Guide · Working capital, explained
How long are working capital loan terms?
By Alex Makowski Published
Typically three to eighteen months, with six to twelve the most common. Time in business and deposit consistency decide where you land. A shorter term usually carries a lower total cost and a much larger periodic payment, which is why the shortest term you are offered is rarely the one to take.
In this guide
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01
What sets the term
Time in business is the strongest single factor. Under a year generally means the short end; three years or more opens the longer terms.
Deposit consistency matters nearly as much. Steady monthly revenue supports a longer term because the funder can see the repayment being met throughout it.
Amount plays a part. Larger facilities stretch further, because the periodic payment on a large sum over six months is more than most businesses absorb.
02
Why the shortest term is usually the wrong choice
The total cost of a shorter term is generally lower, which is what makes it tempting. The payment is what closes businesses, and a shorter term makes it much larger.
The number that matters is what leaves your account each week against what comes in. Work that out before comparing totals, not after.
A term you can service comfortably and repay in full is worth more than a cheaper one you have to refinance under pressure, because clean repayment is what prices the next facility.
03
What changes at renewal
Most funders will renew once you are meaningfully through the term — commonly around half — and renewal terms are typically better than the original.
Clean repayment history is the asset here. It moves pricing more than a modest improvement in revenue does.
Renewal is also the legitimate alternative to stacking: one facility replaced by a larger one, rather than a second debit added on top.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Can I get a longer term than eighteen months?
- Rarely in this product. Beyond that you are into term lending or SBA programmes, which are cheaper but slower and much harder to qualify for.
- Does a longer term cost more?
- In total, usually yes. Per week it costs less, and for most businesses the weekly figure is the one that determines whether the facility works.
- When can I renew?
- Commonly around halfway through, sometimes earlier with strong repayment. Ask at the outset so you know what you are working toward.
Guides
More on working capital, explained
Daily, weekly or monthly
Same total, very different effect on the account.
How much to take
The maximum you are offered is almost never the right number.
Repaying early
Depends entirely on whether it is interest or a fixed factor.
Working capital vs term loan
Same mechanics, different horizon — and a very different bar.
Seasonal businesses
Twelve months of statements, and apply on the way up.
What it covers
Running the business, not expanding it — and the distinction is priced.
Sources
- U.S. Small Business Administration — LoansFederal loan programmes, eligibility and what the SBA does and does not guarantee.
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