How Working Capital Finance Can Help Your Business Grow

 

Introduction

Working capital finance is a short-term loan that allows you to use the money for working capital. It's typically used by businesses in their early stages or those who need extra cash to fund growth opportunities. Working capital loans can range from £50,000 to £1m and are available from most lenders (online and high street). Working capital loans are used for a variety of reasons – for example, if you want to grow your business or expand into new markets but don't have enough cash flow or slow sales cycles.

What Is Working Capital Finance?

Working capital finance is a type of asset finance, which means it's a short-term loan used to pay for stock or raw materials. It can also be used for paying employees and wages, as well as for general business purposes.

It’s similar to other types of asset finance in that it’s used for investment, so it doesn't need to be repaid until after you have sold the goods or services you purchased with the working capital finance.

How Does Working Capital Finance Work?

You can use working capital finance to pay your suppliers, employees and other business expenses. It's a short-term loan that you repay over a set period of time.

Credit unions are not the only financial institutions that provide working capital finance; banks also offer loans for small businesses in this way. The more competitive interest rates from credit unions may be appealing to some businesses, however, so it's worth considering both options before deciding which one is right for you.

Does It Apply to Your Business?

The first step in determining whether working capital finance is right for your business is to determine whether it applies to you. This can be broken down into several questions:

·         How much capital do you have available? If a short-term loan would put a financial strain on your business, then working capital finance isn't going to help. It may be better if you look into other lenders like banks or credit unions.

·         How much capital do you need? If it's only a small amount and wouldn't hurt your cash flow too badly, then working capital finance could be perfect for you!

·         How long will it take to pay back the loan? Just make sure that the length of time isn't longer than what's necessary for what kind of project(s) the money will be used for; otherwise, this might become an issue later on down the road when trying to repay it early without penalty fees from them (which could happen). Plus if they're willing enough they may even waive those fees altogether!

The Benefits of Working Capital Finance

Working capital finance is an important source of funding for your company. It gives you access to extra cash when you need it, enabling you to grow your business and make better use of existing resources. In addition to providing funds, working capital finance also offers other benefits that can help improve your business:

Types of Working Capital Loans

·         Short-term loans are designed to help businesses bridge the gap between periods of cash flow. They typically offer a 6-month term, during which you can use the money for whatever purpose you like—so long as it’s not for an acquisition (if your business is turning over less than $5 million).

·         Medium-term loans offer longer terms, with repayments lasting up to 12 months. These loans are ideal if your company needs more time than short-term financing provides but is still young enough that it can't make use of long-term financing options.

·         Long-term working capital loans have repayment terms lasting between 24 and 36 months; they're best suited to established companies looking for access to large sums of capital at once or several times over time (upwards of $3 million).

How to Speed Up the Application Process

If you are looking to get a working capital loan, there are a few ways that you can speed up the application process. As mentioned above, being financially stable is one of the most important things when applying for a loan. The better your financials look and the more money you have in reserve outside of your business, the more likely it is that a lender will approve your application.

Another way to speed up the application process is by making sure your credit score is good and by having good personal credit scores as well as business credit scores. This shows lenders that you have been able to manage debt responsibly in other areas of life and therefore may be able to handle additional debt from getting a working capital loan on top of all those existing expenses! Having all these factors considered before applying can help greatly in terms of speeding up approval times which means less waiting around for results!

Conclusion

If you’re looking for working capital finance, keep in mind that it might be available to you. You may even qualify for a loan without needing collateral or equity! It’s important to remember that not every business is eligible for working capital loans, so make sure your business meets the requirements before applying. If you have any questions about whether or not your business could benefit from working capital finance, contact us today.