Working capital loans
A customized capital loan helps you in running everyday operations. These loans usually cover recurring expenses like accounts payable, wages, debt payments. Our working capital loans help offset your working expenses during a low sales/revenue period. We have combined the simplest yet best features of several types of such loans to create an offering that is suited for SMEs and start-ups.
These loans are not used to buy long-term assets or investments instead, used to provide the working capital that covers a company’s short-term operational needs.
The immediate advantage of a working capital loan is that it’s easy to obtain and allows business owners to efficiently cover any gaps in working capital expenditures. The other noticeable benefit is that it is a form of debt financing and does not need an equity transaction, which signifies that a business owner maintains full control of their company, even if the financing is in dire need.
Types of working capital loans
These loans are valuable because they will infuse much-needed cash at critical times. You’ll be able to rationalize your operations, keep your business afloat, and seek important expansion opportunities.
They are especially critical for small businesses that are looking for a way to stay afloat in a challenging economy or competitive industry. The loans can be both secured and unsecured.
Short term loans
Short term loans have terms from two weeks to twelve months. They are also ideal because they have a short application process, no prepayment penalty or broker fee, and flexible payment options.
However, depending on the credibility of your credit history and relation with the lender, you can secure this loan for no collateral as well.
Credit line or bank overdraft facility
A bank overdraft working capital loan is the most flexible type of loan. It essentially lets you withdraw excessively from your checking account. In this way, it can be considered as cash advances on a credit card. The lender approves a certain amount to the borrower that he can use. Sometimes overdrafts can be in the form of investments.
The borrower must be vigilant to not exceed the limit of the cash approved. Moreover, the borrower is only charged interest on the amount withdrawn and not the approved amount. This encourages the borrower to deposit the used amount to save on interest.
Account receivables
These loans are based on the assets of your own company. Your confirmed sales orders or account receivables can be used to apply for a working capital loan. It is ideal, especially if your company lacks funds to accomplish a sales order. However, such loans are only secured if the company has a reputable history and a proven track record of paying debts on time.
Factoring of invoices
Factoring of invoices is an arrangement where a business sells either all or some of its account payables to a 3rd party. This is done at a lower value compared to the original value of the accounts. The third party is called the factoring service. It provides financing by purchasing the bills and collecting the amount from the debtors.