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BUSINESS FINANCING GLOSSARY

Working Capital

The cash available to run day-to-day operations — current assets minus current liabilities. The fuel for payroll, inventory, and growth between paydays.

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Related terms

Accounts Payable (AP)→Money your business owes to suppliers and vendors for goods or services bought on credit. It sits on the balance sheet as a short-term liability.Cash Flow→The net movement of money in and out of your business over a period. Positive, steady cash flow is what most cash-flow lenders underwrite to.Current Ratio→Current assets divided by current liabilities. Above 1.0 means you can cover short-term obligations — a quick read on liquidity.Quick Ratio→A stricter liquidity test: (current assets minus inventory) divided by current liabilities. Shows if you can pay bills without selling stock.SBA 7(a) Loan→The SBA’s flagship, most flexible program — up to $5M for working capital, acquisitions, equipment, or real estate, with low rates and long terms via approved lenders.Use of Funds→What you intend to do with the money — working capital, equipment, expansion, acquisition. Some products and SBA rules restrict eligible uses.

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