The gap in plain terms
Working capital is the money that runs the business between paying for things and being paid. Wages, rent, insurance, supplies and fuel all come due on fixed dates. Customers pay on theirs. When the first run ahead of the second, the business needs cash on hand or a way to borrow it for a few weeks.
What the local base looks like
According to Wikipedia, Santa Ana is the county seat of Orange County and the headquarters of companies including Ingram Micro, First American Corporation, TTM Technologies and SchoolsFirst Federal Credit Union, with regional offices for Xerox and T-Mobile. Nonprofits such as Open Doors are based there too. Companies and institutions like these buy printing, catering, cleaning, maintenance, materials and technical services from smaller firms, many of which are paid after the work is done.
- The smaller firm carries labor and materials for weeks.
- Payroll cannot wait for the invoice to be approved.
- One slow payer can disrupt several weeks of planning.
Where the cash goes
| Cost | When it is due | Risk if cash is short |
|---|---|---|
| Payroll | Weekly or twice a month | Staff loss, penalties |
| Rent and utilities | Monthly | Late fees, lease problems |
| Suppliers | On their terms | Tighter terms or lost discounts |
| Taxes and insurance | Scheduled | Penalties, coverage gaps |
An illustration of a single slow invoice
These are round numbers, not our terms. A Santa Ana commercial cleaning company has a $48,000 monthly payroll and bills one large client $60,000 a month on net-60 terms. The client's payment arrives two months late once. The owner can delay payroll, which loses staff, or cover the gap with working capital and repay it when the client pays. The second path is only sensible if the client's record is good and the margin on the work exceeds the cost of the money.
Signs the problem is not timing
If a client never pays or the work loses money, more cash only delays the problem. Chase the invoice, adjust the price or trim the cost first. Working capital is the right tool when the business is sound and the timing is the difficulty, and it works best when the owner can name the payment that will repay it.
When to look at something narrower
If the gap recurs, a line of credit may match it better. A specific machine fits equipment financing, and a defined project suits term loans.
How to apply
We consider FICO scores of 500 and above, review about three months of business bank statements and need no tax returns. The application takes 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. The Orange County page adds regional context.