A simple definition
Working capital is the cash that runs the business day to day: wages, rent, parts, freight, insurance. A company can be profitable and still be short if costs are paid weeks before revenue is collected. Financing working capital closes that gap and is not tied to any single purchase.
Why the gap is common in San Jose
San Jose is described by Wikipedia as the county seat of Santa Clara County and the "Capital of Silicon Valley", with a Foreign Trade Zone designation that covers several counties. Businesses in that economy often sell to larger firms or ship goods across borders, and that creates long gaps between buying inputs and being paid. A small supplier can be asked to double production for a customer who pays on its own calendar, and the supplier carries the cost in the meantime.
Where it tends to be used
| Business | What the money carries |
|---|---|
| Contract manufacturer | Components and shift labor until delivery is paid |
| Importer or distributor | Inventory in transit and in the warehouse (see ports and logistics) |
| Technology services firm | Payroll between milestones |
| Restaurant or caterer | Food costs and staffing ahead of events |
An illustration of the arithmetic
Made-up numbers, not our terms: a small distributor buys $70,000 of goods for a customer that pays 45 days after delivery, while the distributor's own supplier wants payment in 15. For 30 days the distributor funds the order from its own account. If it has that cash and still can cover payroll, there is no gap. If not, working capital bridges the 30 days. The question for the owner is whether the margin on the order exceeds the cost of bridging and whether the customer has a record of paying on time.
Signs you should wait instead
If the gap exists because a customer is not paying at all, or because margins are negative, more cash only delays the problem. Chase the invoice, fix the price or cut the cost first. Working capital is the right tool when the business is sound and the timing is the issue.
When something narrower fits better
If you need a defined asset, equipment financing keeps it separate. Recurring needs can be handled with a line of credit. If a project is fully planned, term loans can give it a fixed shape. For tech-sector businesses, see the tech funding page.
How to apply
We consider FICO scores of 500 and above, ask for about three months of business bank statements and need no tax returns. The application takes about five minutes with a soft credit pull. Funding runs from $25,000 to $5,000,000 and can arrive in as little as 24 hours. Sole proprietors can apply. Apply here. Owners in Sunnyvale, Mountain View, Gilroy and Morgan Hill can apply as well.