Types of Working Capital Loans
There are three core financing options to obtain working capital for a small business:
1. Short Term Loans
A short-term business loan is a fixed amount of working capital borrowed from a lender with an agreed-upon APR. You pay it back with regular payments based on a specified term length.
When you think of working capital financing, the most common option is a short-term loan. They have no collateral requirements.
2. Business Line of Credit
A business line of credit works similar to a home equity line or credit card. You get approved for a fixed amount of capital that you can utilize on an as-needed basis.
You only pay interest on the funds you use and build up your credit score in the process. There are no pre-payment penalties.
3. Invoice Factoring
Invoice factoring, also known as invoice financing, allows you to borrow money by using outstanding invoices as collateral. Lenders provide you up to 99% of the invoice amounts upfront, with the remaining balance paid to you once the unpaid invoices are cleared.
Use-cases for Working Capital Loans:
Allocate working capital towards your most pressing business needs. Here are the top ways in which our funded business owners choose to use financing:
Sometimes, life throws us a curveball and we’re faced with an expense we didn’t anticipate. Funds can be used to cover urgent expenses and provide financial relief during emergencies.
Cash Flow Gaps:
Shortfalls happen all the time in business. When you have an immediate financial need and don’t have the funds readily available, an infusion of working capital can provide a short-term solution.
Cash reserves can be used up quickly during a slow season. If your company is experiencing a cyclic dip in revenue, financing can be used to help you get by.
We help businesses who have experienced a financial hardship as a result of COVID-19. Financing can be used to help you whether the pandemic and any related fall out as a result of the novel coronavirus.
Loans are frequently used to pay for necessary business expenses, like rent and payroll. Additional working capital can be allocated towards operation expenses, to help your business stay on track.