Working capital financing is designed to bridge cash flow needs for small business owners. Terms typically range from 3 to 24 months. Payments may be daily, weekly, or monthly and can be fixed or tied to the ebb and flow of your business revenue.


For example, if your company has had a large purchase order, you need to pay for product to fulfill it. You’ll get that money back from a retailer when your product sells. But as a small business, how do you stay up and running, covering your expenses like payroll, rent and supplies, while you wait?


A similar problem arises for doctors and dentists. You provide a service typically covered by insurance. But insurance companies take time to pay. You might need a working capital loan to keep the lights on while you wait for the insurance company to cut your office a check.

How Much Working Capital Do You Need?

Calculating the amount of working capital your business needs comes down to a relatively simple formula. In general, working capital is the difference between current assets and current liabilities. However, that number likely changes each month as bills get paid.


A better way to gauge how much working capital your business needs is based on your operating cycle -- the amount of time it takes your business to create and sell a product.


For some businesses, like a restaurant, the cycle is very short. For others, like a clothing manufacturer, it’s much more seasonal. You’ll want to take into account your cash flow during each operating cycle to determine how much working capital you’ll need.


Sometimes, the unexpected happens. Kitchens have fires, equipment requires repairs, taxes must be paid. To solve these problems, we can have the money you need deposited into your account within 24 hours.

What kinds of working capital are available?

In general, there are three types of working capital financing. These include:

  • Term Loans: What you probably think of when you think of a loan -- it has a set term, interest rate and payoff schedule.
  • Business Line of Credit: These work a lot like a credit card, in that you have a line of credit limit and interest rate, and you must make a payment each month, but you can borrow and repay the loan as needed. And you can typically borrow much larger amounts than you would be able to finance with a credit card.
  • Merchant Cash Advance: This kind of loan treats your future revenue as collateral against your financing. That means you’ll be able to borrow against a certain percentage of monthly revenue generated by your business, and the lender will expect to be paid back when you’re paid. You can typically choose between a fixed payment, or one that fluctuates with monthly revenue.

What does it take to qualify for working capital financing?

Many businesses qualify for working capital lending, as you only need evidence that you have a business and the loan will be paid, to qualify for financing.

At Cardiff, our requirements look like this:


Credit Score

Typically, personal credit scores aren’t as important as other commercial credit factors. However, a good rule is that if your FICO score is over 500, you’re in the clear!

Time in Business

We look for at least 6 months of time in business.

Revenue

$10,000/month or $120,000 in annual sales with a minimum of three deposits/month.

Is US Citizenship required?

Having US citizenship isn’t required. Cardiff only requires that the business owner be a legal resident.

Ownership

Any owner can execute the contract regardless of their ownership percentage

Credit Score Typically, personal credit scores aren’t as important as other commercial credit factors. However, a good rule is that if your FICO score is over 500, you’re in the clear!
Time in Business We look for at least 6 months of time in business.
Revenue $10,000/month or $120,000 in annual sales with a minimum of three deposits/month.
Is US Citizenship required? Having US citizenship isn’t required. Cardiff only requires that the business owner be a legal resident.
Ownership Any owner can execute the contract regardless of their ownership percentage

How to Apply

To apply for a Cardiff working capital loan, you’ll want to have a few things prepared, including:

  • Your business org doc
  • Most recent tax return
  • 6 months of your most recent bank statements
  • Drivers License
  • Voided Business Check

When you have your paperwork in order, you’ll fill out an application and find out what terms your lender can offer you to keep your cash flowing as your business moves along.

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