Working Capital Loans
Working capital is the lifeblood of any company, no matter what size. Without it, a company can fail quickly.
• Understanding
Working Capital Loans
Working capital loans help you manage your company’s day-to-day expenses with ease. Boost working capital to address utilities, payroll, supplies, and repairs. Or, use a working capital loan to kickstart new projects, add personnel, and pay for travel.
Do you have enough working capital for your small business? There’s a simple formula that can help you find the answer. Divide your annual revenue by your liabilities for the year. You should now have your working capital ratio which gives you an idea of the health of your business. For most businesses, a ratio of 1.5 to 2 is ideal. Any less, and you need working capital quickly.
• How to effectivly use
Working Capital Loans
A working capital loan isn’t like a real estate or equipment loan, where funds are earmarked for one type of purchase. You can apply funds from these loans however your business benefits most. That means it’s easy to cover temporary shortfalls and launch new initiatives.
Most working capital loans are short-term so you can take care of what you need now without paying long-term interest. You can also access revolving credit, such as lines of credit and credit cards, to address working capital expenses. Each time you pay into your account, you free up credit for the future.
Working capital loans are one of the most flexible financial options for small businesses. But, not all lenders are the same. To find out which loan option is right for your small business, contact our professional brokers. We’ll help you compare your options and position your application for success. Reach out today.
SBA7a
The SBA’s 7a loan allows small businesses to borrow working capital, even if they’ve been turned down by lenders before. Typical loan terms are 5-7 years with a variable interest rate and 10% down. Ask your broker which SBA-backed lender is right for you.
Line of Credit
A line of credit gives you access to working capital as you need it. When you pay back the principal, you can borrow again. You only pay interest if you have a remaining balance. Get a secured or unsecured line of credit by talking with our brokers today.
Hard Money
While most people think of real estate when it comes to hard money loans, these loans can also be used to fund working capital. Hard money loans are a good option if your credit is under repair because lenders approve based on the value of your company’s assets, not your credit score.
Advantages
Flexible use funding
Get cash quickly
Avoid late fees and collections
Choose from a variety of lenders and loan types
F.A.Q’s
Q. Do I have enough working capital?
There are two ways to get a look at your working capital. You can use the working capital formula (current assets – current liabilities) to see how much working capital you have annually. You can also use the working capital ratio (current assets/current liabilities) to see if you’re at the right level for your industry. Ask a broker to help you assess your working capital needs.
Q. Where to get the best working capital loan?
There are many types of working capital loans available from different lenders. Not every loan fits every business, which is why it’s a good idea to get the help of a broker to help you choose. Brokers have access to deals you won’t find anywhere else and can help you compare across lenders to find the best working capital financing available.
Q. Can SBA loans be used for working capital?
The SBA backs loans for many small business needs. However, the only SBA loan that allows for borrowing working capital is the SBA 7a loan. To get the most up-to-date terms and interest rates, speak with a broker today.
Q. When is a working capital loan not a good fit?
Working capital loans are typically relatively small amounts used to help a business cover short-term needs. If you’re looking for long-term financing for assets like real estate and equipment, speak with your broker about CRE and Equipment specific loans. They’ll help you find the right financial tool for the job.
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Let's Explore Your Funding Needs.
Our team is here to answer any questions and provide personalized guidance for your business’s financing needs. Whether you’re exploring options or need assistance with the application process, we’re just a message away. Reach out today and let us help you find the best financial solution for your business.