What factors should small business owners consider when applying for working capital?
For small business owners, the question of when to apply for working capital is a common one. To keep business thriving, every company needs working capital to cover the costs of operation, if not for other costs that come along as your business grows. And although all small businesses need it, the answer of when to apply for financing is not the same for everyone. With that in mind, here is a quick look at the different times you may need working capital and the options available to you.
What are your short term needs?
Think about right now, next month, or even the next 6 months. Are you heading into a slow season? Have you experienced cash flow problems regularly for the last few months and feel the strain when you try to cover your operational expenses, payroll, etc.? If so, getting working capital will help you get through the slump, give you the funding you need to pay your team, and allow you to ensure that your company keeps on thriving.
What are your long term goals?
Now, think about the future. Where do you see or want to see your company in the next year, two years or five years? Has the thought of expansion got you excited and thinking about the possibilities of adding new locations, or new products and services? If so, you already know that you’re going to need working capital to help you fund your growth. Growing a business is one of the most common reasons small business owners look for financing.
If you’re planning on an expansion, are considering implementing new technology, hiring more staff or ramping up your marketing efforts, a good time to apply for working capital is right away. You don’t want to wait until your expansion is underway or you’ve plotted out a new strategic marketing campaign and find yourself coming up short with funding resources.
What are your options for working capital?
In the last decade or so, small businesses have faced challenges when it comes to getting loans from traditional banks for various reasons. Bad credit, not enough credit and too short of an operational history are among these reasons. Luckily, companies like ours, which offer alternative financing solutions are helping small businesses get the funding they need.
Asset-based loans are a practical and more flexible option than attempting to obtain the working capital you need from your business bank. Using your company’s assets as collateral, you can apply for a revolving line of credit which gives you a constant source of capital to seize growth opportunities. This will get you through cyclical slow downs or help cover the costs of operation when you need it. So taking advantage of the strength and value of assets like your accounts receivables, inventory, equipment and owner-occupied commercial real estate puts you in a great position to getting working capital when you need it.
If your small business is ready to get bigger or you are facing a situation where you know you’ll be needing financing, talk to us about our various options. We can customize a solution that will fit your needs.