Weighing The Options When Looking To Obtain A Working Capital Loan For Your Business
The first step for any business owner in need of working capital is to first define what your financing needs are and how do you plan on meeting them. If you are looking for quick cash to cover operational needs, pay off outstanding debt to creditors, or any other unexpected short-term obligations, then a Working Capital Loan may be the best option for your business.
What Are Working Capital Loans?
Working Capital Loans provide quick efficient funding for businesses in need of short term financing in order to cover a pressing matter. A Working Capital Loan can serve many purposes for a business except for purchasing assets or any other long term funding needs. However, what your business plans to use the loan for is not required when applying, which makes working capital differ from other traditional loans that require an applicant to specify what they plan on using the loan for.
Working Capital Solutions Available
Often times, business owners need to work with non-bank lenders in order to meet their unique Working Capital needs, especially if they don’t quite fit the bank lending profile. Below are some of the best working capital solutions available through alternative lending to business owners and entrepreneurs. These financing solutions provide fast funding for businesses looking cover short term needs or bridge the gap while waiting for longer term or more permanent financing:
Working Capital Loans offer many advantages to business owners because they are so flexible, including:
- Prepared To Handle Unexpected Financial Difficulties
- Avoid Giving Up Equity In Your Company
- Do Not Require Collateral
- Short Term Of Monthly Payments
- The Money Can Be Used For However The Business Sees Fit
- Fast & Flexible Loan Approval & Retrieval Process
There can be some downsides to Working Capital Loans, although they are minor, it is important to point them out for an active seeking borrower to weigh their options fairly.
- With Short Terms Come Quick Repayment Periods
- Will Not Work Effectively For Long Term Business Needs
If your business is looking to either grow or overcome a financial slump, Working Capital Loans can offer significant benefits. To find out more on how a Working Capital Loan can fit your specific needs, Contact us today and speak with one of our representatives about how we can customize financing for your business!
As a business owner or company executive, your property is most likely your biggest asset, so when it comes to financing or refinancing an important piece of your business, it is important you understand the process and how these financing options work. Here are 5 major points to understand and consider before obtaining a loan for your business real estate.
1. When to obtain a Commercial Real Estate Loan:
- Looking to purchase new property
- Refinancing an existing loan on your business property
- Renovating your existing property
- Funding new construction or development of your commercial property
- Looking for a bridge fund to help with real estate improvements and projects
2. What loans can you use?
- SBA 504
- Bridge Loan
- CMBS Loans
- Mezzanine Financing
- HUD & FHA Loans
To learn more about the details and rates of these loans, visit our Commercial Real Estate Financing program.
3. What is the difference between Recourse & Non Recourse Real Estate Finance?
- Recourse Commercial Real Estate Financing requires the borrower to guarantee the commercial mortgage for the financing process, in case of default.
- Non Recourse Commercial Real Estate Financing DOES NOT require the borrower to guarantee the commercial mortgage and instead applies all the risk to the lender.
4. Where can you find financing?
Alternative Loan Brokers & Lenders are a great outlet for securing a commercial mortgage loan. Traditional lending channels such as banks, have tightened their qualification and approval process for new or small businesses looking to fund their business property. Alternative lending options provide various and more flexible funding sources to choose from, to best fit your commercial real estate financing needs.
5. How to choose optimal business real estate:
When purchasing new real estate for your business or even expanding upon the property you already own, there are a few factors to take into consideration. First, your location whether new or old should be consistent with your brand target. Make sure your business location is readily and easily accessible to the audience your are looking to produce for as well as for your suppliers. Secondly, be mindful of how close your competitors are, and what areas they are targeting their products for. Third, always plan for future growth and make sure you have the space to accommodate expansion. Lastly, be sure research any zoning regulations that may apply to your commercial property.
Extra Commercial Real Estate & Commercial Mortgage Resources
• Commercial IQ: Search Commercial property listings.
• Commercial Real Estate Direct: Commercial Real Estate Market News & Updates
• Bank Rate Commercial Loan Calculator
• Bull Realty General Real Estate Loan & Investment Calculators
There may be times when a company receives a big order but is unable to fund it with available capital. Rather then turning down the business, one option is to use purchase order financing. This can be a great option when a company has a client that has a really strong credit history. For clients with spotty credit reports, this may not be an available option because it will be difficult to find a purchasing order financing company that will take the risk of becoming involved in such a transaction.
Purchase order financing is a financial tool used by some companies to fund jobs that they don’t have the money to complete. For example, Company A may have received a purchase order from a state government agency. It is a large order which could mean lots of money for the company but they don’t have the money available to handle it. Rather then lose the business they might attempt to find alternative options to bankroll it. A bank loan is an option, factoring is an option, and purchase order financing is another. We will talk more about the latter below.
In the example above, the purchase order financing company would agree to advance the company the money for the supplies for Company A. They might pay the supplier directly or open up a line of credit with them, which the finance company would back. This allows Company A to get the supplies they need to fulfill the order. The finance company will then collect on the invoice sent to the state government agency. When they receive the money, they will send it to Company A, minus fees for collections and the money they were already advanced.
Purchase order financing only works when the client that made the purchase order has a good credit history. Some purchase order finance companies will only work with commercial and government clients with a strong credit history. This drastically increases the likelihood that they will be repaid. They are only able to make money if they can collect on the invoices. Companies with strong credit scores, are more likely to pay what they borrow and in a timely fashion.
There are a number of positives to this type of financing. It allows companies to get money really quickly. The entire process from set up to payment might take between 5 and 10 days. It also allows companies to take on big jobs that at first consideration might not seem like they would be able to afford. Being able to accept these jobs allows a company to grow even if they don’t have the finances already on hand to fund expansion.
By leveraging a purchase order, they are able to complete jobs that they normally would not be able to, allowing them to grow revenues and build their business. Having to turn down jobs will not only stunt the company financially but might also tarnish their reputation. Turning away customers means no money and raises doubts about a company’s capability.