Funding Products
Working Capital Loans: A Practical Guide for Small Businesses
Working capital is the cash your business needs to operate between the moment you pay for something and the moment your customers pay you. Almost every growing company runs into a period where that gap widens faster than the bank balance can absorb.
Working capital financing is designed for exactly that gap — not for capital projects, and not for covering ongoing losses.
Common, appropriate uses
- Payroll during a slow collection cycle
- Inventory ahead of a confirmed season or contract
- Marketing spend with a measurable return window
- Emergency repairs that keep revenue flowing
- Bridging the gap on a large project before the first draw
How to size the amount
Start with the gap, not with the maximum approval. Map out the next 13 weeks of expected cash in and cash out, find the deepest point of the shortfall, and add a 15 to 20 percent buffer.
Taking more than you need feels safe but raises the payment for the entire term. Taking less than you need forces a second round of funding at worse terms. The 13-week cash forecast is the cheapest hour of work you can do before applying.
Typical terms
Short-term working capital products usually run 3 to 18 months with daily or weekly payments. Larger, stronger files can reach 24 months and monthly payments. Amounts commonly range from $10,000 to $5,000,000 depending on revenue and time in business.
Pricing is driven by deposit consistency, existing positions, industry, and credit — in roughly that order for revenue-based products.
Strengthening the application
- Keep the business account free of negative days for the three months before applying
- Consolidate deposits into one primary operating account so revenue is visible
- Reduce or clear small existing positions before requesting a larger amount
- Include a short explanation of any one-off dip in revenue
- Have a specific, dollar-quantified use of funds ready
Reading the offer
Compare the total payback, the payment amount, the frequency, the term and every fee. Then divide the payment by your average daily or weekly deposit to see the real pressure on your cash flow. If that number exceeds a comfortable share of your net margin, the offer is too large.
Frequently asked questions
- How much working capital can I qualify for?
- Most revenue-based approvals fall between 50% and 150% of one month's average deposits, adjusted for existing positions and time in business.
- How quickly can working capital be funded?
- With complete bank statements, offers often come back the same day and funding can occur within 24 to 48 hours.
- Is collateral required?
- Most short-term working capital is unsecured, though a personal guarantee and a UCC filing are standard.