Working capital is the cash a business uses to cover day-to-day operations — payroll, rent, inventory, and supplies — between the time money goes out and the time customers pay. When that gap widens because you are growing, waiting on invoices, or ramping for a season, you need operating capital to bridge it. This guide covers your main options and how to choose.
What counts as working capital
Working capital is simply current assets minus current liabilities — the money available to run the business right now. A profitable company can still be short on working capital if its cash is tied up in inventory or unpaid invoices. That is a timing problem, and it is the most common reason owners seek operating capital.
Your main options
A business term loan gives a lump sum repaid over a fixed period — good for planned, larger investments but slow to approve. A business line of credit offers flexible, reusable access to funds — useful for recurring gaps but often hard to qualify for. An SBA loan offers low rates but lengthy paperwork and approval times. Revenue-based funding (a merchant cash advance) advances a lump sum against your future sales and is remitted as a share of revenue — the fastest option, approved on deposits rather than credit.
When speed and approval matter most
If you have steady revenue but a bank has declined you — or you simply cannot wait weeks — revenue-based funding is built for that. Approval weighs the deposits flowing through your business rather than your credit score or collateral, so a revenue-positive business can be evaluated quickly. Eligible applications can get a same-day decision with funding commonly within 24 to 72 hours. Not all applicants qualify.
The bottom line: match the tool to the need — a term loan or SBA loan for planned, lower-cost capital you can wait for; a line of credit for recurring gaps; revenue-based funding when speed and revenue-based approval matter most. Y Millennial Funding is a direct funder of revenue-based funding for businesses doing $25,000 or more in monthly revenue — a small business loan alternative, not a loan.