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Working Capital Terms from American Express: What it is, how it works

American Express business cardholders can use the program to streamline vendor payments

Summary

Working Capital Terms is a program available to eligible American Express business card holders that allows business owners to get access to up to $150,000 in funding. Here’s how it works and how to decide whether it’s right for your business.

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Working capital is a necessary part of doing business and financing can help when cash flow is tight. American Express Working Capital Terms is designed to help with meeting short-term capital needs.

“The benefits to this program are huge for any business owner,” says Daniel Lorick, principal at business consulting firm Ward Willson. “Cash is king and being able to manage cash flow with manageable fees allows businesses to grow and not become stifled by a lack of capital.”

If your business could use a cash infusion after the holidays or to navigate the slower season, here’s what you need to know.

See related: How can my small business overcome seasonal cash-flow issues?

How Working Capital Terms works

Working Capital Terms is intended to meet a specific financing need for businesses: paying your vendors on time.

After all, you rely on your vendors for the services or supplies you need to run your business. Paying them on time is vital to maintaining good relationships.

It’s also a great way to pay vendors who might not accept credit cards, says an American Express spokesperson. “It simplifies vendor payments so business owners can focus on other aspects of running their business.”

With Working Capital Terms, you can get access to between $500 and $150,000 in funding to pay your vendors. Once you’re approved, using your working capital is a four-step process:

  • You tell American Express which vendors you need to pay and how much.
  • You choose the financing term you need, either 30, 60 or 90 days.
  • American Express sends payment to your vendors.
  • You repay financing through automatic debit from your bank account.

“The solution not only helps keep payments on track, it helps strengthen cash flow so businesses have more capital on hand to get more business done – whether that’s investing in operations or new equipment, stocking up on inventory or fund new projects or growth strategies,” says the spokesperson.

What does Working Capital Terms cost?

American Express charges a fixed fee to borrow. This table breaks down the fee ranges:

Financing TermFee
30 days0.6% to 1.75%
60 days1.2% to 3.50%
90 days1.8% to 5.25%

Here are a few examples of how much Working Capital Terms financing may cost for $100,000 in funding, using different term and fee scenarios:

  • 30 days at 0.6% = Total repayment of $100,600
  • 60 days at 1.2% = Total repayment of $101,200
  • 90 days at 1.8% = Total repayment of $101,800

The fee you pay is based on creditworthiness and previous account history. Jesse Silkoff, co-founder and president of MyRoofingPal, an online marketplace that connects people with local roofers, used American Express Working Capital Terms to borrow $150,000 with 90 day terms and a fixed fee of 4.1%.

“It allowed us to take on a bigger project than we normally would during our slow season to smooth over our cash flow until a busier season,” says Silkoff.

Lorick also has experience using Working Capital Terms as a controller for a real estate company. He qualified for the lowest fee, paying $600 on $100,000 in capital with a 30-day term.

See related: Best business credit cards

Who is eligible for Working Capital Terms?

American Express doesn’t offer Working Capital Terms to businesses at large; there are a few conditions you’ll need to meet to obtain funding.

First and most importantly, you’ll need an American Express business credit card. You may be eligible for Working Capital Terms funding if you have any of American Express’s business card offerings, including:

Note: You’re not eligible if your only American Express business credit card is a Centurion, Business Centurion or Corporate Centurion card.

Aside from having an eligible card, there are other qualifications you’ll need to meet. At a minimum, you must have at least six months of account history with American Express small business cards. This requirement doesn’t apply, however, if you have the Business Gold Card.

There is no credit check the first time you enroll; American Express uses existing credit information it has on file to approve your account. That’s a plus if you’re concerned about your credit score getting dinged by a hard inquiry.

See related: How business charge cards’ flexible payment options help manage cash flow

How to apply for Working Capital Terms

Before you can request funding you first have to apply to the Working Capital Terms program. You can do so by logging in to your American Express business card account online.

There’s no paperwork to fill out; you just have to answer a few simple questions about your business and capital needs. The approval and funding process can be completed fairly quickly, in comparison to a bank loan or line of credit, which can take several days or even weeks.

Silkoff, a Business Gold cardmember, says the application process and funding speed are what made Working Capital Terms more attractive than other funding options.

“American Express was able to quickly check my credit and payment history and approve the loan I needed within two days,” he says. “I was able to quickly and easily get the line of credit I needed for my business.”

Speed can also benefit you in another way. When you request payment to be sent to vendors, American Express makes sure the money gets there on time.

“I like this funding option because it’s fast,” says Lorick. “I can get vendors paid the same day to get materials on the job.”

Pros and cons of using Working Capital Terms for business funding

There are several things that make American Express Working Capital Terms worth considering if you need funding for your business on a short-term basis. Here’s a quick rundown of the pros, according to the American Express spokesperson:

  • There are no origination fees or hidden fees of any kind.
  • No collateral is required.
  • Borrowing amounts are comparable to what you could get with other business loans.
  • You aren’t penalized for prepaying early.
  • Repayment terms are flexible.
  • Fees are reasonable, compared to the typical credit card APR or APR for other working capital financings.
  • Business Gold cardmembers can sidestep the six-month account history requirement.
  • Approval and funding are quick and easy.

On the cons side, the biggest drawback is that you have to be an American Express business credit cardmember.

“Since American Express only offers working capital loans to American Express customers, I can imagine this is a negative to some people applying for a working capital loan with them,” says Silkoff.

A few other potential downsides to keep in mind:

  • You’re limited to using this financing to pay vendors.
  • Not all business cardmembers will qualify for the lowest financing fee.
  • You can only use financing to pay U.S.-based vendors; international vendors are excluded.

If you’re considering Working Capital Terms for your business, be clear about what you can realistically afford to repay, says Lorick. You don’t want to get overextended and cause cash flow shortfalls in other parts of your business budget.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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