Explore the features, advantages and disadvantages of the best loans for working capital.
Best Loans for Working Capital
Best Loans for Working Capital: FAQs
How Is Working Capital Calculated?
It’s worth considering how working capital is calculated by lenders. They consider specific values to use in a formula to work it out. Your current liabilities include accounts payable and is one factor they will ask you for. They will also ask you for your accounts receivable inventory and include them in the formula (current assets or accounts receivable minus current liabilities or accounts payable).
What Is an Example of Working Capital?
An example of working capital might include a company with assets worth £50,000 and liabilities worth £20,000. This company’s working capital is £30,000, which we can calculate using the formula and these values by deducting the liabilities from the current assets.
What Is the Difference Between Working Capital Loans and Term Loans?
A working capital loan typically tends to be a short-term loan with a repayment term between a few months and a few years. On the other hand, term loans for businesses tend to be medium or long-term loans that you pay off over an extended period and offer higher sums for business finance.
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