No matter what type your industry your business belongs to, at some point in time during your operations, it will require short-term working capital. Small businesses also need working capital for a number of things such as, updating old products, services, keeping up with competition, workspace, or recuperating from a natural disaster. Consequently, often it so happens that businesses may not have the money required to confront hard economic times and often fall short. Working capital finance options are particularly designed with the aim of offering businesses the capital they need to keep their business running. However, smooth management of working capital is also vital for growth.
The following are some of the benefits of working capital loan that keep small businesses alive-
- Quick cash: unlike conventional banks where it can take weeks or even months to get the funding, working capital loans from alternative lenders are exceptionally quick. With the approval process of working capital financing being extremely efficient, the funding often takes place in 3-5 business days from the time of approval.
- Easiest application: generally, a loan application is considered to be lengthy and exhausting. However, only a 3-step online loan application is required to avail a working capital loan. Your lender will ask you some questions on the type of merchant, business owner name, percent of ownership, amount you are requesting for, your business addresses and phone numbers.
- No collateral requirement: this is an important asset pledged by the borrower as a way to guarantee the loan repayment. Loans from the conventional source such as banks require some type of collateral of valuable assets such as your home or car. Working capital loans from non-bank lenders do not require collateral. Instead, the previous and expected sales of your business, as well as your monthly cash flows are taken into account.
- Use the money as you would like: as against conventional loans, which have intense restrictions, you are able to use working capital loans however you deem fit. They can even be used to pay your taxes, payments and late invoices. Working capital loans are easily accessible for unexpected sales tax payments and payrolls as well. You can also make the most of new profitable business opportunities or launch a new marketing campaign.
- The terms are short on working capital loans: as these are used for a quick capital infusion, they also come with short terms ranging. In this way, you get what you actually need, and are not troubled with long-term obligations or contracts. Since working capital loans come with easily manageable shorter terms, it is more convenient to meet the requirements. However, make sure you are well-aware of working capital loan interest rate before applying.
- Credit rating is not a priority- it is indeed a great thing to have a very good credit rating, and it will surely work in your favour when it comes to applying for a working capital loan as the owner of a small business. However, even if your credit rating is not that good, you need not fret. After all, you need to remember that the qualifying for a working capital loan is based on your cash flow. Lenders mainly consider your ability to pay back the loan as you currently stand.