Working capital loans is a loan that enables a business to run its day to day affairs. This type of loan are not used to fund long term projects or investment, capital loans usually are short term up to 24 months in repayment terms. Sometimes it is also referred to as businesses operating capital. Definition of working capital is typically the total amount of assets a business has minus the total amount of liabilities, giving a true definition of it.
This formula is what most organisations that offer financial funding will use to determine working capital loan requirements. This formula will also influence any working capital loan terms that may be agreed upon.
The Flexible Alternative to Working Capital Loans
One of the challenges facing SME’s in the UK today is access to working capital financing. An ever-changing financial environment has meant that businesses must develop and expand to remain competitive in todays markets. Investment that is needed in resource and infrastructure can sometimes leave a business exposed and cash flow falling short in the long term.
There are different kinds of working capital loans for small business. That is where the hard work start which one, what is the right type? what are their exact financial requirement needed to gain it. You also need to ensure that any working capital loan agreement that they enter is flexible and does not put the business under any further financial pressure. Unexpected costs such as tax bills, vehicle or machinery breakdowns or a client suffering business failure can impact on the working cash available. This will have a negative on the business and the working capital position of the business. These circumstances a short term business loan or cash advance can be hugely valuable.
Alternatives that are available to a working capital business loans, are a business cash advance. Approval and funding times for a business cash advance are quicker than working capital financing. The repayment schedule is far more flexible as the amount funded is only prepaid when the business is paid by its customers. A merchant cash advance shadows the cash flow of business. MCA’s have no APRs or fixed terms, and repayments mirror the transactional activity going through a business debit and credit card machines. Should the business be preforming good in a certain month more is paid back, and if a business is having a slower month the cash advance repayment is less. This eliminates the need to be concerned with high fixed loan repayments at times when cash is tight.
Working Capital Loans for Business Growth
Business cash advance’s offer benefits to businesses searching for working capital loans.
Upfront all-inclusive cost that never changes.
- Funding available in 48 hours
- All-inclusive cost, and simple application
- No fixed term or fixed monthly payments
- No APRs or Admin fees
- Dedicated business relationship manager
- Businesses has been trading for 6 months ca apply for working capital loans
- Transactions of £5000 or more through its credit and debit card terminal on a monthly basis.
Do I need a Working Capital Loan?
Seasonal turnover and temporary downturn in business revenue may require that the directors of a business seek funding to help it trade out of a tight period. Importantly in these circumstances speed, flexible, fast finance is available. If directors act quickly this will not put the business under any further financial strain.
High interest rates and longer-term secured cash flow business loans that have inflexible repayment terms may at first seem like a positive solution. On closer inspection, products like these that can stump growth and performance of a business by putting even further pressure and strain on a already tight cash flow.
Predictable borrowing is something offered by a working capital loan. Borrowing costs should scale with the amount of capital drawn down from the loan. If the business has no requirement for finance in a given month it need not draw down on the working capital available by not drawing down there are no further interest charges. Borrowing costs are therefore kept to a minimum and there is no unnecessary additional expense to the business. Businesses can however operate with confidence know that a funding line of credit is available should they require it.
How do I get a Business Cash Advance?
It is really simple to get a business cash advance for your business. Simply complete the online enquiry form. When is has been received a business cash advance specialist will contact you. Once contact has been made, you can discuss your funding needs for the business. Any question will be answered and funding options discussed.