Working capital is the money a company has available to cover its everyday operating expenses. It is the dollar value difference between a company’s assets and liabilities. Current assets include cash, accounts receivable, and inventory. Current liabilities consist of accounts payable and short-term debt.
The capital keeps a business running smoothly daily and allows it to fund its operations and growth.
The Pulse of Your Business
Every Canadian business owner knows the pressure. A big new contract exists, but unpaid invoices or materials have trapped cash. The working capital gap is a common challenge that can stall even the most promising ventures.
A business can look profitable on paper. However, insufficient working capital can lead to missed opportunities, unpaid bills, and severe financial stress. At EBF, we understand this reality and provide tailored solutions to ensure your business thrives, not just survives.
Defining Working Capital in Simple Terms
Working capital is the essential financial fuel that keeps your business running. Think of it as the money in your business’s “checking account” that you use to cover daily expenses. It’s calculated using a simple formula:
Current Assets (cash, accounts receivable, inventory) – Current Liabilities (accounts payable, short-term debt) = Working Capital.
A positive working capital number means you have enough resources to pay your short-term bills and invest in growth. A negative number, however, signals that you might not have enough liquidity to meet your financial demands.
Why Your Canadian SME Can’t Afford to Ignore Working Capital
Healthy working capital is non-negotiable for a thriving business. It lets you pay your employees and suppliers on time, ensuring smooth and uninterrupted operations. It also fuels growth, enabling you to accept larger contracts, invest in new equipment, or expand your team.
This also offers a vital safety net for unexpected costs or economic downturns, helping your business stay strong during tough times.
Learn More About Our Services
Common Working Capital Challenges Faced by Canadian SMEs
Many Canadian businesses face a significant hurdle: slow-paying customers. Industries like construction often deal with 30, 60, or even 90-day payment terms.
This creates a big cash flow problem. You need to pay for materials and labour upfront and wait for the invoice to get paid.
Traditional banks are often not an option for many of these businesses. They typically turn away new industries, distressed companies, or those with CRA debt or running a loss. This leaves business owners in a difficult position, and some resort to desperate measures like high-interest merchant cash advances that can cost up to 45% per annum.
EBF’s Solutions: Your Working Capital Partner
At EBF, we are a working capital solution. We understand that every business is a dream, and we’re here to help you turn it into a prosperous reality. Our mission is to see an increasingly prosperous Canada, where businesses of all sizes are supported. We provide several alternative financing options to ensure your company gets the needed funding.
Invoice Factoring: This service allows you to sell your unpaid invoices to EBF at a small discount. We then provide an immediate cash advance, giving you access to the funds you need without waiting for your customer to pay. This directly answers slow-paying clients and is often more beneficial than a bank loan.Asset-Based Lending: If you have assets like machinery, equipment, real estate or accounts receivable, you can leverage them to get the working capital you need. This provides a flexible funding option for businesses with high-value assets but limited cash flow.Bridge Financing: EBF provides bridge financing to cover short-term cash flow gaps. We also offer specialised solutions like DIP (Debtor-in-Possession) Financing and business in distress consulting, because a company running a loss or owing the CRA money shouldn’t be disqualified from getting help.
Why EBF is the Right Choice for Your Business
When you partner with EBF, you get a transparent and personalized financial solution. Unlike banks, we create tailored financial solutions with no hidden fees. We pride ourselves on being “lender advisors” who go the extra mile to make something fit for a client, even if it requires helping them sort out complex issues.
Our management team has a century of experience and has funded over a billion dollars. We understand the nuances of the Canadian market and are committed to helping businesses succeed. We’re here to help you get the working capital you need to hit your next milestone.
A Step Towards a Prosperous Canada
Don’t let a lack of working capital hinder your business’s potential. EBF is dedicated to providing the working capital solutions that will allow your Canadian SME to grow and prosper. If you’re a business owner with over $3 million in annual revenue struggling with cash flow, we are here to help.
