Working Capital Loan
Definition
Financing used to fund day-to-day operations — inventory, payroll, payables — rather than long-term assets. It bridges timing gaps between paying suppliers and collecting from customers.
Related Terms in Business Terms
Term Loan
A loan repaid over a fixed period in regular instalments, typically used to buy long-term assets or fund expansion. It carries a set interest rate and maturity.
Amortization Schedule
A table showing each payment on a loan split between interest and principal, with the outstanding balance after every instalment. It reveals how slowly principal falls early in a loan.
Equity Financing
Raising money by selling ownership stakes in a business rather than borrowing. It brings no repayment obligation but dilutes existing owners and shares future profits.
Debt Financing
Raising money by borrowing, to be repaid with interest. It preserves ownership but adds fixed repayment obligations and financial risk if cash flow tightens.
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