When it comes to running a business there are a number of options that can be explored when it comes to raising capital for your company. The best course of action for your organization often depends on what the funds are needed for.
For instance, if your company is looking to obtain business equipment you will want to explore the pros and cons of leasing versus buying. Or your circumstances may be such that a business line of credit is the preferred solution to your needs. Often times your company’s credit rating will pay a significant role in determining which routes are best for securing capital. Fortunately there are options available even if your company is dealing with poor or damaged credit scores.
Today we will discuss some scenarios when a working capital loan may be the solution your company is looking for.
1. Short Term Funds are Needed
Sometimes a company needs a financial shot in the arm to bridge the gap until the next significant revenue deposit comes in. This might be because an unexpected bill has arisen or it may be because some business clients have put off paying the invoices due to your company. Whatever the reason may be, a working capital loan can get funds into your company’s account quickly, and typically without a lot of paperwork. There are benefits that short term financing provides when compared with long term financing.
2. Other Financing Options Can be More Costly
If upon reviewing the financing options your company has been approved for you find that a working capital loan will cost your company the lease in terms of interest rate and fees over the period for which the funds are needed then you should certainly proceed with it. A significant consideration in making these calculations is determining how long the funds need to be used for. Loans are used for a shorter period find that the interest rate has less of an impact than with loans that are used for a longer period since this allows for more interest to accumulate.
3. No Time for Complicated Paperwork Requests
Working capital loans often require far less paperwork than asked for when applying for a regular bank term loan. Sometimes the added cost that comes with the convenience that a working capital provides is worth it since it allows business owners to focus on more pressing matters that are demanding their time. A working capital loan can often have funds to applicants within 24 hours, and this streamlined efficiency can many times be invaluable.
When it comes to determining what financing to accept remember that it’s important to explore every alternative your business has. Taking on a new loan can be beneficial in terms of providing immediate capital, but there are always costs when taking on a loan or lease. Taking on too much credit can lead to a business being financially compromised in the future, and this should be avoided of course whenever possible. For more help in determining which financing avenues best suit your company please contact us today.