order, covering a known renovation, hiring ahead of a signed contract, or anything with a clear amount and a clear end. It is also easier to reach for businesses between six months and a year old.
Line of credit fits: businesses with repeating gaps, such as contractors waiting on progress payments, agencies covering payroll before invoices clear, or shops stocking up before each season.
Neither fits a business under the common revenue guideline or under six months old. Those owners may look at a merchant cash advance instead. See line of credit vs MCA.
Funding brings customers. Is your website ready for them?
Whichever product fits, many owners put part of the money toward getting found, because a loan or line repays more easily when new customers keep arriving. Cheap Cheap Websites builds professional sites from $399, and Website Care at $30/month handles hosting and small edits so the marketing spend points to a page that is ready.
What to prepare
- 3 to 4 months of business bank statements.
- Government ID and a voided business check.
- A short application.
- For larger amounts or limits: financial statements and recent tax returns.
Same-day decisions are common on complete files, with funding often the next business day. Neither is promised.
When another option or waiting is better
If your credit is just under 650 or you are a few months short of a year, take a smaller working capital loan now if the need is real, then revisit a line once you qualify. If the need is equipment, equipment financing usually beats both because the term matches the equipment's life. And if you do not have a specific use for the money yet, wait. Unused cash still costs money on a loan.
Related funding guides
Cheap Cheap Websites builds websites. It does not lend or make funding decisions. Funding is offered by our funding partner, Merchant Fund Express, and every request is subject to its review and approval. Figures on this page are illustrations, not offers. Updated October 15, 2026.