Boosting working capital
Unlock financial stability to achieve long-term success
Every business faces ups and downs in cash flow, but having sufficient working capital ensures you’re always ready to move forward. By knowing how much cash you have on hand — and using financing strategically — you can cover today’s expenses and seize tomorrow’s opportunities with confidence.
Common expenses covered by working capital
Working capital is needed to cover all the expenses that keep your business running in its day-to-day operations. Here are some common examples.
Operating Expenses
- Payroll and employee benefits
- Rent and utilities
- Insurance premiums
- Supplies and office needs
Inventory and Production Costs
- Raw materials and components
- Inventory purchases
- Shipping and logistics
Accounts Payable and Short-Term Liabilities
- Payments to vendors and suppliers
- Taxes and other liabilities
- Loan interest or credit fees
Other Working Capital Outflows
- Maintenance and repairs for equipment
- Marketing and advertising
- Temporary staffing
- Accounts receivable gaps
A small business owner can have many of these financial obligations in a given month, so knowing how much cash you have on hand to pay for it all simplifies your bookkeeping and streamlines operations. You can calculate your working capital by using this formula: Current assets – current liabilities = working capital
By knowing this number, you can stay on top of fluctuations in revenue. But even with careful planning, businesses don’t always have enough working capital on hand to cover costs or jump on a new opportunity. This is where financing can be used to your advantage — it boosts cash flow, so you can maintain operations or propel your business forward.
Need working capital for your business?
How working capital strengthens your business
Let’s say you’re a restaurant owner.
Your business is typically slow during the winter. But you need funds to stock up on ingredients and hire additional staff before business picks up in the spring. While you’ll have extra income once more customers start coming in, right now you don’t have the capital to make the necessary preparations.
A financial solution can help you make those essential purchases and boost cash flow during a seasonal downturn.
So, you decide to apply for a working capital loan and get approved for $75,000 in cash. Now you can use the money to:
With extra staff and a stocked kitchen, your restaurant is ready to serve more customers and earn more revenue — and all it took was a strategic boost of capital to help you make it happen.
Best financing options for working capital expenses
No matter your needs, there’s a financing option designed to fit your business with SmallBusinessLoans. We’ve highlighted the most popular financing options that small business owners use for the different types of common working capital expenses.
Working capital loan
A working capital loan is specifically designed to cover working capital expenses. This loan is customized to your needs and can be used for almost any business expense.
Short-term loan
With terms typically ranging from 6 to 18 months,2 a short-term loan gives you flexibility to meet short-term obligations like covering payroll during a seasonal slump or investing in a new product line.
Business line of credit
With a line of credit, you can draw funds when you need them to make essential purchases or boost cash flow.
Not sure which financial solution is best for you? We’re here to help. At SmallBusinessLoans, we match you with the solutions best suited to your needs. All you have to do is fill out our quick form to see your options, instantly.
