Whether your business needs a quick cash infusion or you want to breathe life into a new idea, a working capital loan could be a viable option. If you’re ready to explore your options, consider using Biz2Credit’s innovative funding platform that can provide your company with capital through an easy online process.
What Is Working Capital Funding?
Working capital loans help small business owners to cover short-term funding needs. They’re commonly used to:
- Pay for one-time business expenses
- Help expand your business
- Hire staff and cover payroll
- Purchase inventory
- Expand your business
Loan proceeds are typically dispersed in a lump sum, and you’ll make regular payments based on your business’s performance. Interest rates are often competitive, but the rate you receive will depend on your credit score, bank account statements, and other details. Be mindful that, just like with all financial products, the advertised rates are generally reserved for customers with good or excellent credit scores. However, even if you do not have the best credit score, you can still get approved for a working capital loan.
How Working Capital Funding from Biz2Credit Work
Biz2Credit offers working capital funding between $25,000 and $2+ million for small businesses. The application process on their website is simple, and you could be approved for funding in just 24 hours while receiving the proceeds in 72 hours.
One of the advantages of working capital with Biz2Credit is that payments are flexible based on your business receipts. First, the company will look at your bank statements to see how much cash flow your business generates. Then, you’ll make payments either daily, weekly, or biweekly, and the amount will be determined by your future business receipts. So if business performance declines because of a slow period, you won’t be stuck making high payments.
How To Get a Working Capital Loan
The process of getting a working capital loan offer with Biz2Credit is relatively simple:
- Step 1: Determine how much funding you need. Use a business loan calculator like the Biz2Credit Financial Calculator to gauge if you can afford the monthly payments based on the amount you wish to borrow.
- Step 2: Access your personal credit score. You also want to review your business credit, as some lenders may also use it to determine if you qualify for funding.
- Step 3: Connect with the lender to learn more about the application process and what you’ll need to apply.
- Step 4: Apply with the lender and await approval.
- Step 5: Sign the closing documentation.
Biz2Credit offers working capital loans to small business owners with a personal score of 575 or higher who have been in business for at least six months and earn at least $250,000 in annual revenues.
When Should You Consider a Working Capital Loan?
Businesses have many ways to use incoming funds. A working capital loan could be a good fit for your small business if one of the following applies:
- You have outstanding invoices that are payable soon
- You’re in dire need of inventory.
- You need to cover payroll soon and don’t anticipate having the funds on hand.
- You need to hire employees to expand operations.
- Your company’s sales volume is declining due to seasonal factors or supply-chain issues.
If possible, avoid using this funding source for hefty, long-term expenses. While you can use a working capital loan to cover any purchase, these funds work better for short-term costs.
Working Capital Financing Types
Borrowers can explore a wide range of working capital loans. Here are some of the financing options you will find on Biz2Credit:
Short Term Loans
Loan proceeds are dispersed in a lump sum and repaid over a set period in equal monthly installments (assuming you get a fixed interest rate). You could also get a loan with a variable interest rate. These rates can change and create some uncertainty with expenses. Fixed-rate loans are optimal for having consistency, while variable-rate loans are best for business owners who believe interest rates will decrease over time.
Business Lines of Credit
Get access to a revolving pool of cash that you can access anytime you need it. Most lenders require interest-only payments during the draw period, and you only pay interest on the amount you borrow. Establishing lines of credit can help you during an emergency and provide a quicker source of funds. Once you get approved for a business line of credit and pay off any money you borrow, you don’t have to reapply for a new credit line like you would for a loan.
Sell your unpaid invoices for cash with invoice factoring. This form of financing comes at a fee, typically between 5 and 15 percent of each invoice. Still, you’ll get paid quickly, and the lender will handle the collection process for you. Having the lender take care of invoicing will save you plenty of time, but you have to trust the lender to maintain a good relationship with your customer. If you prefer to preserve the relationship between you and the customer and do the invoicing yourself, asset-based financing may be right for you.
Merchant Cash Advance
A merchant cash advance (MCA) is an agreement between the lender and business owner to provide an upfront sum of money in exchange for a portion of future revenue. Merchant cash advances can get expensive in the long term, but you don’t need good credit to qualify for one of these loans. In addition, business owners will not have to worry about monthly payments restricting current cash flow since the loan repayment comes from gross sales in the future.
Pros And Cons of Biz2Credit Working Capital
There’s a lot for business owners to love about working capital funding with Biz2Credit. The lender’s clients can tout the following benefits:
- Generous amounts: If there’s a match, you could get approved for between $25,000 and $2+ million. Biz2Credit offers higher loan amounts than most lending platforms.
- Flexible repayment schedule: Your daily, weekly or biweekly payments are based on sales volume.
- Low minimum credit score: You only need a personal credit score of 575 or higher to qualify for a working capital loan.
- Fast approvals: Many applicants get a lending decision in just 24 hours. If you are confused about the process, Biz2Credit’s customer service can clear up any issues and simplify the loan application process.
While Biz2Credit offers various loans and has a faster approval time than most financial institutions, the lending platform also has some drawbacks:
- Steep annual revenue requirement: Your business needs yearly revenues of at least $250,000 to be eligible for a working capital loan. This amount could be a bit excessive if you haven’t been in business very long.
- Brief repayment period: The maximum term is 36 months. Depending on how much you borrow, the payments could quickly become unaffordable. You can use their lowest funding option, which is $25,000, to minimize monthly payments, but if you need to borrow closer to $2 million, the payments will start high.
Other Types of Biz2Credit Loans
A working capital loan offers great versatility, but it may not work for your small business. Each borrower has different needs and objectives. Luckily, Biz2Credit has other loan options for you to explore. If you would qualify for a working capital loan, you could also be eligible for the following loans through Biz2Credit:
- Business Term Loan: These loan products range from $25,000 to $500,000, with interest rates starting at 7.99 percent and 12- to 36-month repayment periods. If approved, you could get funding in as little as 72 hours.
- Commercial Real Estate Loan: Secure between $250,000 and $6 million in funding by using the equity in real estate properties you currently own. The interest rate on commercial real estate loans is as low as 10 percent, and lending decisions are generally available in 48 hours.
When you’re ready to apply for funding, use the simple online application. It’s free to apply and only takes four minutes of your time. Plus, there’s no obligation to move forward if the financing options offered to you don’t quite work for your small business. Biz2Credit can introduce your company to several business loans and streamline the process. They make it easy to get funding for your company so you can go back to getting new customers.