What is working capital for a small business?

Working capital is the difference between a business's current assets (cash, receivables, inventory) and its current liabilities (accounts payable, short-term debt). Positive working capital means the business has more liquid assets than short-term obligations. Negative working capital means current liabilities exceed current assets, a sign the business may need additional funding to meet its obligations.

What is a good current ratio for a small business?

A current ratio between 1.5 and 2.0 is generally considered healthy for most small businesses. A ratio below 1.0 indicates negative working capital. A ratio above 2.0 indicates a strong cash position. The ideal ratio varies by industry: businesses with fast-turning inventory (restaurants, retail) can operate effectively at lower ratios than businesses with slow receivables cycles (construction, professional services).

Can I get funding with negative working capital?

Yes. Negative working capital does not automatically disqualify a business from MCA funding. Merchant cash advances are evaluated on revenue and deposit consistency, not balance sheet ratios. A business with negative working capital but strong monthly deposits may qualify for an advance that directly improves the working capital position. The advance amount and factor rate will be affected by the severity of the negative position.

How does working capital differ from my net income?

Working capital is current assets minus current liabilities; it measures liquidity, not profitability. A business can be profitable but have negative working capital if customer payments come in slowly or if large inventory purchases outpace collections. Working capital financing bridges that gap.

What is a good working capital ratio for a small business?

A working capital ratio of 1.5 to 2.0 (current assets divided by current liabilities) is generally considered healthy for a small business. Below 1.0 means current liabilities exceed current assets, a warning sign. An MCA can provide immediate working capital injection without requiring collateral.

Working Capital Calculator for Small Business

Current Assets

What your business currently owns or is owed.

Cash in Business Bank Account(s)

Accounts Receivable (money owed to you)

Inventory Value

Current Liabilities

What your business currently owes within 12 months.

Accounts Payable (bills due)

Short-term Debt / Loan Payments (next 12 months)

Other Short-term Obligations

Monthly Operating Expenses

Total Monthly Fixed + Variable Expenses

Include rent, payroll, utilities, supplies, loan payments.

Your Working Capital Report

Total Current Assets $28,000

Total Current Liabilities $10,000

Net Working Capital $18,000

Current Ratio 2.80

Cash Runway 1.5 months

Funding Gap $0

A shop owner working through paperwork at a workbench — Estimating your funding capacity starts with the same numbers a business owner already tracks on their own books.

Estimate Your Funding Capacity

A different question than working capital position: based on your revenue and bank balance, how much MCA funding could your business access right now?

Average Monthly Revenue

Average Daily Bank Balance

Approximate balance across your last 6 months of statements.

Desired Payoff Timeframe

Estimated Funding Capacity

Minimum Estimate (0.75×) $18,750

Typical Estimate (1.0×) $25,000

Maximum Estimate (1.5×) $37,500

Est. Daily Payment (typical amount) $154/day

Average daily balance of $5,000+ supports the full estimated range.

Apply for This Amount →

Formula: Average Monthly Revenue × 0.75-1.50 = estimated MCA range, based on 6 consecutive months of business bank statements with $4,000-$6,000+/month in revenue and a $4,000+ average ending monthly balance. Illustrative estimate only, not a credit decision or funding offer.

A worker checking documents against a delivery — Reading your results against real requirements, not just a raw number, is what turns an estimate into a usable next step.

How to Read Your Results

Current Ratio Benchmarks

Below 1.0Negative Working Capital

1.0-1.5Tight: Monitor Closely

1.5-2.0Healthy for Most Businesses

2.0+Strong Position

Why Working Capital Matters for Funding

Underwriters review working capital as a measure of your ability to service additional debt. A positive working capital position with 1.5+ months runway signals a business that can handle consistent MCA payments without being pushed into distress. Negative working capital doesn't disqualify you from MCA, but it does affect offer size and factor rate.

Need to improve your working capital?

Working capital funding from $10,000-$1M. Review begins as soon as your file is complete.

Apply for Working Capital →

Revenue Gap Calculator → MCA Payment Calculator → Check Fundability Score →

Working Capital Calculator FAQ

What is working capital for a small business?: Working capital is the difference between a business's current assets (cash, receivables, inventory) and its current liabilities (accounts payable, short-term debt). Positive working capital means the business has more liquid assets than short-term obligations. Negative working capital means current liabilities exceed current assets, a sign the business may need additional funding to meet its obligations.

What is a good current ratio for a small business?: A current ratio between 1.5 and 2.0 is generally considered healthy for most small businesses. A ratio below 1.0 indicates negative working capital. A ratio above 2.0 indicates a strong cash position. The ideal ratio varies by industry: businesses with fast-turning inventory (restaurants, retail) can operate effectively at lower ratios than businesses with slow receivables cycles (construction, professional services).

Can I get funding with negative working capital?: Yes. Negative working capital does not automatically disqualify a business from MCA funding. Merchant cash advances are evaluated on revenue and deposit consistency, not balance sheet ratios. A business with negative working capital but strong monthly deposits may qualify for an advance that directly improves the working capital position. The advance amount and factor rate will be affected by the severity of the negative position.

How does working capital differ from my net income?: Working capital is current assets minus current liabilities; it measures liquidity, not profitability. A business can be profitable but have negative working capital if customer payments come in slowly or if large inventory purchases outpace collections. Working capital financing bridges that gap.

What is a good working capital ratio for a small business?: A working capital ratio of 1.5 to 2.0 (current assets divided by current liabilities) is generally considered healthy for a small business. Below 1.0 means current liabilities exceed current assets, a warning sign. An MCA can provide immediate working capital injection without requiring collateral.

Working Capital Calculator