Small Business Loan

Working Capital Loan: Guide to the Different Types of Working Capital Funding for Small and Medium Businesses

Every business, at some point, requires some form of financial assistance. If you find that you simply need more money to fund your company’s day-to-day operations, then you will want to apply for a working capital loan. The sooner you can get an approval, the better, as this kind of loan helps pay for a business’ short-term operational requirements. Companies that rely on seasonal profits or cyclical sales tend to need working capital to help out during periods of reduced activity. Retailers, for example, generally sell more products during the 4th quarter around holiday season than at any other time. Manufacturers have sales that correlate to the needs of the retailers who buy from them.

The great thing about a working capital loan is that the funding is immediate. This kind of loan is also easy to obtain for the most part, and allows company owners to efficiently cover up any gaps in their working capital expenditures. It is also a type of debt financing that doesn’t require an equity transaction. This means that you, as the business owner, will still maintain full control of your company.

There are a few different types of working capital loans, with the most common being “working capital short-term loans”. These provide the business with a lump sum that must be paid back over a shorter period of time, usually within 18 months. You might also want to apply for a working capital line of credit, which will give you access to some funds that you can use whenever you need to.

Other Options Besides a Working Capital Loan

Other options include invoice financing and merchant cash advances. With the latter, you get an advance sum of cash which you will be expected to pay back by allowing the lender to take a certain percentage of your company’s credit card sales. It’s the costliest kind of capital a business can get, but it’s also very easy to get approved for. If you haven’t established a good credit rating, you really might have to consider this.

As for invoice financing, it is a solution for companies whose working capital depends on customers paying invoices. If the customers have been late, these companies have difficulty finding the cash they need for the daily operations. So the invoice financing helps the business owners gain access to capital immediately.

If you are interested in any type of working capital loan, the best place to look into is US Business Funding. They are committed to offering financial solutions to help small and medium sized businesses grow. There is a 60 second approval process and 24-hour funding process.

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