Working Capital Loans

Funds when you need them.

Southern Bank offers short-term business working capital loans & lines of credit to fuel your business to meet demand. Learn more today or contact a lender.

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Working Capital and Why It's Important

Have money on hand.

Working capital is about having money on hand to cover things like paying your employees and vendors, and making sure you reach your long-term goals. Ultimately, working capital is the money available to meet your day-to-day obligations.

Some reasons why your business might require additional working capital:

Seasonal Cash Flow Gaps - It is typical of many businesses to experience seasonal cash flow differences and to need extra capital to gear up for a busy season or to keep the business operating during the off-season.

Accounts Receivable Gaps - Most businesses will have times when additional working capital is needed to fund obligations while waiting for payments to come in from customers.

Unique Opportunities - Extra working capital can help you take advantage of time-sensitive opportunities, like bulk purchases and discounts, to improve your business.

Additional Project Expenses - Working capital can be used to help you scale up your business to meet project demands and to cover other project-related expenses.

We can help you better understand your working capital needs and what steps you may need to take to prepare for various situations. Having a clear view of working capital can help you operate with short-term efficiency, and set you up for long-term growth.

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Calculate your Working Capital

Determine your working capital ratio and your net working capital.

You can better understand where your business stands right now by determining your working capital ratio and your net working capital, both of which indicate your company’s short-term financial health.

Working Capital Formula

Current assets ÷ Current liabilities = Working capital ratio

  • If you have current assets of $2 million and current liabilities of $1 million, your working capital ratio is 2:1, generally considered a healthy ratio- There are some industries where lower ratios are considered acceptable.

Your net working capital tells you how much money you have readily available to meet current expenses.

Use our calculator to help determine your working capital requirements >

Net Working Capital formula

Current assets – Current liabilities = Net working capital

For Short-term assets, add up:

  • the cash in your business account
  • the money your customers owe you
  • the inventory you expect to convert to cash within 12 months.

For Short-term liabilities, add up:

  • the money you owe vendors and other creditors
  • the expenses for salary, taxes and other outlays
  • other short-term debts

Explore our other Business Management and Finance calculators >