What Is Working Capital?

Working capital is the money a company utilizes to run its day-to-day activities, like making salaries, paying suppliers, and keeping inventory. It represents the difference between current assets and current liabilities, ensuring that a business can meet its short-term obligations and operate smoothly.

Key Facts About Working Capital

Crucial for Operations: Working capital is essential for keeping a business running efficiently by covering day-to-day expenses.

Short-Term Financing: Working capital loans are usually short-term and designed to address immediate financial needs, typically repaid within a year.

Flexible Use: The funds can be used for various operational purposes, including inventory management and payroll.

Working Capital Eligibility Criteria

Business Age: Most lenders prefer businesses that have been operational for at least 1-2 years.

Credit Score: A strong credit score improves your chances of getting favorable loan terms.