Working capital is the amount of capital that is available for the day-to-day operations of a business. Working capital is typically used to pay for regular expenses, such as utility bills, employee payroll, rent, inventory, and marketing costs. You can calculate your business’s working capital by subtracting the business’s current liabilities from its current assets.

You may need additional working capital to:

• Pay expenses
• Pay debt
• Take advantage of business opportunities
• Invest money ahead of seasonal changes
• Increase business health with cash on hand

SBA Express loans and SBA 7(a) loans can be used to fund working capital for business borrowers, but SBA 504 loans cannot.

Working capital is essential for the day-to-day operations of a business. It is typically used to pay for regular expenses, such as utility bills, employee payroll, rent, inventory, and marketing costs. Without adequate working capital, a business may not be able to cover its expenses and may struggle to stay afloat.

SBA Express loans and SBA 7(a) loans can be used to fund working capital for business borrowers, but SBA 504 loans cannot. SBA 7(a) Loan for Working Capital and Working Capital Explained provide more information about working capital and how it affects a business's operations.

Having sufficient working capital can provide a variety of benefits to small business owners. These benefits include:

• The ability to pay expenses and debt
• The ability to take advantage of business opportunities
• The ability to invest money ahead of seasonal changes
• The ability to increase business health with cash on hand

For more information, please see Using the SBA 7(a) Loan for Working Capital.

Having insufficient working capital can be a major risk for businesses. Without enough working capital, businesses may not be able to pay their expenses, debt, or take advantage of business opportunities. This can lead to cash flow problems, which can cause businesses to miss payments, default on loans, and even go out of business. Additionally, having insufficient working capital can lead to a lack of liquidity, which can make it difficult for businesses to invest money ahead of seasonal changes or increase their business health with cash on hand.

The best ways to increase working capital are to reduce current liabilities, increase current assets, and increase cash flow. Reducing current liabilities can be done by paying off debt, negotiating better terms with suppliers, and reducing inventory. Increasing current assets can be done by increasing inventory, collecting accounts receivable, and investing in short-term investments. Increasing cash flow can be done by increasing sales, reducing expenses, and improving operational efficiency.

For more information, please visit www.sba7a.loans/sba-7a-loan-for-working-capital.