Working Capital Cycle Explained: How DIO, DSO, and DPO Turn EBITDA into Real Cash for Loans Your business doesn’t run on profits—it runs on how fast cash flows through inventory and receivables. Here’s how the working capital cycle determines real liquidity and borrowing power. Key Takeaways Cash, not profit, drives financial health. The speed of cash movement through inventory, receivables, and payables determines true liquidity. The Cash Conversion Cycle (CCC) shows how long cash is tied up before it’s available again. CCC = DIO + DSO – DPO: Shorter cycles strengthen cash flow; longer ones strain it. Even profitable firms...

The EBITDA Illusion: Why It Misleads Small Business Loan Decisions (And What Lenders Really Check) Profit doesn’t pay the bills—cash does. Here’s why EBITDA often tricks business owners into overborrowing and what lenders actually examine. Key Takeaways EBITDA ≠ Cash Flow: EBITDA reflects accounting profit, not actual cash available for debt payments. Cash Flow Drives Lending Decisions: Lenders look for a healthy Debt Service Coverage Ratio (DSCR), not just high EBITDA. Working Capital Matters: Inventory, receivables, and payables timing can dramatically alter real cash availability. Cash-Based DSCR Prevents Overborrowing: Loan sizes should be based on CFADS (Cash Flow Available for...

Capital Source Funds 18 Deals Totaling $2.9 Million in September 2025 Chicago, October 10, 2025 — Capital Source, through its Private Credit Division, has announced the successful funding of 18 transactions totaling $2.9 million across North America for September 2025. These deals reflect the firm’s ongoing commitment to providing flexible financing solutions that empower small and mid-sized businesses to grow, modernize operations, and strengthen their foundations. Supporting Growth Across Multiple Sectors Capital Source continues to serve a wide range of industries, providing strategic funding to support business growth and expansion across North America. Industry Location Amount Funded Food & Beverage...

Smart Financing Boosts Your Working Capital Cycle Beyond APR Key Takeaways APR Isn’t Everything: It overlooks timing, opportunity costs, and the strength of your working capital cycle. Borrowing for Growth: Every dollar financed should fuel your working capital cycle, boosting net working capital by 20–30% through faster cash conversion. Opportunity Costs Hurt: Delays from slow funding can cost $500K+ in missed margins. EBITDA ≠ Cash Flow: Account for interest, taxes, and working capital needs. Fast Financing Wins: Speed creates value. Invoice factoring or bridge loans deliver rapid liquidity that keeps your cycle moving. Capital Source’s Edge: We calculate true cost—not...

🎧 Listen to the Expert Dialogue: Financial Leverage – The Debt to Assets Ratio Demystified Key Points The debt to assets ratio reveals how much of a business’s assets are debt-financed. High ratios (0.7+) increase vulnerability — especially if slow SBA funding forces reliance on interim debt. Delays can drive missed opportunities (e.g., $300K+ lost sales) and inflate liabilities. APR alone is misleading; true cost = interest + opportunity loss – cycle gain. Capital Source connects leverage ratios with true cost analysis to balance risk and growth. Introduction Imagine chasing a low-APR SBA loan, only to miss $300K in seasonal...