Working Capital Financing - Zip Capital Group working capital financing for small business, everything you need to know about working capital financing, working capital lender in California, working capital financier in California, small business working capital lender, working capital loans, small business working capital financing, working capital financing for small business, working capital funding in Southern California, working capital lender in orange county, working capital lender in southern california I n s t a n t Q u o t e G e t S t a r t e d N o w
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Working Capital Financing

Everything you need to know about working capital financing and how Zip Capital Group can help you meet your short-term financing needs.

Running a small business is often a waiting game, amongst other things. You may design a product or service, hustle to get it into the market and wait for the sales to start. Once they start, there is often a lag between the sale and when you receive payment. This is often dictated by your payment terms. Until then, costs and expenses continue.  Working capital financing can bridge the gap between the sale and when you are paid.

Success in a new business is largely the result of long-term investments and managing priorities to deliver your business solution to your market. A business loan is a financial product that enables you, the business owner to finance growth, while a working capital loan addresses short-term finance needs

What is working capital financing?

Working capital loans fund your company’s everyday operations such as payroll, rent, and debt payments. It is simply debt used by a company to finance its daily operations.

How does working capital financing work?

Sometimes, a company does not have asset liquidity or cash on hand to cover day-to-day operational expenses. As a result, they may need to secure business capital financing to cover their shortfall. Companies that experience working capital shortfalls regularly should consider a revolving credit facility, such as a working capital line of credit to bypass the application process.

What types of companies benefit most from working capital financing?

Many small businesses don’t have predictable or stable revenues throughout the year or earn most of their money within a short period of time.  For example, cyclical companies, such as a toy manufacturer may earnworking capital financing most of their revenue in the last half of the year when they ship for the Holiday Season. In contrast, the first half of the year is spent designing and making toys. Such a company may need to borrow capital and pay interest on funds to get through the lean times.

What is working capital?

Working capital is the difference between your business’s current assets and its current liabilities. The underlying asset, such as accounts receivable are converted to cash and vice-versa within a year.

Permanent working capital is permanent in that, month after month, year after year, the balance never goes away.

What is working capital a measure of?

Working capital is a measure of a company’s operational efficiency, liquidity, and short-term financial health.

What is your working capital ratio?

Also known as your current ratio, this is your current assets divided by current liabilities. It is a measure of liquidity, your business's ability to meet its payment obligations as they come due.

What is net operating working capital?

Also a measure of liquidity, net operating working capital is the excess of operating current assets over operating current liabilities. In most cases, it equals cash plus accounts receivable plus inventories minus accounts payable minus accrued expenses.

What are trends to be aware of?

When looking at your working capital, keep in mind:

  • Negative working capital is less than one and you could benefit from more working capital.
  • Positive working capital indicates your company can fund its current operations and fund future growth and activities.
  • Too much working capital is not necessarily a good thing. It may indicate that your business has too much inventory and is not investing extra cash.

What are the benefits of working capital financing?

There are several benefits of such funding, including that it is easy to obtain and lets you cover any gaps in expenditures. Another benefit is that it is a form of debt financing that does not require equity, meaning that the owner maintains full control of their company, regardless of how dire the financing need. Additionally, it doesn't require real estate, may or may not require a personal guarantee, often comes with flexible loan terms, and requires lender approval.

Are working capital loans collateralized?

Only small business owners with the highest credit ratings can secure uncollateralized financing. However, most businesses will need some form of financing that is unsecured, meaning that they are not required to put down any collateral. Businesses having little to no credit will have to securitize their financing.

Collateralized financing can be a drawback when it is tied to the business owner’s personal credit. Any missed payments or defaults will hurt their credit score.

What are the different types of financing for a working capital loan?

There are various types of working capital funding that can be either secured or unsecured. These are the six most common forms:

  1. Credit Line or Bank Overdraft Facility
    A good credit score, the interest rate, and the amount of credit you can get depend on your relationship with your lender. An advantage of this credit facility over other forms of financing is that you pay interest on the amount drawn down.
  2. Short-Term Loan
    Unlike a line of credit, this form of finance is for a fixed term and interest rate, usually for 12 months. As with a line of credit, your relationship with your lender matters. As a result, an unsecured loan is possible for those with good credit. Such characteristics may also apply to online lenders.
  3. Equity Funding via Personal Resources
    Equity funding is usually obtained from personal relationships, often from friends and family. This form of business financing is ideal for a business without a credit history, such as a start-up. Long-term equity funding is also a long-term investment for the investor, rather than a liability.
  4. Accounts Receivable Financing
    Most working capital financing solutions are collateralized. Accounts receivable financing is secured by your accounts receivables. This type of funding is ideal if you lack the cash flow needed to fulfill a contract or order. Accounts receivable financing differs from purchase order financing in that one form of financing is for invoices while the other is for purchase orders.
  5. Invoice factoring services or Advances
    This form of financing is similar to accounts receivable financing. However, with accounts receivable and invoice factoring, the business sells its notes at a discount. As a result, the buyer assumes the risk for unpaid invoices while the seller sets payment terms on receivables.
  6. Trade Creditor
    Not to be confused with an instrument of international trade finance, a trade creditor loan is provided by a supplier. They may offer a trade credit facility for bulk orders. As a result, you can expect an extensive credit review.

We offer both secured and unsecured short-term loans to growing companies.

When is the best time to secure funding?

If you have determined that you need funding, you should start the application process before you need the funds. This enables business owners to have the money when they most need it.

What are indications you may soon need financing?

The following situations may be an indication that you may soon need financing:

An upcoming slow season: Some businesses make most of their revenue a few months out of the year. Working capital financing options cover the shortfalls when cash is scarce.

An increase in hiring: If you have recently hired more employees to expand your business, you may need funding to cover salaries until your business grows.

An increase in orders: For most businesses, there may be a lag between when an order is placed and when paid. When this happens, there is often a strain on cash flow to cover expenses.

Many businesses and growing companies anticipate such events and seek out business loans or a revolving line of credit before it is needed.

Is working capital financing right for my business?

Working capital loans are one of the easiest ways to leverage your business potential. Some forms of funding are unsecured meaning you can access capital without putting up short-term assets as collateral. It can also be a great solution for a small business, just starting out, doesn’t have traditional collateral, or going through a period when they have low cash flow

How Can I use the proceeds from my working capital financing?

The use of proceeds from your working capital loan is intended to fund short-term operating needs. Acceptable uses include to:

  • Buy Inventory
  • Increase your cash flow
  • Fund your marketing campaign
  • Pay salaries, or
  • Get through the season

Using the proceeds to fund business opportunities is normally not permitted.

 Why working capital financing from Zip Capital Group?

Businesses can get approved for our working capital program even when they can’t get traditional financing. Rather than just credit, we look at your cash flow, your company's balance sheet, and not so much your business credit cards.

When working with Zip Capital Group, we take care of the details so that you can focus on running your business.

Looking to take your business to the next level? Contact us to discuss funding options to overcome the biggest challenges in small business today at (800) 795-3919 today.

About Zip Capital Group

Zip Capital Group is a leading business lender working with companies in a number of industries. Whether it be a term loan, short-term business loan, or merchant cash advance we can help fund day-to-day operations or grow your business. We provide the following business funding vehicles:



“Apply Online” It takes about 45 minutes to give us your business and ownership information


Receive a decision within 48 hours. Review Financing terms to determine if it works for your business.


When your Financing is funded, documents are signed electronically and funds are sent to your checking account.

or call us today at

1 800-795-3919