Working Capital
Editorial Team
At Working Capital, we believe access to funding should be simple, transparent, and designed around your business not the other way around. We’re committed to helping entrepreneurs make smart financial decisions with tools, guidance, and lending partners they can trust.
Many entrepreneurs spend more time sorting through financing options than actually applying for them. Products that appear similar at first glance can have dramatically different qualification standards, repayment models, and geographic restrictions, making lenders a good fit for entirely different types of businesses.
Many business owners are looking for quick business loans for small businesses that match their revenue and projected growth. Some need access to growth capital without giving up equity. Others want predictable repayment terms, minimal paperwork, or a lender that understands recurring revenue rather than relying solely on traditional credit metrics. Geographic eligibility can add another layer of complexity, as products that appear attractive on paper may not even be available in a company’s market.
Those differences become particularly important in the case of Arc and Funding Circle. Arc serves U.S.-based startups and recurring-revenue businesses, while Funding Circle primarily focuses on established UK companies across a wide range of industries. As a result, the two providers attract a distinct customer base, making fit and eligibility just as important as financing terms when comparing them.
<span data-mce-type=”bookmark” style=”display: inline-block; width: 0px; overflow: hidden; line-height: 0;” class=”mce_SELRES_start”></span>U.S.-based. Provides funding to businesses headquartered in the U.S. with a U.S. bank account and EIN number. Products denominated in USD.<sup>6</sup>
Arc functions as a merchant cash advance provider for businesses with predictable, ongoing revenue. It advances capital today against the income a company expects to collect in the future. SaaS companies and other recurring-revenue businesses remain Arc’s core customer base, but eligibility now extends well past that niche to include legal firms, education companies, advertising agencies, and retail businesses.3
Rather than asking for tax returns or financial statements with an application, Arc plugs directly into a company’s existing financial systems to pull live data on how the business is actually performing.3 That data lets Arc track revenue patterns, growth, available cash, and overall financial condition, rather than working from documents that provide a snapshot that’s already out of date by the time it’s submitted.
Arc’s underwriting process is built for speed. Arc states that a business can connect its financial accounts in a matter of minutes, and most applicants get a financing decision within about 48 hours. Companies with an Arc account can receive approved funds as soon as the same day.3
Businesses seeking financing should meet Arc’s short list of requirements. The business must be a U.S.-based entity with a U.S. bank account, generate at least $250,000 in annual revenue or ARR, and have enough cash on hand to cover six months of repayment.3
Arc determines funding amounts based on each company’s financial profile. The company states that it generally does not extend more than 10% of a company’s revenue.3 Its revenue-based financing guide also notes that advances may be sized as a percentage of ARR, with new customers typically receiving 20%–50% of ARR and established customers potentially qualifying for higher percentages. Arc advances can reach up to $5 million.2
Funding Circle’s model is built around traditional term lending. It does not offer a revenue-based financing product for business owners. The company provides small business term loans and lines of credit, generally evaluated using more conventional underwriting factors like time in business, credit history, and financial statements, with repayment terms that can extend up to several years.
Businesses looking specifically for revenue-based financing won’t find that option through Funding Circle, though its term loan products may be a fit for companies that prefer a fixed loan structure over one tied to ongoing revenue performance.
Arc built its lending model around advancing capital against a business’s future revenue, and that focus has not expanded to include conventional lending structures. Funding amounts are tied to current revenue performance, and repayment is collected through revenue-linked or fixed monthly debits rather than a traditional amortization plan.
This distinction matters for businesses trying to figure out which type of financing actually fits their situation. A company looking for a standard term loan, with predictable fixed payments and a long-term repayment horizon, won’t find that option through Arc. Its underwriting process, funding amounts, and repayment mechanics are all built around the revenue-based model, which makes it a fit for businesses with high recurring or predictable income rather than those seeking traditional installment debt.
Businesses specifically searching for a term loan structure will need to look to lenders that offer that product directly.
Funding Circle’s primary lending product for UK businesses is a fixed-term business loan designed for established companies seeking working capital, expansion funding, equipment financing, or capital to fund other longer-term investments. The lender serves UK-registered limited companies and LLPs with at least one year of trading history and a solid credit profile.9
Business owners can complete an application online, and eligible companies may receive a lending decision in as little as one hour and receive funding within approximately 48 hours.7
Loan amounts range from £10,000 to £750,000, with repayment terms from six months up to six years.9 Funding Circle automatically collects fixed monthly payments from a business’s account, providing a predictable repayment schedule.11 The six-year maximum term gives businesses flexibility to spread costs over a longer period when financing growth initiatives or larger purchases.
Term loans for businesses carry traditional APR-based interest rates, with APRs starting around 6.9% for the most qualified borrowers. Interest accrues on the outstanding balance, so paying off a loan ahead of schedule reduces the total interest paid. Funding Circle does not charge prepayment penalties, allowing businesses to repay early without additional fees.9
Funding Circle requires a personal guarantee from a director or shareholder for all business loans, and may request collateral in certain circumstances. Funding Circle does not limit eligibility to specific industries or business models, making its lending available to qualifying companies across a wide range of sectors.9
Funding with Arc is structured as discrete, lump-sum advances rather than an always-available credit line. Each advance is reviewed and issued individually. Businesses that repay an advance can apply for a new one with the possibility of accessing higher limits as an established client in good standing.
