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Working Capital

Working capital loans can help grant you quick financing to handle your daily expenses. You can cover all sorts of costs with a working capital financing plan, including new projects, onboarding, equipment and bills. Our network of loan brokers can find exactly the right kind of loan that fits your business’s situation.

What is Working Capital?

Working capital refers to the difference between a company’s assets and liabilities. Included in those assets are cash, accounts receivable, property holdings and equipment. Therefore, a working capital loan works essentially the same as cash. Some loans have a specific purpose for which they must be used. Working capital loans work differently, since they do not have a specific intended use. This means that your business can use the loans as cash for just about anything. Whether you need a little bump in funds to meet payroll or pay back suppliers, working capital loans can help. Repayment also works in a very simple and straightforward manner. You can pay back the loan once revenue picks up again. Many businesses take out working capital loans once or twice a year, without getting bogged down by long term financing.

And just as working capital loans have flexibility in their usage, they also have flexibility in how you can acquire them. You can get a secured working capital loan, meaning you can put an asset on the line to secure the loan. In the event that you cannot make payments, the loan provider will become the owner of whatever asset you used to secure it. Secured loans generally do not require as high of a credit score to get. On the other hand, some businesses might qualify for an unsecured loan. This means that you do not have to put any asset up as collateral. Businesses usually need good credit scores to qualify. In addition to loans, business free up working capital by selling assets, including accounts receivable, property and equipment. Selling assets helps get funding without worrying about paying back a loan.

FACTORING

If you need immediate cash and have clients with outstanding bills, consider factoring. A factor will buy your accounts receivable and give you a lump sum of cash. They worry about collecting payment and usually only charge you less than five percent of the invoice’s value.

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LINE OF CREDIT

Your business can open up a line of credit to use as cash. Much like a credit card, you can use it for nearly any expense you need covered. You borrow some from your credit line, and then pay it back to open up more funding.

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SBA 7(A)

The Small Business Administration supports small businesses by guaranteeing financing. You can get the right SBA 7(A) to free up some much needed capital by contacting one of our brokers.

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Working Capital

Has big advantages

  • Flexibility of use
  • Multiple types of loans
  • Keeps finances steady

FAQs

When to Avoid Working Capital Loans?

Working capital loans work best in the short term. If you need long term financing such as when purchasing real estate, get a long term loan.

Can a business be profitable but low on Working Capital?

Absolutely. Working capital represents your liquid assets versus debts for a one-year cycle. If your business’s finances are tied up in long-term assets, you may be low on working capital. This can put your business in jeopardy.

How Much Working Capital Does My Business Need?

In general, you want twice as many assets as liabilities when looking at your working capital balance. You can take out as much in working capital loans as you need, and for which you can qualify, to get through a slump.

How Quickly Can I Acquire Working Capital?

Short term funding usually means shorter time to acquire. You can often get a working capital loan within 24 hours of applying.

What Financing Fits You?

It only takes a few minutes to find out exactly what your options are.

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