Why Working Capital Loans Might be Right for Your Business?

by Kevin Smith Author

A working capital loan uses assets a business already possesses as collateral for access to cash now. It helps a business struggling with cash flow or experiencing a lag between customer invoicing and payment to get access to revenue. Obviously, a loan recipient has to be responsible in how they use their loan, but if you are looking at working capital loans for small business in Norcross, there are several advantages; here are a few.

Emergency Funds Access

Any business can find itself in a cash flow crunch. In fact, most do. That can lead to immense financial pressure on a company, even to the point of making business operations impossible. Financial pressure can also affect a business’ ability to get a traditional loan because a financially extended business can affect its credit rating. Tying up a traditional business loan to run your operations will affect your ability to borrow for business growth projects. A working capital loan can alleviate the crunch or can serve as a bridge to keep the lights on until your cash flow catches up while avoiding a more traditional loan.

Quick Help for Short-Term Problems

One major benefit of a working capital loan is that it helps alleviate a crunch. It is not a long-term obligation that requires years of monthly payments. Best of all, it does not tie up a businesses’ funds that are allocated for research, development or growth.

You Control the Money

There are few if any restrictions on how you can use the loan. The lender wants you to use the money to ease a cash crunch and keep your business running. Additionally, because you are not giving up a percentage of ownership in the company, the business decisions are your decisions to make. That allows a business owner the ability to use the loan amount as they see fit, without having to justify types of expenditures.

Quick Access to Funds

Lenders of working capital loans advertise how quickly they can assess, approve and pay out a loan. That is extremely helpful if you are facing an emergency, unanticipated cash crunch. Part of the reason they can make a decision and pay out so quickly is that they do not require reams of paperwork or have a lengthy approval process. They also do not usually require a personal guarantee for the loan, given it is based on inventory assets or accounts receivables. Turn around time is usually within a week of loan approval.

A working capital loan can help a business get through a cash crunch, is quick and does not tie up a business’ more permanent assets. These advantages can help small businesses get through the rough spots. If you are looking at working capital loans for small business in Norcross, you should keep these advantages in mind.