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A variable cost is an expense that rises and falls in proportion with how much your business produces or sells. A variable costing income statement is a type of income statement in which you subtract variable expenses from total sales revenue to arrive at a separate line item called contributions margin. Contributions margin is the money left over from sales after paying all variable production expenses. From there, you subtract fixed expenses, such as rent and salaries, to get your net income, or profit.

Read on for a closer look at variable costing income statements, including how they differ from traditional income statements, what they can tell you about your small business, and the pros and cons of preparing this type of income statement.

What Is Variable Costing?

Your business incurs both variable and fixed costs. Variable costs fluctuate depending on the number of products you produce or sell, whereas fixed costs stay the same regardless of how much you produce or sell.

Variable costing is a method of cost accounting that excludes fixed manufacturing expenses from the cost of making products. It differs from absorption costing, in which you allocate fixed overhead costs to products produced.

Variable production costs include the cost of materials, packaging, and supplies. In some cases, variable costs might also include overhead costs that vary based on the number of products sold, such as commissions paid to salespeople. To calculate your total variable production expenses, you add your total variable cost of goods sold with your total variable selling expenses.

While the Generally Accepted Accounting Principles (GAAP) does not allow the use of variable costing in financial reporting, business owners and managers will often use the variable costing method to calculate the contribution margin, which is the metric that tells you your break-even point, or how many units need to be sold before you start earning a profit.

Recommended: Break-Even Analysis: How to Calculate and Examples

What Are Variable Costing Income Statements?

A variable costing income statement is a financial report in which you subtract variable expenses from revenue, resulting in a contribution margin. From there, you subtract all fixed expenses to arrive at the net profit (or loss) for the accounting period.

Variable costing income statements differ from traditional income statements in that all fixed production costs are listed lower in the statement, after the contribution margin. Fixed overhead is regarded as a period cost and is charged against revenue in the period it is incurred.

Two other key differences:

•   All variable selling and administrative expenses are combined with variable production costs to calculate contribution margin.

•   Gross margin (which includes both variable and fixed production costs in the cost of goods sold) is replaced by the contribution margin (which only includes variable costs in the cost of goods sold).

Under both a variable costing income statement and a normal income statement, the net profit or loss will be the same.

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Examples of Variable Costing Income Statements

Here are two examples of how variable costing statements are used across different industries:

Example 1: Manufacturing Company

XYZ Manufacturing produces custom furniture. In a given month, the company sells 500 units at $200 each, resulting in $100,000 in sales. The variable costs include:

•  Direct materials: $50 per unit

•  Direct labor: $30 per unit

•  Variable manufacturing overhead: $10 per unit

Total variable costs per unit are $90. The total variable cost for 500 units is $45,000. The contribution margin is calculated as:

Contribution Margin = Sales − Variable Costs = $100,000 − $45,000 = $55,000

Fixed costs for the period, including rent, salaries, and fixed overhead, are $30,000. The net operating income under variable costing is:

Net Operating Income = Contribution Margin − Fixed Costs = $55,000 − $30,000 = $25,000

Example 2: Service Company

ABC Consulting provides marketing services. In a month, the company earns $80,000 in revenue. Variable costs include:

•  Consultant fees: $20,000

•  Marketing materials: $5,000

Total variable costs are $25,000. The contribution margin is:

Contribution Margin = Revenue − Variable Costs = $80,000 − $25,000 = $55,000

Fixed costs, such as office rent and administrative salaries, total $20,000. The net operating income is:

Net Operating Income = Contribution Margin − Fixed Costs = $55,000 − $20,000 = $35,000

These examples illustrate how variable costing income statements provide a detailed view of profitability by separating variable and fixed costs.

How to Create a Variable Costing Income Statement

Creating a variable costing income statement involves several key steps to distinguish between variable and fixed costs. Here’s a step-by-step guide:

1.   Gather Financial Data
Start by collecting all relevant financial data for the period, including sales revenue, variable costs, and fixed costs. Ensure you have detailed records of all costs associated with production and operations.

2.   Identify & Calculate Variable Costs
Variable costs are expenses that fluctuate with production levels. Common variable costs include:

•  Direct Materials: Costs of raw materials used in production.

•  Direct Labor: Wages paid to workers directly involved in manufacturing.

•  Variable Manufacturing Overhead: Costs that vary with production volume, such as utilities for manufacturing facilities.

•  Sales Commissions: Payments to sales staff based on sales performance.

Sum all variable costs for the period. This will give you the total variable costs, which will be subtracted from sales revenue to determine the contribution margin.

3.   Compute the Contribution Margin

The contribution margin is the difference between sales revenue and total variable costs. It indicates how much revenue is available to cover fixed costs and contribute to profit.

Contribution Margin = Sales Revenue − Total Variable Costs

4.   Identify Fixed Costs

Fixed costs are expenses that remain constant regardless of production levels. These typically include:

•  Rent: Costs for business premises.

•  Salaries: Fixed wages for administrative and management staff.

•  Depreciation: Allocation of the cost of tangible assets over their useful lives.

•  Fixed Manufacturing Overhead: Costs such as insurance and property taxes.

5.   Calculate Net Operating Income
Subtract total fixed costs from the contribution margin to determine net operating income:

Net Operating Income = Contribution Margin − Total Fixed Costs

6.   Format the Income Statement
Present the data in a clear, structured format. A typical variable costing income statement includes:

•  Sales Revenue

•  Less: Variable Costs

◦  Direct Materials

◦  Direct Labor

◦  Variable Manufacturing Overhead

◦  Sales Commissions

•  Contribution Margin

•  Less: Fixed Costs

◦  Rent

◦  Salaries

◦  Depreciation

◦  Fixed Manufacturing Overhead

•  Net Operating Income

Pros and Cons of Variable Costing Income Statements

Normal Income Statements vs Variable Costing Income Statements

Both variable costing income statements and normal income statements report a company’s profit or loss for a specific accounting period. However, they arrive at a company’s “bottom line” in different ways.

