Working Capital vs Fixed Capital

Fixed capital and working capital are vital to any business’s success. Some newer business owners just starting may not know the difference yet. Let’s discuss what these terms mean.

Working Capital

Working capital is the difference between your company’s current assets and liabilities. It is the money available short-term and used to keep the business running and purchase your daily inventory.

Fixed Capital

On the other hand, fixed capital is the money for long-term assets that a business has at its disposal, such as equipment, property, and even furnishings. It includes durable goods that remain in the industry for more than one accounting period. This figure is relatively illiquid because business owners cannot convert it easily into cash like working capital.

Both Are Needed for a Successful Business

Capital is the essential requirement for business entities to function optimally. They compliment each other to ensure the profitable use of fixed assets of the company. Fixed and working capital together is known as total capital.

First Union Lending is Here to Help!

At First Union Lending, we are invested in small businesses. If you find yourself in a situation where you may contemplate selling off fixed assets to raise some cash, you might try working with an online lender first to procure a short-term loan.

A business loan might be a more innovative solution rather than trying and liquidate assets that could otherwise be of value down the road.

We work with small businesses across the United States. Our job is to help companies thrive and ultimately grow. We offer short-term loans, SBA loans, and equipment financing, among other funding types. Even for those who do not have an ideal credit score, we might still have a solution for you. With resources ranging from $5000 to $1 million, we have the cash on hand to help you right now. Call today, and let’s see if we can help you!