Working capital financing is short-term business funding for operating costs such as payroll, rent and supplies, normally repaid in fixed installments from the revenue that follows. Silvershore Funding Group, a small-business funding broker in Flagstaff, Arizona, helps Coconino County owners size the need and connects them with lending partners, who approve requests and set rates and terms.
| What it pays for | Operating costs: payroll, rent, materials, supplier bills |
|---|---|
| Short or long term | Short term; repaid over a shorter period than equipment or project loans |
| How it is repaid | Fixed installments, commonly by weekly or monthly debit |
| Partners usually review | Bank statements, revenue, existing debts, credit |
| Who decides | The lending partner, not Silvershore Funding Group |
| Office | 10 N Leroux St, Flagstaff, AZ 86001 · (928) 239-1321 |
How the money moves
Working capital financing follows a simple cycle, and it only works when every step of the cycle holds:
- Funds arrive. The partner pays a lump sum into the business account, or makes a limit available if the product is structured as a line.
- Costs are paid. The money covers the wages, rent, materials or invoices that fall due before revenue arrives.
- Revenue lands. Customers pay, a contract milestone is billed, or sales pick up.
- The balance is repaid. Installments come out of that revenue on the partner's schedule until the balance is cleared.
If step three is uncertain, the financing just adds a payment to a business that is already short. That is why the most useful question is not how much a partner might offer but what, specifically, will pay it back.
Short term or long term?
Working capital is short-term financing. It is meant to be repaid out of the revenue cycle it supports, so terms are shorter than for equipment or project loans, and payments are often taken weekly or monthly by automatic debit.
If a need will take years to pay for itself, such as a remodel or a new service line, a term loan usually fits better. If the gaps keep returning in different sizes, a business line of credit lets you borrow only what each gap requires.
Can working capital cover payroll?
Payroll is one of the most common reasons owners look at working capital, and many partners allow it. Partners set out permitted uses in the agreement, so read that clause rather than assuming. Two cautions apply. First, financing a single payroll ahead of a known receivable is a timing fix; financing payroll month after month because revenue does not cover it is a sign the business needs a different conversation, about pricing, costs or both. Second, the free advisers listed in our Northern Arizona resources directory can help with that conversation at no cost.
Where payroll weighs most in Coconino County
County figures show why wages dominate many working capital requests here. Accommodation and food services employed 14,573 people in Coconino County in the March 2023 pay period, more than any other sector, and its establishments paid $453.6 million in annual payroll (U.S. Census Bureau, County Business Patterns 2023). Health care and social assistance paid $565.3 million, the largest payroll of any sector, and construction employers paid $180.5 million.
Restaurants also run larger crews than the typical local employer. Just 20.4 percent of the county's food service and drinking places had fewer than five employees, against 52.8 percent of all employer establishments (same source). When the biggest recurring bill is labor, the timing of payroll against revenue is the working capital question. The industry pages look at each confirmed sector in more detail.
Working capital, line of credit or merchant cash advance?
| Working capital financing | Business line of credit | Merchant cash advance | |
|---|---|---|---|
| What it is | Short-term financing, usually a lump sum | A credit limit you draw on | A purchase of future receipts; not a loan |
| How it goes back | Fixed installments | Payments on the drawn balance; repaid amounts can be drawn again on a revolving line | A share of sales or fixed debits until the agreed total is remitted |
| Suits | A one-off gap of known size | Repeated gaps of varying size | Card-heavy businesses that have compared the total cost against loan options |
| Cost to compare | Interest and fees over the term | Interest on draws plus any fees | The total remitted against the amount received |
A merchant cash advance often gets offered to card-based businesses as working capital. It is not a loan, and its cost is expressed differently, so compare the total amount remitted with what a loan would cost before choosing it.
What partners usually review
- recent business bank statements, often covering several months;
- revenue level and how steady it is from month to month;
- the debts and liens the business already carries;
- business and owner credit;
- proof that the business is registered and licensed. Our Flagstaff license and TPT checklist covers the local paperwork.
Partners decide how much, if anything, to offer, and on what terms. Silvershore cannot predict either before a partner has seen the file. The four stages of a request explain what happens after you send it.
Questions to ask before you sign
- What is the total amount I will repay, including every fee?
- How often are payments taken, and from which account?
- Is there a personal guarantee, and does the partner file a lien on business assets?
- What happens if I pay early: is there a discount, or a charge?
- What counts as a default, and what happens then?
Bring the offer to us and we will go through it with you.
By Silvershore Funding Group · Updated