Traditional income statements use absorption costing, which allocates all manufacturing costs to finished goods. Fixed overhead costs are spread out among all goods produced and added to the total cost of producing each good.

By contrast, variable costing income statements use variable costing. With this approach, only variable costs are included in the cost of goods sold; overhead costs are considered on a periodic basis rather than a per-unit basis and listed lower in the statement.

Another key difference is that a standard income statement calculates a gross margin, while a variable costing income statement calculates a contribution margin.

Recommended: How to Read Financial Statements

Other Kinds of Income Statements

All income statements report a company’s profit or loss. However, they can be formatted in different ways. Here’s a look at two other types of income statements.

Contribution Margin

Just like the variable costing income statement, a contribution margin income statement only includes variable expenses in the cost of goods sold, and pushes fixed production costs lower down in the statement to make it easier to understand the contribution margin on sales.

Traditional

A traditional income statement focuses on the revenue, expenses, gains, and losses of a company during a particular period. This format is GAAP compliant and uses absorption costing, which captures all costs (fixed and variable) associated with manufacturing a particular product.

Recommended: How to Read a Profit & Loss Statement

The Takeaway

A variable costing income statement is a financial report prepared using the variable costing method, in which you only deduct variable expenses from total sales for a specific period to come up with a contribution margin. The statement then deducts fixed costs, which it considers period costs.

Variable costing income statements are typically prepared for internal use to help inform decisions about pricing and cost management. However, this type of income statement is not GAAP compliant. If you decide to seek outside funding through an investor or a small business loan, you will likely need to prepare a traditional income statement.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What are the advantages of using variable costing when preparing income statements?

Advantages of financial statements prepared under variable costing include helping you conduct a break-even analysis, or how much your company must sell at a certain price before it shows a manufacturing profit. It also provides a more accurate picture of your cash flow, which can be particularly important for small businesses with tight margins.

What exactly is variable costing? What are variable costs?

Variable costing is an accounting method for calculating production expenses where only variable costs are included in the product cost. Variable costs are those that rise and fall in proportion with the amount of goods a company produces or sells. They include direct labor costs, direct raw material costs, and variable manufacturing overhead.

Which costs are treated as product costs under variable costing?

Under variable costing, only those production costs that vary directly with output are treated as product costs. These include direct labor costs, direct raw material costs, and variable manufacturing overhead.

Photo credit: iStock/staticnak1983

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q324-007

California has about 4.2 million small business owners who can apply for small business grants. Submitting an application and competing for small business grants in California can help you grow your small or medium-sized enterprise in the Golden State.

California’s economy has a gross domestic product of $4 trillion as of the 3rd quarter of 2023. That’s the largest GDP in the United States out of the 50 states and the District of Columbia. Small businesses contribute to the nation’s economy.

Small and medium-size firms exported about $69.1 billion worth of goods from California per year, second in the nation to Texas ($147.8 billion), according to the most recent U.S. Census Bureau export data.

Below we highlight some of the top small business grants in California that you can explore.

California Small Business Grants

If you’re looking for small business grants in California, here are some potential options to consider:

Replacing, Removing, or Upgrading Underground Storage Tanks (RUST) Grants

•   Program description: California RUST grants provide eligible small business underground storage tank owners and operators with financing of up to 100% of the costs necessary to upgrade, remove, or replace project tanks to comply with the Golden State’s health and safety regulations.

•   Incentive: Receive between $3,000 and $70,000 to replace, remove, or upgrade your small business underground storage tank infrastructure. This financing can cover up to 100% of the costs necessary to undertake a RUST project.

•   General requirements: Here are some of the general requirements for this grant:

◦   Be the owner or operator of an underground storage tank

◦   Employ fewer than 20 full-time and part-time employees as an independent small business owner

◦   Have principal offices and company officers domiciled in California

◦   The facility where your project tank is located legally sold gasoline after January 1999 as a fuel retailer

◦   You’ve sold less than 1.5 million gallons of gasoline annually for each of the two years preceding the submission of your grant application

◦   Be in compliance with state health and safety codes

•   How to apply: You can submit an application through the California State Water Resources Control Board’s Financial Assistance Application Submittal Tool (FAAST) system.

California Civil Money Penalty (CMP) Nursing Home Grants

•   Program description: California’s skilled nursing home facilities can apply for CMP communicative technology grants to purchase tablets and tablet-related accessories. Eligible nursing homes can also apply for CMP reinvestment project grants to cover expenses related to improving the quality of care or quality of life for long-term care facility residents.

•   Incentive: Receive funding for nursing home reinvestment projects. (There is no stated limit to the amount of funds you can request for reinvestment projects that improve the quality of life for residents in skilled nursing facilities.) You can generally request up to $3,000 to buy tablets for telehealth and virtual family visits.

•   General requirements: You may qualify for these grants if you operate a certified skilled nursing facility (SNF) in California.

•   How to apply: Access the application forms online and submit a completed application to the California Department of Public Health.

California Small Agricultural Business Drought and Flood Relief Grants

•   Program description: California Small Agricultural Business Drought and Flood Relief can provide grants to eligible small agricultural businesses in California that have been financially impacted by severe drought or flooding.

•   Incentive: Receive up to $100K if you’re a qualified small agricultural business owner impacted financially by flooding or drought.

•   General requirements: Here are some of the general requirements for these grants:

◦   Operate a small agricultural business domiciled in California

◦   Have 100 or fewer full-time employees

◦   Have conducted business in California prior to January 2020

◦   Your business is currently active and operating

◦   Storm flooding or severe drought has affected your business financially

•   How to apply: You can apply through California’s drought and flood relief grant portal. Take note that annual application deadlines are typically early in the year.

