The gap is in the calendar, not the profit
A business can be profitable and still run short. The problem is timing: costs are paid on fixed days while customers pay when they pay. Working capital covers the distance between the two.
In Glendale, that distance is longest for businesses that invoice other businesses. The city is part of the film and animation production area it shares with Burbank, and the vendors around that work, from set and prop builders to catering, couriers and post-production, typically pay people weekly and are paid in weeks. Companies in the Grand Central Business Centre industrial park have a similar profile: materials and labor first, invoice later.
Where the money goes, ranked by urgency
- Payroll. It cannot be late without losing people.
- Rent and insurance. Fixed dates, with penalties.
- Suppliers. Paying on time keeps credit terms and pricing.
- Taxes. A sales-tax or payroll-tax shortfall gets expensive quickly.
- Growth spending. Marketing, a second shift or extra stock comes last, but is often the reason to borrow.
If your cash problem is mostly items one to four, the business is covering a timing gap. If it is mostly item five, the funding is for growth, and the plan for repayment should come from that growth.
How much to ask for
A usable estimate is your weekly costs multiplied by the number of weeks you wait to be paid. For illustration only, a Glendale design firm with $9,000 a week in costs and a typical 50-day payment cycle has about seven weeks to cover, around $63,000. Round up a little for surprises. Asking for far more than the gap raises the repayment without helping the business; asking for less means going back again. The numbers are an example, not our terms.
Signs you need working capital rather than something else
- You can pay your bills each month, but only after a customer's late payment lands.
- You turn down bigger orders because you cannot front the materials.
- You use a personal card to cover payroll for a week or two.
- You are healthy on paper and short in the bank in the same month.
If most of these are true, the issue is timing. If none are true and you are looking at a single large purchase, a different structure may fit better. Describe your situation plainly in the application.
Applying
We fund $25,000 to $5,000,000, with funding in as little as 24 hours once approved. FICO 500+ is considered, we ask for about three months of business bank statements, and no tax returns are required. The application takes five minutes and uses a soft credit pull; sole proprietors can apply. Apply to start.
You can also compare a line of credit, merchant cash advance or term loans. See the LA Metro overview for the region.