Working capital formula
Compute the gap.
Guide
How much should you actually borrow?
Providers offer the maximum your deposits support. That number has nothing to do with what you need. Sizing the request is the decision that most affects total cost, and it takes twenty minutes.
Step 1: name the gap
Write one sentence: "I need $X by [date] to [specific use], and it will be covered by [specific inflow] on [date]." If you cannot write the sentence, you do not have a funding need yet; you have a planning need. Start with the working capital formula.
Step 2: add a buffer, not a cushion
Add 10–20% for the inflow arriving late or the cost running over. Do not add "a little extra to have around"; on a factor-rate product, extra cash costs the full factor and sits in an account earning nothing.
Step 3: test the payment against your worst week
Take the weekly (or daily × 5) payment and subtract it from deposits in your slowest week of the last six months. If the remainder does not cover rent, payroll, and suppliers that week, the amount or the product is wrong. Use the calculator to get the payment.
| Requested | Factor 1.25, 26 weeks, 2% fee | Weekly payment | Total cost |
|---|---|---|---|
| $10,000 | $9,800 net | $481 | $2,700 |
| $25,000 | $24,500 net | $1,202 | $6,750 |
| $50,000 | $49,000 net | $2,404 | $13,500 |
Illustrative assumptions; not quotes.
Step 4: match the term to the payoff
Money that returns in 60 days can be financed for 60 days. Money that returns over three years (a build-out) calls for a multi-year product. Financing a long payoff with a short product tends to force renewals, and renewals are where the cost compounds. Which product fits which term.
A useful rule of thumb
For revenue-based products, a request above roughly one month of revenue is usually a sign the structure is wrong for the need. For lines, size the limit to your largest expected gap, not your average. For term loans, size to the project, then confirm coverage: monthly cash flow after the new payment should still leave a margin.
What Fast Mula is and isn't. Fast Mula helps you compare business-funding structures and submit one inquiry. Nothing on this site is an offer, approval, guaranteed rate, or guaranteed timeline. Any funding depends on a provider's own review, and terms vary by state.
Common questions
Should I take the maximum I’m approved for?
Almost never on a factor-rate product. Every dollar costs the full factor whether you use it or not. Take the gap plus a buffer.
What if the need is ongoing?
Then a one-time product is wrong. An ongoing need calls for a line of credit, a receivables facility, or fixing the underlying cash-flow driver.
Related
See which options fit your numbers
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