California Department of Food and Agriculture (CDFA) Grants

•   Program description: The California Department of Food and Agriculture offers a variety of small business grant programs through its Office of Farm to Fork.

•   Incentive: Eligible small businesses can request funding for key initiatives, such as funding to buy energy-efficient refrigeration and freezer equipment under the annual Healthy Refrigeration Grant Program.

•   General requirements: Requirements can vary by grant, but you’ll generally need to operate a qualified small business in California in an urban area or low-food access area to be eligible for one of these grants.

•   How to apply: Apply online for any open CDFA Office of Farm to Fork grant opportunities.

EmployABILITY Business Grant

•   Program description: Small business owners in California can use this grant to hire, train, and accommodate individuals with neurodevelopmental conditions or physical disabilities.

•   Incentive: Receive $20K to $200K to support the hiring and training of neurodiverse employees or individuals with physical disabilities.

•   General requirements: Be a California small or medium-sized business owner and commit to hiring and employing individuals with disabilities to qualify for this grant.

•   How to apply: Visit EmployABILITY California if you’re interested in applying.

National Grant Options for California Businesses

California businesses have access to a wide array of national grant options that can provide essential funding to support growth, innovation, and sustainability. These grants, offered by federal agencies, non-profit organizations, and private entities, cater to diverse business needs and sectors.

1.   FedEx Small Business Grant Contest:

•  Description: The FedEx Small Business Grant Contest awards grants to small businesses across the United States. Winners receive significant funding, along with access to FedEx services and resources.

•  Benefits: Grants up to $50,000, plus FedEx print and business services credits.

•  Eligibility: Open to U.S.-based small businesses with fewer than 99 employees.

2.   Comcast RISE Investment Fund:

•  Description: Comcast RISE offers grants, marketing consultations, media placements, and creative production services to small businesses owned by people of color.

•  Benefits: Grants of up to $10,000, along with marketing and technology resources.

•  Eligibility: Open to businesses owned by people of color in the U.S.

3.   National Institute of Standards and Technology (NIST) Grants:

•  Description: NIST provides grants to support small businesses in developing and commercializing innovative technologies.

•  Benefits: Funding for research and development, technology transfer, and commercialization efforts.

•  Eligibility: Open to U.S. small businesses engaged in technology innovation.

How the Grants Application Process Works

Applying for a grant can be a valuable way for businesses to secure funding without the need for repayment. While the process may vary depending on the grant provider, there are general steps and required documents that most applications will follow.

1.   Researching Grants: The first step is identifying suitable grant opportunities. This involves researching various grants available from government agencies, non-profit organizations, and private entities. Pay attention to eligibility criteria, application deadlines, and the specific goals of each grant to ensure they align with your business needs and objectives.

2.   Preparing Documentation: Gathering necessary documents is crucial. Commonly required documents include:

•  Business Plan: A comprehensive plan outlining your business goals, strategies, market analysis, and financial projections.

•  Financial Statements: Recent balance sheets, income statements, and cash flow statements to demonstrate the financial health of your business.

•  Tax Returns: Personal and business tax returns from the past few years.

•  Proof of Ownership: Documentation proving ownership of the business.

•  Letters of Recommendation: Endorsements from business partners, clients, or community leaders.

•  Project Proposal: A detailed description of the project or purpose for which the grant is being sought, including timelines and expected outcomes.

3.   Writing the Grant Proposal: A well-written grant proposal is key to a successful application. It should clearly articulate the need for funding, how the funds will be used, and the anticipated impact on the business. Tailor each proposal to address the specific requirements and objectives of the grant program.

4.   Submitting the Application: Follow the grant provider’s submission guidelines meticulously. This may involve filling out online forms, mailing physical documents, or submitting via email. Ensure all required fields are completed and documents are included.

5.   Follow-Up: After submission, follow up with the grant provider to confirm receipt of your application. Be prepared to provide additional information or clarification if requested.

By understanding and carefully navigating the grant application process, businesses can increase their chances of securing valuable funding to support their growth and innovation.

Do You Have to Pay Back a Small Business Grant?

A small business grant typically comes with terms and conditions, and you may be responsible for paying back the grant if you violate those terms. In general, small and midsized business owners are not required to pay back a small business grant absent any violations.

You typically have to sign a funding agreement to accept a small business grant. As mentioned above, the grant may come with certain conditions. Using the grant for an illegitimate purpose may violate the agreement and require business owners to pay back the grant.

Small business grants may require you to spend the money by a certain date. You may also have to provide proof of payment and a written statement detailing how you’ve spent the grant.

Recommended: Comparing Personal Loans vs Business Loans

Who Is Eligible for Small Business Grants in California?

Local business owners or operators of an enterprise with fewer than 500 employees may be eligible for small business grants in California.

The U.S. Small Business Administration’s Office of Advocacy generally defines a small business as an independent business having fewer than 500 employees. A small business, including individuals with freelancing business ideas, may be eligible for small business grants.

Who Provides Small Business Grants in California?

State government agencies, including the California Department of Rehabilitation, offer a variety of small business grants in California.

You can compare small business grants in California with similar programs in other states, such as:

•   Florida small business grants

•   Indiana small business grants

•   New York small business grants

California Resources for Small Business Owners Looking for Funding

Here are some resources for small and medium-sized businesses looking for funding in the Golden State:

California Small Business Development Center (SBDC)

The California SBDC is a statewide program that can provide California’s small business owners with the following services:

•   Confidential advising

•   Connecting tech entrepreneurs with venture capital

•   Interactive training sessions

SBA District Offices in California

The U.S. Small Business Administration (SBA) is a federal agency that provides resources and support to small business owners. The SBA has six district offices in California:

•   SBA Fresno District Office. This SBA district serves California’s San Joaquin Valley and Central Coast. It’s centrally located in Fresno.

