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Working Capital Loans

If cash flow is tight even though you are hitting annual revenue targets, consider a working capital loan.

Working Capital Loans Overview

How does your business handle its day-to-day needs? It’s not your long-term assets that keep the lights on – it’s your working capital. A working capital shortfall could mean your business is headed for trouble.

Working capital loans give your business the cash flow boost it needs to get a handle on expenses or take on a new project. Since working capital loans aren’t tied to a specific use, like equipment or construction, you can put the funds wherever you need them most.

You have several options when it comes to working capital financing. Short-term loans, lines of credit, and SBA loans can all offer you working capital funds. But, to find out which one is right for your business, get help from a professional broker. They’ll line up the best choices and help you pick the right fit.

How to Effectively
Apply Funds

Your business’s working capital ratio is one way to test for adequate cash flow. The ratio takes your company’s current assets and divides them by your current liabilities. A result of one or less is a danger sign. Most businesses aim for a score of two to two and a half for optimum short-term liquidity.

Solve payroll, supplies, utilities, and custodial needs with a boost to your working capital. Lenders don’t typically restrict working capital funds to any intent or purpose, so you can apply the money where it makes the most sense.

If you find that your working capital is shrinking, the sooner you act, the better. Working capital financing can help you get back the cash you need. Since working capital solutions come in many forms, it’s a good idea to know where your business needs the most help. Contact a broker to find customizable options.

Working Capital Loan Options

Inventory

Gearing up for a big sale? Working capital financing can help your company take on new inventory ahead of time, so you don’t have to put your clients on hold. Deliver faster and get paid sooner by having your inventory stocked and ready to ship.
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Staff

Your staff works hard, but if business is slow, it can be difficult to retain qualified personnel. Keep payroll on track with a working capital loan through your financial broker. Save yourself the time and expense of rehiring with each cycle when you have flexible funding at your fingertips.
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Short-term Debt

Taxes, interest payments, utility bills, and other accounts payable can stack up quickly. Use working capital financing to stay on top of your company’s short-term debt without having to liquidate assets. Your broker can work with you to determine which liabilities to target first for maximum impact.
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F.A.Q’s

Q. Why does my business need working capital?
Working capital is a critical piece of every business because it’s used to manage daily operating expenses. Utilities, rent, payroll, materials, and supplies all require working capital funds.
Q. Where does working capital come from?
Sources of working capital can be accounts receivable, tax provisions, investors, marketable securities, and highly-liquid assets just to name a few. It’s essentially any incoming liquid assets not eaten up by your company’s liabilities. When you need to increase cash flow, working capital financing boosts your current assets.
Q. When is working capital financing not a good fit?
If your company is gearing up to acquire long-term assets like equipment or real estate, a long-term loan may be a better fit. Ask your broker to show you an SBA loan, traditional mortgage, or equipment lease instead.
Q. Can a business have too much working capital?
A high working capital ratio may mean a business is missing out on opportunities to invest. Extra working capital can be put back into the company to drive growth and increase operating profit.

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