What Is a Working Capital Loan?
It can be challenging for small business owners to secure a loan from a traditional lender, especially if you don’t have the best credit scores. Lenders often require extensive collateral or substantial personal guarantees of repayment—like high-value collateral, or even your home.
Working capital loans provide short-term funding without extensive up-front collateral requirements. These small business loans can serve as an essential lifeline to keep your business going when cash flow is an issue.
You can use working capital loans to buy new equipment, hire new staff, fund expenses like rent or payroll, or manage gaps in cash flow during business lulls or the slow season.
Drastic measures like putting your home up as collateral just doesn’t make sense when you need short-term business funding to get you through a challenging time or to grow your business.
Is a Working Capital Loan Right for My Business?
Working capital is calculated by subtracting your current liabilities from your current assets. These loans are typically unsecured, which means you aren’t required to provide traditional collateral.
If you own a fledgling business or are just starting out, a working capital loan can help give you the boost you need to stay afloat or grow.
Benefits of a Working Capital Loan
A working capital loan is a quick and easy way to secure funding when you need it most. It can help you make up for financial shortcomings or grow your business. Here are some of the primary benefits:
You maintain ownership of your business.
Traditional equity investors require you to give up a percentage of your company in return for funding. This means you’re giving up some of your ownership power to the investor. With a working capital loan, you retain full ownership rights in exchange for making agreed-upon payments on time.
Use the money as you see fit.
With a working capital loan, banks and other lenders don’t typically restrict how you use the money. Whether you need to make payroll, maintain your operations, or buy new equipment, working capital can help you do it.
Prepare for the future.
Businesses that can meet current financial obligations are better prepared for future growth. Maintaining adequate cash flow is key to your success. Without adequate cash on hand, you’re more likely to run into late payments and problems with creditors. This can lead to higher interest rates on future credit lines and business loans. Small business operating capital loans can help you avoid challenges down the line.
Contact Adept Payments today to learn how we can help you secure a small business working capital loan. We also specialize in merchant cash advance loans, which can help you get needed funds now in exchange for a percentage of future credit card sales.