Working capital and equipment finance — which do I need?
Working capital smooths the gap between paying costs and getting paid. Equipment finance funds a specific asset over its useful life.
Working capital
Best when the business is fundamentally profitable but the timing is wrong — you pay suppliers and staff before customers pay you. It funds stock, payroll and receivables, and is typically revolving, so you draw and repay as the cycle turns.
Equipment finance
Best when you need a specific asset — machinery, vehicles, IT or fit-out. The asset itself usually acts as security, the term is matched to its useful life, and the repayment profile is fixed so it is easy to budget.
Choosing
| Question | Points to |
|---|---|
| Is the need recurring and cyclical? | Working capital |
| Is it a single, identifiable asset? | Equipment finance |
| Will the funds be repaid within one trading cycle? | Working capital |
| Will the asset generate returns over several years? | Equipment finance |
What we look at
Trading history, cash-flow forecasts, the concentration of your customer base, existing commitments, and — for equipment — the supplier quotation and the asset's resale value. A clear, evidenced explanation of how the facility will be repaid matters more than any single ratio.
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