•   SBA Los Angeles District Office. This SBA district serves three counties in southeastern California (Los Angeles, Santa Barbara, and Ventura). It’s located in Los Angeles.

•   SBA Orange County / Inland Empire District Office. This SBA district serves three southern California counties (Orange, San Bernardino, and Riverside). Depending on where you’re based, you can contact the main office in Santa Ana or the branch office in Palm Desert.

•   SBA Sacramento District Office. This SBA district serves 21 counties in northeastern California. It’s centrally located in Citrus Heights.

•   SBA San Diego District Office. This SBA district serves the southernmost counties in California (San Diego and Imperial). It’s based in San Diego.

•   SBA San Francisco District Office. This SBA district serves 14 counties in northern California, including south of the Bay Area in Santa Cruz and along the Oregon border in Del Norte. It’s based in San Francisco.

Alternative Funding Sources for Small Businesses in California

Here are some alternative funding sources for small businesses in California:

California State Small Business Credit Initiative (SSBCI)

California’s SSBCI is a federally funded program for small business owners in the Golden State. Federal law — the American Rescue Plan Act of 2021 — allocates nearly $1.2 billion to California’s State Small Business Credit Initiative program.

Here’s how California plans to use the SSBCI funding:

•   California Collateral Support Program — $472.8 million. This program provides cash collateral to help small businesses qualify for small business loans.

•   California Small Business Loan Guarantee Program — $391 million. This program helps California small business owners access funding, including financing for startup costs, construction, inventory, working capital, and business expansion.

•   California Capital Access Program (CalCAP) — $118.2 million. This program, also known as CalCAP for Small Business, uses SSBCI matching funds to support portfolio insurance on small business loans.

•   Inclusive California Initiative — $100 million. This program helps provide venture capital funding to California small businesses owned by socially and economically disadvantaged individuals.

•   Emerging California Initiative — $50 million. This program provides venture capital funding to underrepresented managers and fund managers who intend to invest in small businesses owned by socially and economically disadvantaged individuals.

•   California Co-investment Initiative — $50 million. This program will help provide venture capital funding to eligible businesses, including those owned by underrepresented individuals or based in underserved regions of California.

California Microloan Lenders

Community-based nonprofits may offer microloans of up to $50,000 to small business owners in California, including microloans for women-owned small businesses. In general, microloans can range from $500 to $50,000 and may be available to startups.

California Small Business Loans from Private Lenders

Banks, credit unions, and private lenders may offer different types of small business loans to California business owners.

Here are some of the funding products you may consider depending on your needs:

•   Commercial real estate loans

•   Equipment financing

•   Small business loans for startups

•   Working capital lines of credit

Recommended: How Much Does It Cost to Start a Business

Find Small Business Financing With SoFi

Small businesses are eligible for a number of grants in California, ranging from state or local governments to private sources.

The Takeaway

Small businesses are eligible for a number of grants in California, ranging from state or local governments to private sources.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How do you get a small business grant in California?

You can apply for California small business grants, but there’s no guarantee you’ll get approved for one. You may have to submit a grant application as a qualified small business owner to be considered for a small business grant in California.

How hard is it to get a business loan in California?

You may have difficulty getting a small business loan in California if you have bad credit or insufficient business experience. You generally have to pay back business loans with interest.

What is the easiest SBA loan to get approved for?

There’s no guarantee you’ll get approved for any SBA loan, but SBA microloans may be one of the easier ones to get if you’re a new business owner. Startups may be eligible for SBA microloans of up to $50K. If you’re looking for a streamlined application process, SBA Express working capital loans are an option you may consider.

Photo credit: iStock/andreswd

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSMB-Q324-004

Net operating working capital (NOWC) is one measurement of a company’s financial health. It looks at how efficiently a company is managing its current assets and liabilities.

Unlike plain net working capital, net operating working capital excludes cash and cash equivalents, since they are not tied up in operations. This makes net operating working capital more closely tied to current cash flows and a more accurate indicator of a company’s ability to sustain cash flow in the face of changes or obstacles.

Read on to learn how to calculate net operating working capital, why it’s important, how it differs from other measures of working capital, and see an example of a NOWC calculation.

What Is Net Operating Working Capital?

To understand what net operating working capital is, it’s helpful to know what working capital is.

Working capital is the money available to meet your current, short-term obligations. It’s calculated by subtracting current liabilities from current assets, as listed on the company’s balance sheet. Current assets are those that can be converted into cash within one year; current liabilities are obligations expected to be paid within one year.

Net operating working capital measures the difference between a firm’s current assets, such as inventory and accounts receivable, and its current liabilities, such as accounts payable and accrued expenses. Unlike net working capital, however, it excludes cash and cash equivalents, such as bank deposits and short-term investments, since they are not tied up in operations and can be converted into cash if needed.

NOWC also excludes debt (such as different types of small business loans) and interest-bearing securities, since these items represent a method of raising the necessary capital to fund ongoing operations.

What Is Net Operating Working Capital Used For?

Calculating NOWC provides a measure of your company’s liquidity — or, in other words, its ability to meet its short-term financial obligations.

Having a high NOWC, for example, makes it easier to pay your bills as they come due. It also allows you to invest in growth opportunities when they come up and increase profits. If, on the other hand, a business has too little NOWC, it risks not having sufficient funds to pay off outstanding liabilities and may not be able to remain solvent. It will also lack funds to invest in future growth.

Once you have calculated NOWC, you can use it to analyze your firm’s financial health and compare it to industry benchmarks or its historical performance.

