Benefits of a Working Capital Line of Credit in Norcross

by Kevin Smith Author

Small businesses need to have an adequate amount of working capital to cover operating expenses such as inventory, payroll, and accounts payable. Often, small businesses that experience gaps in their cash flow resort to alternative and traditional lenders to meet their funding goals. There are some things you should know about a working capital line of credit.

What Is a Working Capital Line of Credit?

A working capital line of credit is a loan that is used to finance routine operations of your company. Instead of these loans being used to purchase long-term assets, they are used for wages and accounts payable.

Benefits of a Working Capital Loan

Working capital loans enable you to appropriately cover any gaps in working capital expenditures such as buying equipment or doing repairs. A number of working capital loans are unsecured which means that you would not have to put up any collateral to get approved for the loan. Keep in mind that your credit score is a factor and you must have a high credit rating to be eligible for an unsecured loan. Another way working capital loans benefit you is that it's a mode of debt financing while you still maintain control of your company.

Potential Pitfalls of Working Capital Loans

A potential pitfall is if a working capital loan requires to you to put up collateral. Other drawbacks include high-interest rates if you're considered to be high-risk. Also, these types of loans are usually associated with your personal credit and if you default on the loan or miss any payments, it could hinder your credit score.

Best Working Capital Loans

PayPal Working Capital:
PayPal working capital loans are a great fit if you're a small business owner who uses PayPal to process a majority of your sales. You must have been using a PayPal premier or business account for at least three months. You are also required to generate at least $15,000 to $20,000 in annual sales through PayPal. You are allowed to borrow up to 18% of the sales you've had in the past year.

Kabbage:
Kabbage is an excellent solution and there are no credit requirements to qualify. You only need to be in business for one year with an annual revenue of $50,000 to qualify for up to a $100,000 line of credit. To qualify for up to $150,000, you must have been in business for three years with an annual revenue of $500,000. Even with low credit scores, you can still qualify for a substantial loan as long as you have a business that's in good financial health.

Fundbox:
Fundbox is a great option for a working capital line of credit in Norcross if you're a business owner who is looking for fast funding. With Fundbox, you can get up to a $100,000 line of credit or even get invoice financing. You do not need a high credit score to qualify and you only need to be in business for at least two to three months. Your business must be generating at least $25,000 in annual revenue.