This page from Aspenspring Business Loans in Durango, Colorado explains working capital loans for small firms: how they work, how to read the working capital ratio from a balance sheet, what different working capital loan companies look at, and how to size a payroll gap with invented worked figures before asking a funding partner.
At a glance
- Employer establishments, La Plata County, CO
2,447 (County Business Patterns 2023)
- Annual payroll, all county employers
$1,091.4 million (County Business Patterns 2023)
- Employers with fewer than five employees
60.7% (County Business Patterns 2023)
How Does a Working Capital Loan Work for a Durango, CO Business?
A funder pays out one amount, and the business pays it back over a short schedule, from a few months to a year or two depending on the offer. Some working capital loans take fixed monthly payments; others take weekly or daily debits from the business account. The price can be quoted as an annual rate or as a flat fee on the amount, and the two are only comparable once both are turned into total dollars.
La Plata County, CO employers paid $1,091.4 million in annual payroll in 2023 across 20,351 employees (County Business Patterns 2023). Payroll does not wait for a client's check, which is the gap these loans exist for. A gap that returns every month is better matched to a business line of credit, where the limit refills as clients pay.
Working Capital Ratio: The Number a Partner Reads First
The working capital ratio is current assets divided by current liabilities, both taken from the balance sheet. Current assets are cash, receivables and stock that will turn into cash within a year; current liabilities are bills, card balances and loan payments due within a year. A ratio above 1 means the short-term assets cover the short-term debts.
Illustration only, invented figures: a firm with $148,000 of current assets and $96,000 of current liabilities has working capital of $52,000 and a ratio of 1.54 (our arithmetic). A partner reading that balance sheet also asks how much of the invented $148,000 is receivables, and how old they are, because a 90-day-old invoice is not the same as cash.
Finding Working Capital in Your Own Accounting Records
Accounting software shows working capital without a formula: run a balance sheet as of today and subtract total current liabilities from total current assets. The aged receivables report shows what clients owe and how late, and the aged payables report shows what the business owes. Those three reports, plus recent bank statements, are what a reviewing partner can ask for on a working capital request.
- Balance sheet dated within the last month.
- Aged receivables, with any invoice past 60 days explained.
- Aged payables, so the partner sees what is already due.
- Business bank statements covering whatever months the partner asks to see.
Working Capital Loan Companies and How They Differ
Three kinds of funder make working capital loans. Banks and credit unions price on full financial statements and tax returns and can take longer to decide. Online and specialty lenders read bank deposits and can work from a shorter history, with prices that vary widely. Revenue-based providers, including merchant cash advance companies, collect a share of sales instead of fixed payments, and a cash advance is not a loan.
The comparison that matters is the same for all three: the amount received after fees, the total paid back, the payment frequency, and what happens if a payment is missed. The merchant cash advance page covers how a factor turns into a total cost.
Payroll Gaps in Owner-Run La Plata County, CO Firms
Of the county's 2,447 employer establishments in 2023, 1,485 had fewer than five employees (County Business Patterns 2023). In a firm that size, one late client can mean the owner covers payroll from savings. Illustration only, invented figures: a three-person finish crew pays $6,800 a week in wages and waits 6 weeks for a general contractor's draw, a gap of $40,800 (our arithmetic).
A working capital loan of about that size covers the gap once. If the same 6-week wait comes with every job, the cost of taking a new loan each time adds up, and a revolving line fits the pattern better. Accounting firms, clinics and contractors each have pages covering their own timing: accounting firms, medical practices and contractors.
How to Get Working Capital for a Small Business, Step by Step
- Size the gap: weekly costs times the number of weeks until the money comes back.
- Check the leanest month in the last year against the new payment.
- Write out every loan, lease and cash advance already coming out of the account.
- Call (970) 238-5207 or send the online form with the amount and the timing.
- Send the reviewing partner the records it names, then read the whole offer before signing.
Illustration only, invented figures: a supplier offers a $42,000 order on 60-day terms. If the business sells the goods and is paid inside those 60 days, it needs no loan at all; working capital comes in only when the cash arrives after the supplier is due.
Two articles put working capital next to an equipment purchase: a fitness studio opening its doors and a landscaping crew paying wages before commercial accounts pay.
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