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Working Capital

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Understanding Working Capital Loans

Working capital loans are short-term financial instruments designed to help businesses cover their everyday operational expenses and maintain a healthy cash flow. Unlike loans for long-term investments such as property or large equipment, these loans provide the necessary liquidity to manage the gap between a company's current assets (like cash, accounts receivable, and inventory) and its current liabilities (such as accounts payable and salaries). Essentially, they ensure a business has enough cash on hand to run its day-to-day operations smoothly.

How to Effectively Apply Funds

Common uses for working capital loans include:

  • Covering Payroll: Ensuring employees are paid on time, even when waiting for customer payments.

  • Purchasing Inventory: Buying the necessary stock to meet customer demand, especially for seasonal businesses that need to build up inventory before their peak season.

  • Paying Rent and Utilities: Meeting monthly obligations for office, retail, or manufacturing space.

  • Managing Seasonal Fluctuations: Providing a financial cushion for businesses with cyclical sales, helping them cover costs during slower periods.

  • Bridging Accounts Receivable Gaps: Offering the funds to operate while waiting for clients to settle their invoices.

  • Funding Marketing Campaigns: Investing in promotional activities to attract new customers and grow the business.

  • Handling Unexpected Expenses: Providing a safety net for unforeseen costs that could otherwise disrupt business operations.

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Loan Structure

Working capital loans are typically paid back over a short term, usually within a year to 18 months, because they are designed to cover immediate, day-to-day operational costs rather than long-term investments. The specific repayment method depends heavily on the type of financing a business gets.

Qualifications

UNSECURED WORKING CAPITAL PROGRAM

  • 625+ FICO

  • 1+ Year Time in Business

  • $150,000 minimum annual revenue

  • Terms: 6-18 months

  • Applicants must have minimum 51% business ownership

SALE-LEASEBACK CASH OUT 

  • Terms up to 60 Months

  • Eligible Equipment: Transportation, Construction, Demolition, Machine Tools, Manufacturing, Materials Handling, Livery, Industrial, Vocational, Packaging

  • FREE AND CLEAR EQUIPMENT ONLY

  • Up to 100% on Equipment Loan-to-value (Subject to valuation)

  • Use of Funds and Facilities List must be submitted

  • Maximum Age & Mileage of Equipment: 10 Years & 500K miles for Vocational Trucks, 20 Years for Construction

ASSET-BASED WORKING CAPITAL

  • Challenged credits with additional collateral to support the financing

  • Assets Considered:

    Yellow Iron | Machine Shop Tools | Hard Assets with strong secondary market value

  • Terms up to 60 months

*Published guidelines represent the minimum requirements for each program and are subject to lender discretion

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