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Net Operating Working Capital Formula

Here’s a look at the net operating working formula:

Net Operating Working Capital (NOWC) = Operating Current Assets – Operating Current Liabilities

Operating current assets includes:

•  Accounts receivable

•  Accounts payable

•  Inventory

Operating current liabilities includes:

•  Accrued expenses

•  Prepaid expenses

•  Deferred revenue

Calculating Net Operating Working Capital

To calculate net operating working capital, you need to:

1.   Determine your company’s current assets. These are assets that are expected to be converted into cash within one year. Examples include accounts receivable, inventory, and prepaid expenses. You can find your company’s current assets listed on its balance sheet.

2.   Determine your company’s current liabilities. These are debts that are expected to be paid within one year. Examples include accounts payable, accrued expenses, and short-term loans. You can find a company’s current liabilities listed on its balance sheet.

3.   Exclude cash and cash equivalents. Cash and cash equivalents are excluded from the NOWC formula because they are not tied up in a company’s day-to-day operations. These include bank deposits and short-term investments.

4.   Calculate net operating working capital. Subtract your company’s current liabilities (excluding any short-term debt that has been used to finance current assets) from its current assets (excluding cash and cash equivalents).

Recommended: Change in Working Capital

Working Capital vs Net Operating Working Capital

Net operating working capital (NOWC) and net working capital (NWC) are both financial metrics that can be used to evaluate a company’s liquidity and overall financial health. NWC, however, includes all of a company’s current assets and liabilities, including cash and cash equivalents. It is calculated by subtracting a company’s current liabilities from its current assets.

NOWC, by contrast, is a narrower measure that excludes cash and cash equivalents from current assets, and short-term debt that has been used to finance current assets from current liabilities.

It is calculated by subtracting a company’s current liabilities (excluding any short-term debt used to finance current assets) from its current assets (excluding cash and cash equivalents).

As a result, NOWC tends to be a more precise measure of a company’s ability to fund its day-to-day operations. It hones in on the capital a company has tied up in its day-to-day operations, which is more relevant for short-term financial management.

Recommended: What Are Unrealized Gains and Losses?

Net Operating Working Capital Example

Here is an example of how to calculate NOWC for fictional company ABC.
ABC’s operating current assets are:
Accounts Receivable = $5 million
Inventory = $30 million
Prepaid Expenses = $4 million
Total operating current assets = 39 million
ABC’s operating current liabilities are:
Accounts payable = $10 million
Accrued expenses = $7 million
Deferred revenue = $3 million
Total operating current liabilities = 20 million

We then plug theses numbers it to the NOWC formula:
Net Operating Working Capital (NOWC) = Operating Current Assets – Operating Current Liabilities

NOWC = 39 million – 20 million
NOWC = 19 million

Based on the operating working capital formula, ABC has a positive NOWC, which means it is capable of paying off all of its current operating liabilities with some assets left over. This indicates that things are going well — ABC could meet its obligations all at once if needed and still have funds left to cover their current operations.

Recommended: Balance Sheets Explained

The Takeaway

Net operating working capital measures a company’s short-term liquidity, meaning its ability to meet short-term financial obligations. If a company has a positive NOWC, it is able to cover all of its liabilities. If it doesn’t, some aspects of the business are likely not operating as well as they could.

Some ways to improve your company’s NOWC include reducing inventory levels, improving collections from customers, negotiating better payment terms with your suppliers, and increasing operational efficiency.

You might also consider financing options, such as a working capital loan, which can provide short-term financing to cover operating expenses or factoring, where you sell its accounts receivable to a third-party for cash.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How are operating capital and operating working capital different?

Operating capital and operating working capital are the same thing: capital required to fund a company’s day-to-day operations. They can cover operational expenses, including inventory, accounts receivable, and accounts payable.

What does net operating working capital include?

To calculate net operating working capital (NOWC), you subtract operating current liabilities (accrued and prepaid expenses, plus deferred revenue) from operating current assets (accounts receivable, accounts payable, and inventory).

What is net operating working capital an indicator of?

Net operating working capital (NOWC) is an important indicator of a company’s short-term liquidity and its ability to meet day-to-day operational expenses. A positive NOWC indicates that a company has sufficient current assets to cover its short-term obligations, while a negative NOWC suggests potential liquidity issues.

Photo credit: iStock/miodrag ignjatovic

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q324-008

Florida has 2.8 million small business owners who can apply for small business grants. Submitting an application and competing for Florida small business grants can help you grow your small- or medium-sized enterprise in the Sunshine State.

Florida’s economy has a gross domestic product of $1.44 trillion for the most recent year studied. It’s one of just four states (along with California, New York, and Texas) that contribute more than $1 trillion to America’s GDP. Small businesses contribute to the nation’s economy.

Below we highlight some of the top small business grants in Florida that you can explore.

Grants for Small Businesses in Florida

If you’re looking for small business grants in Florida, here are some potential options to consider:

SelectFlorida Trade Grants

•  Program description: Florida offers a variety of trade grants through its official international trade and investment promotion agency, SelectFlorida Inc. (SelectFL). These small business grants can help you export your goods and services from the Sunshine State to foreign markets.

