Working Capital Loans
Long-term assets are nice to have but unless your business can also meet short-term expenses, it could be in trouble. Working capital is absolutely vital to keeping a business afloat. If you need to boost your business’s working capital, we’ll help you explore the options.
What is Working Capital financing?
To calculate your business’s working capital, subtract current liabilities from current assets. The total will give you an understanding of your ability to meet short-term expenses. It also indicates if your business is using its resources efficiently. You can also calculate working capital as a ratio by dividing your current assets by your current liabilities. The resulting number is used by investors and lenders to get an idea of a business’s ability to cover short-term debt.
You might need a boost in working capital if your business experiences a seasonal revenue cycle. When sales are down, working capital financing can cover the bills. When sales are back up, the debt can be repaid. Working capital financing is also helpful if you’re thinking of launching a new project. You can use it to bring in extra cash for supplies, new hires, a big event, or an annual conference. We can match you with the right financing and the right lenders, no matter what you see in your future.
Term Loans
When you need funds for a specific scope and limited term, term loans serve many businesses better than revolving credit or other types of financial instrument. Because these loans are limited to a particular project such as a high value PO to fulfill a contract or fund the purchase of goods to launch a new store or fill a unique channel of distribution, working capital term loans are a better choice. These loans close at repayment without leaving an open account on your credit report, charging you annual fees or the ding to your credit you get when closing a revolving line.
Asset Based
Leverage existing assets such as land, buildings and high value equipment to access cash without the high interest rates associated with unsecured loans. Many businesses find themselves overcapitalized but cash constrained. In these instances, Asset Based borrowing empowers businesses with the funds they need to remain nimble in a changing market.
Accounts Receivable
Leverage Accounts Receivable, client purchase orders and contracts through factoring, Rather than functioning as a loan, this is treated as a sale of an asset. Factoring fees can be as low as 1%, providing a low cost way to accelerate cash flow.
Equipment
Utilize equipment to access funds through an asset based loan or sale leaseback. With asset based lending, you’ll receive low interest loans at a percentage of the value of the asset. Choose from term loans or revolving credit. Sell equipment and immediately lease to retain use of your equipment.
Property
Access hard money loans or credit through asset based funding. Buildings, land and personal property such as vehicles, homes or jewelry can all be the source of funds to power your business. Depending on your use of funds we’ll make a recommendation on the best source and loan terms.
Advantages of Working Capital financing
- Increase working capital quickly.
- No long-term obligations
- An inexpensive form of financing
- Plenty of options available
Frequently Asked Questions
Are prepaid expenses Working Capital?
Yes. If the goods or services that are prepaid will be rendered within a year, it goes into your working capital calculation. Not sure what else to add to your working capital calculation? We can help you gather the right documents and determine your working capital goals.
Does my business have enough Working Capital?
The industry you’re in and how long you’ve been in business will determine your working capital needs. In most industries, a working capital ratio of 2.5 is a good sign your business is financially healthy. Tell us more about your working capital needs today.
What is the best way to finance Working Capital?
There’s no one ultimate working capital financing solution that fits every business. For some, the SBA 7(a) is a great option. For others, factoring is the best choice. We’d love to sit down with you and learn more about your business. We have a range of working capital options that we can introduce you to.
When is Working Capital financing not a good fit?
Working capital financing is typically a short-term financing solution. If you need to hold assets for a long time, we can help you find a more traditional loan. Long-term financing may give you a better rate if you can afford to wait for your application to process.