Most companies don't fail because they are unprofitable. They fail because the money arrives later than the obligations. Sizing working capital properly — before you're desperate — is the difference between a facility that costs a few percent and an emergency facility that costs far more.
Here is the three-step method we walk applicants through. It takes about twenty minutes with last month's bank statement.
Step 1 — The survival buffer
Start with your fixed monthly costs: payroll, rent, insurances, loan repayments, minimum supplier payments. Multiply by the number of months you want to survive with zero revenue:
| Your revenue pattern | Buffer months |
|---|---|
| Signed contracts, recurring invoicing | 1 month |
| Steady repeat customers | 1.5–2 months |
| Seasonal, project-based or new-market | 3 months |
Example: fixed costs of £28,000/month with a seasonal customer base → buffer of £84,000.
Step 2 — The growth gap
Funding for growth is a different calculation from funding for survival. The question is: how much cash is tied up between paying for the thing you sell and getting paid for it?
- Take your monthly cost of goods / cost of delivery.
- Count the days between paying suppliers and receiving customer cash (your "cash conversion days").
- Growth gap = monthly COGS × (cash conversion days ÷ 30).
Example: £19,000 monthly COGS, 52 cash conversion days → gap of ~£33,000 permanently tied up. If you want to grow volume 30%, add another £10,000.
Step 3 — The stress test
Take your buffer + growth gap, then ask: what if the largest customer pays 60 days late? If the answer makes you uncomfortable, that discomfort is the honest size of your working capital need — and the number worth applying for.
Quick calculator
The honest answer is usually smaller than the maximum offered. A £40,000 facility on a £42,000 calculated need is a tool. A £250,000 facility on the same need is a liability with interest. Size to the calculation, not to the approval.
What Solvo Funding can do with this number
Bring us the calculation and we put it in front of the UK lenders whose criteria fit your company — £10k–£500k, unsecured or secured, with a typical indicative decision within 24 hours and funding in 24–72 hours where a lender approves. Applying costs nothing; we're paid by the lender.
Frequently asked questions
What is working capital, in plain terms?
The cash available to pay near-term obligations before customer money arrives. A profitable company can still run out of it.
How many months of costs should a company hold?
One to three months of fixed costs depending on revenue predictability — one for contracted revenue, three for seasonal or project-based.
Can funding finance growth rather than survival?
Yes, and it's often the stronger case — provided each pound borrowed returns more than it costs within the term. The growth-gap step above is that calculation.
How much can Solvo Funding help raise?
£10,000–£500,000 for UK limited companies and LLPs trading 6+ months with £10k+ monthly turnover, at no cost to the applicant.
Last updated: 22 August 2026. Figures are illustrative, not advice; facility terms are always subject to lender criteria.