There are two main hurdles would-be entrepreneurs and business owners face when starting a business- getting the idea and financing the idea. Ideas are a dime a dozen and the real billion dollar ideas don’t come along that often; however, while any idea is better than no idea, an idea is worth nothing if it is not executed. A big part of execution comes down to financing.
Funds can be raised through a variety of ways these days ranging from equity financing to the relatively new “crowdfunding”. While each method is a great choice depending on the needs of the business owner, sometimes, working capital loans for everyday needs are basically all that is required to take that idea and breathe life into it, so to speak.
The question now is this- How does one go about getting a working capital loan? But before that, it is important to understand what a working capital loan actually is. Investopedia defines a working capital loan as “ a loan that has the purpose of financing the everyday operations of a company. Working capital loans are not used to buy long-term assets or investments and are instead used to cover accounts payable, wages, etc.” Simply put, a working capital loan for everyday needs is basically money loaned to the business owner to enable him pay for the day-to-day activities involved in running his (or her) business. For businesses with a seasonal variation of revenue, such as manufacturers of certain products, working capital loans are a great way to “fill in any gaps” during the slow months.
There are many types of working capital loans, ranging from bank overdrafts, to accounts receivable loans to short term loans, and trade creditor working capital loans. Each type has its own advantage; for example, for bank overdrafts, interest to be paid by the borrower is to be paid only on the amount overdrawn and depending on the relationship between the borrower and the lender, the maximum amount that can be overdrawn could be greater than what may be allowed by other types of working capital loans. Accounts receivable loans allow the business owner to obtain funds on account of confirmed sales orders of products especially if the company lacks funds required to fulfil a sales order.T rade creditor loans involve a supplier offering the business owner trade credit on purchase of a bulk order which can then be repaid after the business has made sales. Whatever financing needs your business may have, there is a form of working capital loan available.
Contact Us for any query you may have.