How To Get Financing For Extra Working Capital
If you’re looking for ways to help your business grow, it’s important to explore all the avenues for increasing working capital. In order to help your business function its best during day-to-day operations, explore the following options for increasing cash flow.
Short Term Loan
For a quick source of working capital, consider applying for a short term loan. Short term loans are appealing to small business owners since this type of loan is usually paid back within one year of applying. This way, you won’t have a looming pay off date far into the future. This type of loan is ideal for business owners who like to make small, timely payments.
Line of Credit
For startup companies or small businesses, there’s often no better way to increase working capital than to apply for a line of credit. This helps a business gain access to capital whenever it’s needed, and is especially helpful for businesses that need to make routine purchases on a cyclical basis. A line of credit is similar to a credit card, and it’s also effective at improving the credit score of a new business when payments are made on time and in full.
Asset-Based Loan
If you’re interested in getting a loan, consider an asset-based loan if your company has valuable inventory or accounts receivable. For this type of loan, you’ll need to show the lender your accounts receivable and inventory information in order to receive a loan based on their value in return. In exchange for a portion of the accounts receivable value, you’ll be able to secure a loan that acts as a source of working capital for the business.
Trade Credit
Trade credit can be an excellent source of financing for businesses that purchase goods to sell each month. With trade credit, you’ll be able to gain access to the products you need and pay for them later. This arrangement can be beneficial for young businesses that struggle with access to capital.
Long Term Loan
If you’re looking to go the traditional route to gain access to extra capital, consider opting for a long term loan. This type of loan might be the most familiar and comfortable for a small business owner to apply for. With a long term loan, you’ll likely be able to qualify for a substantial amount of money at a fixed interest rate. Most long term loans are paid off over the course of a few years, and you’ll have access to a lump sum of money to get your business up and running smoothly.
