Working capital, explained plainly.
Working capital is the money that keeps the business running day to day: payroll, inventory, rent, a slow season. There are several ways to fund it, and they differ a lot in cost and structure. Here is how they compare.
Full Port Financial is not a lender. Financing is provided by third-party funding partners.
What working capital is
"Working capital funding" is not one product. It is a job that several products can do. The most common are short-term loans, business lines of credit and revenue-based financing. Each one suits a different situation, and the difference in cost between them can be large.
Full Port Financial is not a lender. We help you understand which option may fit your cash-flow pattern, explain the real cost of each offer in plain terms, and connect you with funding partners.
Often used for
- Covering payroll between customer payments
- Buying inventory ahead of a busy season
- Bridging a slow month or a delayed contract
- Handling an urgent repair
- Taking on a new order that needs materials up front
- Keeping reserves intact for emergencies
The terms that matter
A lump sum repaid over a shorter term, often with weekly or daily payments. Simple to understand; compare by APR and total repayment.
Draw what you need and repay as cash comes in. Often the lowest-cost option for recurring needs, if you qualify.
Also called a merchant cash advance. The funder buys a share of your future sales for a lump sum today. It is not a loan, and it can be expensive.
If customers pay you on terms, some funders advance money against unpaid invoices.
What funding partners usually look at
Every funding partner sets its own requirements. These are the factors that come up most often.
- Steady recent revenue deposited into a business account
- Consistent daily balances and few overdrafts
- Time in business
- Existing advances or loans and their daily or weekly payments
- Personal and business credit history, weighted differently by product
- Your industry, since some funders exclude certain businesses
What to have ready
You don't need these to make the first call. Having them ready later speeds things up.
- Three to four recent months of business bank statements
- A government-issued photo ID for each owner
- A voided business check or bank letter
- Basic business details: legal name, entity type, EIN and start date
Understanding what it really costs
Short-term financing is convenient, and it can be costly. A merchant cash advance, for example, is usually priced with a factor rate rather than an interest rate. A factor rate of 1.3 on a $20,000 advance means you repay $26,000 in total, and because repayment happens over a short period, the equivalent annual cost can be high.
Before you accept any offer, ask for the total amount you will repay, the payment amount and frequency, the expected length of repayment and every fee. Your advisor will lay offers side by side so you can see the real cost.
From first call to funded in three steps.
Tell us about your business
Your industry, your revenue and what the money is for. A few minutes on the phone with a funding advisor.
Compare your options
See options from funding partners that fit your profile, side by side, with your advisor walking you through them.
Get funded
Choose the offer that works for you, sign with the funding partner, and receive your funds.
Questions, answered.
What is working capital funding?
It is funding used for day-to-day operating costs such as payroll, inventory and rent, rather than for long-term investments. Short-term loans, lines of credit and revenue-based financing are the most common options.
Is a merchant cash advance a loan?
No. A merchant cash advance, also called revenue-based financing, is the purchase of a share of your future sales. It is structured and regulated differently from a loan, and it is often more expensive. Always ask for the total repayment amount.
What is a factor rate?
A factor rate is how many merchant cash advances are priced. You multiply the advance by the factor rate to get the total you repay. For example, a $10,000 advance at a factor rate of 1.25 means you repay $12,500.
Will checking my options affect my credit?
Talking with Full Port Financial does not affect your credit, because we do not pull credit reports. A funding partner may review your credit later as part of its own review, with your permission.
What if I already have an advance or loan?
Tell your advisor. Existing daily or weekly payments affect what makes sense next, and we will not steer you into stacking financing your cash flow cannot support.
Does Full Port Financial charge a fee?
No. Full Port Financial does not charge applicants a fee to apply or to talk with an advisor. When a funding partner funds a business we introduced, the partner may pay us a commission.
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Your money is one call away.
Tell us about your business and what the money is for. An advisor will walk you through the options that may fit, with no pressure and no obligation.