•  Incentive: Eligible small businesses can receive top trade grants, such as:

◦  Website localization grants of up to $8,000

◦  Matchmaker grants that reimburse some or all of the costs of participating in SelectFL export sales missions

◦  Up to $4,500 toward the development of a customized export marketing plan

◦  Trade show grants of up to $5,000 to register and participate in international trade shows

•  General requirements: Here are some of the general requirements for these grants:

◦  Be located in Florida and registered as an active entity with the Florida Division of Corporations

◦  Be in business for a minimum of two years in the state of Florida based on Florida Division of Corporations records

◦  Have a licensed commercial operation that consists of either an office, office/warehouse, or manufacturing facility

◦  Coworking spaces are eligible, but home-based businesses and virtual offices do not qualify

◦  Employ at least three full-time employees (excluding 1099 contractors) but no more than 500

◦  Have at least $250K in annual sales in the previous calendar year

◦  Be a Florida-based manufacturer whose products are produced in Florida or a local services provider whose services are provided from the Sunshine State

◦  Have a viable product line or service

•  How to apply: Contact your local SelectFL trade representative (formerly known as Enterprise Florida) if you wish to apply for Florida trade grants. Qualified companies can receive a maximum of three trade grants each year between July 1 and June 30.

Orlando Business Assistance Program

•  Program description: Orlando operates a Business Assistance Program (BAP) that provides matching grants to small businesses seeking to locate, expand, or redevelop in this Central Florida city.

•  Incentive: Eligible businesses can receive up to $20,000 in matching funds to help pay for commercial development fees in Orlando, including building permit fees.

•  General requirements: Be an Orlando-based small business with an Orlando Business Tax Receipt or obtain one upon relocating your business there.

•  How to apply: Request a meeting with the BAP coordinator to determine your eligibility. More information is available on the City of Orlando’s website.

Florida High Tech Corridor Matching Grants Research Program (MGRP)

•  Program description: The Florida High Tech Corridor Matching Grants Research Program (MGRP) provides funding to research teams spearheaded by University of Central Florida and University of South Florida faculty in collaboration with business partners.

•  Incentive: Eligible research teams can receive up to $150K in matching cash and in-kind investments.

•  General requirements: Partner with UCF or USF and secure federal Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) awards to be eligible for MGRP funding.

•  How to apply: Small businesses can contact USF’s or UCF’s MGRP staff to discuss potential collaboration. More information is available on the respective websites of University of South Florida and University of Central Florida.

Tampa Community Redevelopment Area (CRA) Facade Improvement Grant

•  Program description: The City of Tampa’s Facade Improvement Grant Program can provide matching grants to eligible business owners who renovate their establishments in a designated Community Redevelopment Area (CRA).

•  Incentive: Receive up to $50,000 in matching grants for making eligible improvements to your commercial properties in a CRA.

•  General requirements: Here are some of the general requirements for this grant:

◦  Own a retail or targeted commercial property in Tampa

◦  Property must be located in a participating CRA (Drew Park, East Tampa, or Ybor City 1 and 2)

◦  Propose a plan of making exterior improvements to your commercial property

◦  Proposed work must be approved by Tampa’s Economic and Urban Development Department prior to initiating the work

◦  Provide a detailed budget with reasonable costs for the proposed work

◦  Properties in a Local Historic District must get a Certificate of Appropriateness

◦  Be current on your property taxes

◦  Have no outstanding Tampa building code citations

◦  Provide proof of property insurance

◦  Property does not contain “adult uses”

•  How to apply: Contact your participating CRA for the grant application and more information on Tampa’s Facade Improvement Grant Program.

Miami-Dade County’s Mom and Pop Small Business Grant

•  Program description: The Miami-Dade County Mom and Pop Small Business Grant Program can provide business owners with financial aid to buy equipment, supplies, inventory, and commercial liability insurance, among other products and services.

•  Incentive: Eligible small business owners may receive up to $5,000 that could be used for a variety of purposes. Proof of payment and a written statement detailing how you’ve spent the grant may be required.

•  General requirements: Here are some of the general requirements for this annual grant program:

◦  Operate a small business in one of the 13 Miami-Dade County Commission Districts

◦  Have a physical address for your business (home-based businesses can apply)

◦  Must not be part of a national chain

•  How to apply: Contact Miami-Dade County’s 3-1-1 Contact Center for information and updates, or check the MiamiDade.gov site.

Recommended: Loans and Grants for Disabled Veterans

National Grant Options for Florida Businesses

For Florida businesses, several national grant options are available, providing valuable financial support across various industries and purposes.

1.   Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs: These programs are among the most prominent federal grant initiatives aimed at encouraging innovation and technological development. Florida businesses engaged in research and development can apply for SBIR and STTR grants, which provide substantial funding to support the creation and commercialization of innovative products and services.

2.   U.S. Department of Agriculture (USDA) Grants: For businesses in the agricultural sector, the USDA offers numerous grant programs. The Value-Added Producer Grant (VAPG) helps agricultural producers enhance the value of their products. The Rural Business Development Grant (RBDG) program supports the development of small businesses in rural areas, offering funds for training, equipment, and other essential needs.

3.   Economic Development Administration (EDA) Grants: The EDA provides grants to stimulate economic growth and create jobs. The Public Works and Economic Adjustment Assistance programs offer financial assistance to businesses and communities affected by economic distress. These grants can be used for infrastructure improvements, business expansion, and workforce development initiatives.

4.   National Association for the Self-Employed (NASE) Growth Grants: NASE provides grants of up to $4,000 for small businesses to finance specific business needs such as marketing, advertising, hiring employees, and purchasing equipment. These grants are particularly beneficial for sole proprietors and micro-businesses looking to enhance their operations.

5.   Amber Grant for Women: This grant is designed to support women-owned businesses across the United States, including Florida. Each month, the Amber Grant awards $10,000 to a woman entrepreneur, with an additional $25,000 awarded annually to one of the monthly recipients. This grant can be used for a wide range of business purposes, from product development to marketing initiatives.

By exploring these national grant options, Florida businesses can access vital financial resources to drive innovation, support growth, and achieve long-term success.

Who Provides Small Business Grants in Florida?

Some of the organizations or entities that provide small business grants in Florida typically include local municipalities, county governments, nonprofits, and state-based organizations.

