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Working Capital

A business rich in assets but low in working capital could be in trouble. Working capital helps cover the daily expenses of running a business. If yours could use a boost, we’re here to help.

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What is Working Capital?

Working capital is a measure of your business’s ability to handle short-term expenses. To calculate the working capital for your business, subtract your current assets by your current liabilities. Leave any assets that can’t be turned into cash right away out of the equation. The result is how much working capital you have. To get your working capital ratio, divide your annual assets by your annual liabilities.

Your working capital ratio is important because it represents your ability to meet your business’s payment obligations. The ideal ratio depends on the industry you’re in, but a ratio between 1.25 and 2 is generally best to have. A low ratio means you likely have trouble managing to cover bills or meet payroll. A high ratio may mean you’re not reinvesting enough of your income back into the company. If you need to improve your cash flow, talk to one of our experienced lenders.

Types of Working Capital Financing

Lines of Credit

A line of credit gives you flexibility when it comes to seasonal income fluctuations. Borrow when you need to, pay it back when you can. Put money put back into your credit line to free up your balance for the future.

Factoring

Let us help you leverage the value of your accounts receivable to pull in working capital for your business. Factoring lets you sell accounts your clients haven’t paid yet, eliminating the wait time after invoicing.

SBA 7(a)

Small businesses can get financing through the SBA to help fund working capital. Talk to us about finding an SBA-certified lender that can get you the funding you need for payroll, utilities, marketing, and more.

Advantages of Working Capital Financing

Use for any legitimate business expense.
Get secured or unsecured financing.
Options available for businesses with a low credit score.
Smooth out seasonal income cycles.

Frequently Asked Questions

When is Working Capital financing not a good fit?

If you need to bring in real estate or equipment assets, a more specialized loan can help you do it. Use our working capital financing options for day-to-day operations.

What’s the difference between working capital and a working capital ratio?

Working capital is a dollar amount. A working capital ratio (also known as the current ratio) is an indication of your business’s liquidity. The ratio is used by lenders to determine loan rates and terms.

Which assets are used to calculate working capital?

You’ll want to include accounts receivable, cash, inventory, and prepaid accounts as part of your current assets. If you plan to sell it or use it within the year, it figures into your current asset amount.

What counts as liabilities when calculating working capital?

These are all of your debts that will be due during the year. This could be short-term debt, long-term loans maturing in the short-term, taxes, and accounts payable.

Our Process

Consultation

Unlike online lenders, we work with you to understand your goals and objectives for your business. Applying the right financial instrument with the right terms to each objective sets up a path for success. We’ll help you position your business for funding.

Placement

Unlike banks and other traditional lenders, we aren’t drawing from a single source of funds with a single set of terms. We aren’t trying to ‘sell’ you on a loan package. Instead, we facilitate placement of your loan with like minded lenders based on your plan.

Funding

We help you evaluate the terms offered by each prospective lender and we negotiate on your behalf to secure the best terms available for your business. Not only that, we are here for you in the road ahead. As you grow and evolve we will support with information and future financing opportunities.

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