Funding Gap

A Funding Gap refers to the shortfall between a company’s available financial resources and its projected financial requirements over a defined period. It highlights situations where operational expenses, capital expenditure, or growth investments exceed current cash reserves and available credit facilities.

This metric is vital for:

• Cash flow planning

• Financing strategy formulation

• Identifying when additional capital raises or bridge loans are necessary

• Negotiating with investors or lenders

In fast-growth companies, especially in capital-intensive sectors or during periods of market volatility, a clear understanding of the funding gap ensures proactive fundraising and liquidity management.