If you’re a business owner and have been around for several years, you probably know the importance of cash flow to the company. The money collected is used for important functions such as payroll, purchasing merchandise, advertising and insurance. If you’re looking for a way to help your small business, the following are surprising ways a working capital loan can aid your business.
Cover Most Expenses
If you own your own business, there are a number of loans available that can help provide you with money to operate. Although meant to keep you covered until you get on your own feet, the loans are an opportune way for businesses to grow and expand. If your company is in need of a short term loan that can help pay for every day operating expenses, a working capital loan can prove beneficial. From marketing and office expenses to payroll and insurance, the loan covers almost anything.
Turn Over Inventory Quickly
Purchasing inventory to help run your business can be costly, especially if you’re waiting for your customers to pay their invoices on time. But poor economic conditions made it challenging for businesses to obtain investment capital. The credit crunch gave rise to small business lenders looking to secure bulk pricing for vendor product. Because a company may have to pay a substantial amount of money upfront to take advantage of the low prices, a working capital loan provides funds that allows a company to save money and get ahead.
Choose the Loan Terms
Getting to decide the length your business wishes to pay back a loan is important and with the working capital variety, you can do just that. When you choose longer terms, the monthly payments are feasible. With a short term loan, your interest will be less, but your payments higher. The terms of a working capital can range between 6 and 18 months.
Secure Funds Quickly
The paperwork for a business loan can be extensive. At the end of the long and arduous process, the bank could take months to disperse the funds. Through a working capital loan, you can gain access to the money in a matter of days. This allows you to act quickly if your computer crashes or a dispensing machine in the production department breaks down unexpectedly.
Going through a bank for a business loan requires a great deal of paperwork. After all of the standard fine print, they may even decide not to give you your cash. But with a working capital loan, you’ll find the experience a breeze and with significantly less restrictions.
Risky Credit History
Having a good credit history is important for your business. You can do this by paying your bills on time, keeping credit card debt to a minimum and checking your credit report for any blemishes. But if you’re struggling to make ends meet with your business and have experienced a rough patch, the bank may label you a risk. This can make it nearly impossible for you to obtain a loan for your business. Working capital is an excellent loan option for businesses with not-so-perfect credit.
If you need to explore your optimum business potential, a working capital loan is one of the best places to start. The extra cash that the loan affords your business allows you to make the expansion improvements or add another employee to your sales force. Because the repayment plans are realistic and easy to afford, you can focus on your business needs. The money can also help you build a solid credit history for future growth and development.