You can compare small business grants in Florida with similar programs in other states, such as:

•  Small business grants in California

•  Small business grants in Indiana

•  Small business grants in New York

•  Small business grants in Wisconsin

Do You Have to Pay Back a Small Business Grant?

A small business grant typically comes with terms and conditions, and you may be responsible for paying back the grant if you violate those terms. In general, small and midsized business owners are not required to pay back an SMB grant absent any violations.

You typically have to sign a funding agreement to accept a small business grant. As mentioned above, the grant may come with certain conditions. Using the grant for an illegitimate purpose may violate the agreement and require business owners to pay back the grant.

Small business grants may require you to spend the money by a certain date. You may also have to provide proof of payment and a written statement detailing how you’ve spent the grant.

Recommended: How Much Does It Cost to Start a Small Business?

Who Is Eligible for Small Business Grants in Florida?

Local business owners or operators of an enterprise with fewer than 500 employees may be eligible for small business grants in Florida.

The U.S. Small Business Administration’s Office of Advocacy generally defines a small business as an independent business having fewer than 500 employees. A small business, including individuals with freelancing business ideas, may be eligible for small business grants.

What Industries Does Florida Support With Grants?

Florida may offer grants to businesses in the following industries:

•  Architectural, engineering, and related services

•  Construction

•  Manufacturing

•  Professional, scientific, and technical services

•  Real estate

•  Restaurants and other eating places

•  Retail trade (store and nonstore retailers)

•  Scientific research and development services

Florida Resources for SMB Owners Looking for Funding

Here are some resources for small and medium-sized businesses looking for funding in the Sunshine State:

Florida Small Business Development Center (SBDC)

The Florida SBDC is a statewide program that can provide Florida’s small business owners with the following services:

•  Live and on-demand training in operations and management

•  Access to market research and data

•  Business consulting advice at no cost

SBA District Offices in Florida

The U.S. Small Business Administration (SBA) is a federal agency that provides resources and support to small business owners. The SBA has two district offices in Florida:

•  SBA North Florida District Office. This SBA district serves 43 counties in northern Florida. Depending on where you’re based, you can schedule an appointment at the main office in Jacksonville or the virtual office in Orlando.

•  SBA South Florida District Office. This SBA district serves 24 counties in southern Florida. Depending on where you’re based, you can schedule an appointment at the main office in Miami, satellite office in Tampa, or the virtual office in Fort Pierce.

Recommended: Typical Small Business Loan Fees

Alternative Funding Sources for Small Businesses in Florida

Here are some alternative funding sources for small businesses in Florida:

Florida State Small Business Credit Initiative (SSBCI)

Florida’s SSBCI is a federally funded program for small business owners in the Sunshine State. Federal law — the American Rescue Plan Act of 2021 — allocates more than $488 million to Florida’s State Small Business Credit Initiative program.

Here’s how Florida plans to use the SSBCI funding:

•  Collateral Support Program — $250 million. This program provides cash collateral to help small businesses qualify for small business loans.

•  Venture Capital Program — $100 million. This program implements a targeted investment strategy providing venture capital to underserved startups and investors.

•  Loan Participation Program — $50 million. This program uses SSBCI funds alongside private funds to support a loan to a borrower.

•  Loan Guarantee Program — $50 million. This program provides lenders with short-term, partial guarantees to support loans and lines of credit for eligible small businesses.

•  Capital Access Program — $38.5 million. This program uses SSBCI matching funds to support portfolio insurance on small business loans.

Recommended: How Much Can Your Business Borrow?

Florida Microloan Lenders

Community-based nonprofits may offer microloans of up to $50,000 to small business owners in Florida, including microloans for women-owned small businesses. In general, microloans can range from $500 to $50K and may be available to startups.

Florida SMB Loans from Private Lenders

Banks, credit unions, and private lenders may offer different types of small business loans to Florida business owners.
Here are some of the funding products you may consider depending on your needs:

•  Commercial real estate loans

•  Equipment financing

•  Small business loans for startups

The Takeaway

Florida offers a variety of grants for small businesses that fit the criteria, ranging from state or local governments to private business groups.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How do you get a small business grant in Florida?

You can apply for Florida small business grants, but there’s no guarantee you’ll get approved for one. You may have to submit a grant application as a qualified small business owner to be considered for a small business grant in Florida. You may also need to pass a criminal background check.

How hard is it to get a business loan in Florida?

You may have difficulty getting a small business loan in Florida if you have bad credit or insufficient business experience. You generally have to pay back business loans with interest.

What is the easiest SBA loan to get approved for?

There’s no guarantee you’ll get approved for any SBA loan, but SBA microloans may be one of the easier ones to get if you’re a new business owner. Startups may be eligible for SBA microloans of up to $50K. If you’re looking for a streamlined application process, SBA Express working capital loans are an option you may consider.

Photo credit: iStock/photohoo

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSMB-Q324-001

When you’re running a business, you may come up against unforeseen expenses or an opportunity to grow your company pops up and you wonder about small business financing. But without working capital to cover those costs, it can be challenging.

If your business has substantial commercial property assets, one type of financing you might consider is a commercial equity line of credit.

What Is a Commercial Equity Line of Credit?

A commercial equity line of credit (CELOC) is a type of credit offered by banks and other lenders that allows businesses to use their commercial property as collateral for financing needs. These credit lines work in a similar way to other lines of credit. Rather than receiving a large lump sum of funds up front, you are approved for a maximum amount and then you can take out funds up to that max at any time. You pay back and owe interest only on what you have borrowed.

A commercial equity line of credit is generally secured by commercial property. In the event that the CELOC borrower defaults on the loan, the bank or lender can seize and sell that asset to cover the remaining balance.

Lines of credit can be useful because there are times when you need some cash now and some later, particularly with something like a renovation project. You won’t have to take out multiple small business loans if you need more money over time; you simply borrow against your line of credit.

