# Working capital loan vs line of credit: lump sum or revolving ?

URL: https://cheapcheapwebsites.com/business-funding/working-capital-vs-line-of-credit/
Updated October 15, 2026. Funding offered by Merchant Fund Express (https://merchantfundexpress.com/working-capital-vs-line-of-credit/); Cheap Cheap Websites builds websites and does not lend.

## The short answer
A working capital loan gives you one lump sum repaid on a fixed schedule, which suits a known, one-time need. A line of credit gives you a limit you can draw from, repay and draw again, which suits recurring or uneven needs. At Merchant Fund Express, both commonly start around $17,500 a month in revenue, but lines usually want about 650+ credit and a year in business.

## 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.

## Illustrative 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 .

## 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.

## Frequently asked questions
**Is a line of credit cheaper than a working capital loan?** It can be, because you only pay for what you draw. If you draw the full limit and keep it out for a long time, the total cost can be similar. Compare total repayment on the amount you will actually use.

**Can I have both a loan and a line?** Some businesses do, using the loan for a single project and the line for day-to-day gaps. Each new payment reduces what the account can carry, so funders will look at both together.

**Which is easier to qualify for?** Working capital loans usually are. At MFE, they commonly start around 600 credit and six months in business, while lines usually start around 650 credit and a year in business.

**Does an unused line cost anything?** That depends on the agreement. Some lines have maintenance or draw fees. Read the terms so you know the cost of keeping the line open, not just the cost of drawing.

## Website for growing businesses
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.

Apply for funding: https://merchantfundexpress.com/current-application.html?src=ccw-working-capital-vs-line-of-credit
Website plans: https://cheapcheapwebsites.com/products