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Working capital or a lump sum?
Most borrowing questions start in the wrong place — "how much can I get?" — when the better first question is "what shape does this job actually need?" Get the shape right and the amount, the term and the cost usually fall into place behind it.
Start with the problem, not the product
Business finance comes in a few broad shapes, but nearly every real decision reduces to one distinction: are you paying for a single, known cost — or covering a gap that keeps opening and closing? A one-off cost wants a one-off answer. A recurring gap wants something that recurs with it.
A new oven for the kitchen, a supplier deposit to secure a big order, a van that has finally given up — these are lump-sum problems. You know roughly what they cost, you know when you need the money, and once it is spent the need is gone. A fixed amount, taken once and repaid over a set term, matches that shape cleanly.
When the gap keeps coming back
Now picture a different pattern. You invoice on 30-day terms but pay your own staff and suppliers weekly. Every month there is a stretch where money is committed but not yet collected. That is not a one-off cost — it is a rhythm. Borrowing a single lump sum to paper over it means you are paying to hold money you only need for part of the cycle.
A revolving or working-capital shape fits this better: you draw what you need when the gap opens, repay as the invoices land, and draw again next cycle — one facility kept open rather than a fresh application every time the same problem returns.
Three questions that decide it
- Is the cost fixed and known? A defined amount with a clear purpose points to a lump sum. A range that shifts with trading points to a flexible line.
- Is there a clear end? A project with a finish date suits a term loan. An ongoing operational gap suits something you can draw and repay repeatedly.
- How predictable is repayment? Steady, forecastable income services a fixed schedule comfortably. Lumpy or seasonal income often prefers the room to repay faster in good months.
Don't force one tool to do both
The common mistake is stretching a single lump sum to cover both a project and the everyday gaps around it. You end up over-borrowing for the project and still short on cash flow — carrying cost on money that is sitting idle while the real gap goes unmet. Two different problems are usually served best by matching each to its own shape, not by one oversized loan doing neither job well.
None of this needs a spreadsheet to start. Name the problem honestly, decide whether it is a one-off or a rhythm, and the right shape is usually obvious. The figures come after — and they live on the lender, where each product is set out in full.
Put numbers to it
See the shapes side by side on the lender
credicorp.co.uk lays the three products out next to each other — a fixed lump sum, a revolving facility and a way to spread a supplier bill — with real amounts, pricing and terms. Match your problem to a shape here; confirm the figures there.