How Working Capital financing works
Working capital needs can be met with term loans, revolving lines of credit, or asset-based structures. The SBA 7(a) program permits working capital uses, and SBA offers line-of-credit structures through participating lenders, including the 7(a) Working Capital Pilot for eligible businesses that borrow against receivables or inventory.
Note that SBA 504 loans cannot be used for working capital. Lenders will evaluate your cash conversion cycle, receivables, inventory, and the purpose of the funds.
Common business uses
- Inventory purchases and seasonal needs
- Supporting receivables and contract growth
- Payroll and operating expenses during expansion
- Marketing, hiring, and new location ramp-up
General eligibility considerations
- Operating history and financial statements that support the request
- Clear explanation of how the funds will be used and repaid
- Receivable and inventory reporting for revolving or asset-based structures
- Acceptable credit profile for the business and owners
Documentation lenders typically request
- Business federal tax returns (typically the most recent three years)
- Personal federal tax returns for owners with significant ownership
- Year-to-date profit and loss statement and balance sheet
- Personal financial statement for each owner
- Business debt schedule listing current obligations
- Business formation documents and ownership structure
- Résumés or management background for key principals
- Accounts receivable and accounts payable agings
- Inventory reports where applicable
- Cash flow projections showing the working capital need
Requirements vary by lender and program. Please do not send tax returns or other sensitive documents through our website form — we will provide a secure method when documents are needed.
The role Sapphire Holdings plays
- Help define the working capital need and appropriate structure to explore
- Organize agings, projections, and financial statements
- Help present the request clearly to potential lending sources
Sapphire Holdings is not a lender and does not make credit decisions. The lender independently determines eligibility, rates, terms, and approval.