Through Arc, repeat funding is often possible, especially as monthly recurring revenue increases and a strong repayment history is established. This can result in a serial funding pattern, where companies access new rounds of capital over time as their financial profile evolves.
For startups with predictable growth and periodic capital needs, this approach can align well with staged funding requirements. However, it does not function as a revolving facility, and companies that need continuous, on-demand access to a credit line may need to consider other financing options designed for that purpose.
Funding Circle’s FlexiPay product offers a revolving business line of credit available to qualifying UK companies, with credit limits of up to £250,000. Unlike a one-time loan, available credit replenishes as draws are repaid, allowing businesses to access funds repeatedly without submitting a new application for each advance.9 This structure can be useful for managing recurring expenses, seasonal cash flow gaps, inventory purchases, or other short-term financing needs.
Each draw is repaid over a term selected by the borrower, ranging from one to 12 months. Instead of charging compounding interest, FlexiPay applies a single flat fee to each repayment plan, and there are no annual fees. Paying off a draw ahead of schedule reduces the fees owed. Businesses that submit draw requests before the daily cutoff may receive funds through a same-day bank transfer.11
Because FlexiPay operates on a revolving basis, businesses can continue to access available credit through this business line of credit provider as balances are repaid.
Arc’s platform extends beyond capital access to include treasury and cash management capabilities. Businesses with significant cash reserves can use the platform’s treasury offerings to earn yield on idle balances, which may be attractive for startups managing long runways or holding funds between financing rounds.5
Alongside these treasury features, Arc provides operating accounts and corporate spending tools within the same ecosystem. Companies can issue virtual and physical cards, monitor spending activity, and establish permissions and controls for employees and teams.4 By combining banking, treasury management, and spending functions, the platform gives startups the ability to oversee several aspects of their finances through a single interface.
Funding Circle remains focused on business lending. The company does not operate a business banking platform and does not provide integrated cash management or spending products. Businesses seeking operating accounts or treasury services would need to obtain those solutions through separate providers.
This narrower approach reflects Funding Circle’s emphasis on term loans rather than building a broader financial ecosystem. For many businesses, that separation may not present a drawback, particularly if they already maintain established banking relationships. However, companies looking for a single platform that combines capital access with day-to-day banking functions may find that Funding Circle’s offerings are more limited in scope.
Arc approaches corporate spending from a cash management perspective rather than a credit-based one. Its platform includes the Arc Card, a corporate card with cashback rewards and no annual fee. Spending capacity scales with the company’s cash holdings and revenue profile instead of relying on a preset credit limit.4
Since transactions draw directly from available funds, businesses cannot carry balances from month to month. Companies can issue physical and virtual cards, implement spending controls, and track transactions through the same dashboard used for banking and other financial activities.4 By bringing these functions together, Arc provides startups with a centralized view of both cash balances and employee spending.
The Funding Circle Cashback Visa Business Credit Card provides a revolving credit option for covering day-to-day operating expenses and is paid off through monthly billing cycles. The card charges no annual fee and earns cashback on eligible purchases, making it distinct from debit-based products that draw directly from cash balances.12
Unlike platforms that combine corporate cards with business banking and treasury services, Funding Circle’s card operates as a standalone credit product. Businesses can separate short-term spending from cash reserves and carry balances when needed, subject to the card’s terms and conditions.12 This structure may appeal to companies that prefer the flexibility of traditional credit rather than managing expenses exclusively through available cash.
However, the business credit card for small businesses is limited to the UK market and is not available to U.S. businesses.
Comparing Arc and Funding Circle highlights that, in business financing, access to capital is influenced as much by structure and eligibility as by pricing or product features. Differences in geography, revenue model, underwriting approach, and repayment design often tailor lending platforms and products to a specific type of business rather than a universal borrower profile.
Arc is structured around recurring-revenue startups that can connect financial data sources and demonstrate predictable monthly performance, while Funding Circle is built for established UK businesses with trading history and traditional credit profiles. Those underlying features influence everything from how applicants are evaluated to how capital is delivered and repaid, as well as whether products like cards, banking tools, or treasury features are available alongside lending.
Because of that, the most meaningful takeaway is an understanding of fit. Businesses comparing working capital loans from these two lenders are effectively comparing two different models. One is centered on data-driven, revenue-linked startup capital, and the other on more traditional small business lending. In both cases, the decision of which lender to pursue ultimately comes down to whether the structure of the financing aligns with how the business operates today and how it expects to grow in the future.
2https://www.joinarc.com/guides/revenue-based-financing
3https://www.joinarc.com/working-capital
4https://www.joinarc.com/business-account
5https://www.joinarc.com/treasury-management
6https://help.joinarc.com/en/articles/6396515-does-my-company-qualify-for-arc-capital-markets
7https://www.fundingcircle.com/uk/
8https://www.fundingcircle.com/uk/small-business-loans/
9https://www.fundingcircle.com/uk/businesses/business-finance/
10https://www.fundingcircle.com/uk/resources/business-finance/preparing-credit-checks/
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