Finance the cash the business already earns.
Inventory, receivables, a season that arrives before the customers pay. Working capital is a line against the cycle of the company, not a one-time purchase. We still run it as a competition.
Growth ties up cash before it returns any.
A larger order, a second shift, terms you gave a customer that your suppliers will not give you. The bank you already use will often renew the line you already have. Renewal is not a market. We find out what the line is worth to more than one lender.
Who finances working capital.
The split is between a bank line sized off the company, and an asset-based line sized off the collateral.
A revolving line, often against receivables and inventory.
A borrowing base that grows when the collateral does.
When the cycle is too uneven for a bank formula.
A 7(a) line when the working capital qualifies and the bank will not stretch.
Who a working-capital facility is for.
The company earns the money, then waits to collect it. Inventory, receivables, a season that arrives before customers pay, a larger order that has to be bought before it can be shipped. The need is a facility against that cycle, not a term loan for a building or a company.
It fits an operating company in the $1 million to $100 million revenue band. Replacing a line you already have, on the same use, is a refinance. Buying a machine is equipment financing.
How working-capital lenders typically structure the line.
A bank revolver is often sized off the company: cash flow, receivables, and inventory, with a limit that does not move every week. Renewal from the bank you already use is easy to accept. It is one bid. It does not tell you what another bank would offer.
An asset-based lender sizes a borrowing base off eligible receivables and inventory. Availability grows when the collateral does, and it shrinks when the collateral does. That structure fits a season a bank formula will not stretch for. The comparison is availability and the field exam, not only the interest rate.
Private credit is the lender that will look when the cycle is too uneven for a bank formula and an asset-based line still does not cover the gap. The SBA's 7(a) program can be used for short- and long-term working capital, and the SBA describes a 7(a) Working Capital Pilot for monitored lines of credit up to $5 million for businesses that qualify. Both are lender programs. The pages are 7(a) loans. Siddwell does not advance the line.
Documents a lender usually asks for.
A working-capital lender underwrites the cycle. They commonly ask for:
- Accounts-receivable and accounts-payable agings, and an inventory report
- Three years of financial statements and tax returns, plus a year-to-date statement
- A debt schedule, including any line you already have and its covenants
- A short description of the cycle: who you pay, who pays you, and when
- Customer concentration, if a few accounts are most of the receivables
- The borrowing-base certificate form the asset-based lender will want going forward
How the financing is run.
The working-capital facility is the assignment. The steps are the same four used on every mandate. Engagement: a letter is signed, the books are reviewed, and the case a lender will back is built. Market: the materials are prepared and the lenders who actually finance this use of proceeds are mapped. Competition: they see the deal at the same time, so the house bank or the vendor's lender has to beat the field. Close: the offers are compared, the terms are negotiated, and the one you accept is taken to signing.
No duration is promised here, and no rate. A lender's credit process sets the clock. What the mandate changes is who is asked, and whether the first term sheet is the only one.
What Siddwell is and isn't.
Siddwell is an investment bank hired to advise on the financing and to run a competition among lenders. Siddwell is not a lender, not a licensed loan broker, and not a business broker. The lender makes the credit decision. If you would rather meet SBA lenders on your own, the SBA's Lender Match tool introduces participating lenders, and you apply with the lender, not with the SBA.
Is a working capital line the same as a term loan?
No. A term loan pays for a purchase — a company, a building, a machine. A working capital facility funds the gap between paying suppliers and collecting from customers.
When is asset-based lending the right path?
When the inventory and receivables are real and the bank's cash-flow formula is too small for the season. We take both kinds of lender out and compare availability, not just rate.
Do you refinance an existing line here?
Replacing a facility you already have, on the same terms of use, is the refinance page. This page is for raising working capital the company does not have yet.
Is a line the same as a term loan?
No. A term loan pays for a purchase. A working-capital facility funds the gap between paying suppliers and collecting from customers. The lender list is different.
When is asset-based lending the comparison to make?
When inventory and receivables are real and the bank's cash-flow formula is too small for the season. Take both kinds of lender out and compare availability, not just rate.
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