How Does a CELOC Work?

To qualify for a CELOC, a business must own commercial real estate with sufficient equity. Lenders typically require a comprehensive appraisal of the property to determine its current market value. The amount of credit available is usually based on a percentage of the property’s appraised value, minus any existing mortgages or liens. Businesses must also demonstrate a stable financial history, adequate income, and a good credit score to gain approval.

Once approved, the lender establishes a credit line up to the approved amount. The business can draw on this line of credit as needed, up to the maximum limit. The funds can be accessed through checks, a credit card linked to the account, or online transfers.

CELOCs typically have variable interest rates, which are tied to a benchmark rate such as the prime rate. Interest is only charged on the amount borrowed, not the entire credit line. Repayment terms can vary, but generally include monthly interest payments and a minimum principal payment.

Types of Property for Your Collateral

When securing a CELOC with commercial real estate, you’ll want to check with the lender to confirm the types of property they will accept. Generally, commercial property valued up to $5 million may be eligible.

Common examples of what may be included:

•  Office

•  Retail

•  Warehouse

•  Multi-family

•  Light industrial

•  Mixed-use

Pros and Cons of a Commercial Equity Line of Credit

Like any type of small business financing, there are benefits and drawbacks to taking out a commercial equity line of credit.

Pros

•  Access to cash when you need it over time

•  May have lower rates than business credit cards

•  Can help with cash flow during slow seasons

•  Allows you to leverage business opportunities that arise

•  Can help build business credit with on time payments

Recommended: How to Check Your Credit Score for Free

Cons

•  Interest rates may be high depending on your credit scores, annual revenues, and the value of your property

•  There may be extra fees, like for appraisals or late payments

Recommended: Types of Small Business Loan Fees

Commercial Equity Line of Credit Uses

You can use a commercial equity line of credit for nearly anything that pertains to your business. A few examples of situations in which a CELOC could be useful include:

•  Cover gaps in your cash flow when you’re waiting for clients to pay you

•  Pay for a larger inventory order so that you save what you spend per item

•  Pay for payroll, office expenses, office equipment, or remodeling

If you are a real estate investor, a commercial property line of credit will use the property you are purchasing as collateral, helping you get a lower rate on the CELOC.

Recommended: What Are Partnerships Business Loans?

Who Is a Commercial Equity Line of Credit Good for?

If you need short-term financing and expect to need funds over time rather than all at once, a line of credit could be an option to consider. Whether you have a slow period that you need to cover expenses for or are looking for capital for a real estate investment, a CELOC provides steady access to cash that is available when you need it.

Qualification Factors

Each lender will have slightly different requirements for applicants, and some require you to be an existing bank customer for at least six months.

Getting your finances in order is a good first step if you are interested in applying for any small business loan, including a line of credit. Lenders may require businesses to have a certain yearly revenue or time in business, and you may be asked for your profit and loss statement, tax returns, or other financial documents.

Additionally, lenders may require applicants meet a minimum credit score requirement.

But one of the most important qualifications is the collateral. Generally, the higher the value of the commercial real estate you’re using for your asset, the more you will qualify for. Some lenders will determine the amount you qualify for based on the value of the property.

Where to Find a Commercial Equity Line of Credit

Start simply by seeing if the bank you already do business with offers a commercial equity line of credit. Since some lenders require CELOC borrowers to be existing customers, this may be an important consideration.

But that’s not your only option. There are also lenders who specialize in commercial equity lines of credit, and some online lenders may be more willing to work with you if you have less-than-excellent credit. Potential borrowers with a credit score on the lower score of the spectrum, however, may end up with a higher interest rate.

Recommended: Florida Small Business Grants

The Application Process

Before applying for a line of credit, calculate how much you need, both immediately and down the road. Calculate cash flow to see how long you can operate with what you have, then determine how much you want to ask for.

Keep in mind that you will be paying on your CELOC as soon as you borrow from it. As you repay the funds, it frees up more of your line, so you may not need a line of credit for as large a sum as you may originally think. A more moderate sum may suffice if you continually pay back what you’ve used and then take out more.

Applications will generally ask for some basic information about both you as the business owner and the business itself, including:

•  Name, address, phone number

•  Date business was established

•  Employer identification number or Social Security number

•  Name of all owners and their personal details

•  Gross revenue

•  Details on bank accounts and current loans

If you are using your commercial property as collateral, you may also be required to provide details on it, including:

•  Property type

•  Address

•  Current market value

•  Loan balance if you have a mortgage on it

Depending on lender requirements, you may be asked to submit additional financial documents:

•  Business and personal tax returns

•  Balance sheet

•  Profit and loss statement

•  Schedule K-1

•  Personal financial statement

Recommended: Business Cash Management, Explained

Finding A Commercial Equity Line of Credit

If you own commercial property and need access to working capital, you may be able to leverage your asset with a commercial equity line of credit. Be sure to shop around, as interest rates and terms can vary from one lender to another based on your qualifications.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What is a commercial equity line of credit?

A commercial equity line of credit gives you access to working capital, and you can borrow up to your maximum approved amount. You pay back only what you have borrowed plus interest, and are able to continue to borrow against that line over time.

Can you take a HELOC on commercial property?

Each lender will have their own requirements for a home equity line of credit (HELOC). While some may consider commercial property, generally HELOCs are for primary or secondary residences, and some investment properties.

Can I get an equity line of credit?

If you own commercial real estate that can be used as an asset and meet a lender’s qualifications, you may be able to get an equity line of credit for your business.

Is an equity line of credit a good idea?

An equity line of credit can be one solution for business owners that have commercial real estate they can leverage as collateral and who need access to funds over time rather than all at once.

Photo credit: iStock/

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q324-010