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Working Capital Loans

What Is A Working Capital Loan?

A working capital loan is a financing option a business could take advantage of if they need capital to pay for day-to-day overhead and operating expenses. Working capital loans are not intended to be used to finance investments or long-term assets. Rather, they’re specific to funding short-term, daily operational needs.

Companies use working capital loans to pay for things such as:

  • Rent
  • Adding inventory
  • Supplies
  • Hiring staff
  • Training
  • Payroll
  • Utilities 
  • Access to cash needed to pay back debts

Any type of business might find a working capital loan useful. That said, these loans can be particularly helpful for companies with cyclical or seasonal sales periods who must find a way to survive down times when regular revenue isn’t flowing in. 

How Does A Working Capital Loan Work?

A working capital loan can offer businesses additional cash on hand to cover expenses. It’s a great option for companies in the beginning and early growth phases, when there isn’t yet a predictable or expected revenue, with a year over year sales history. Working capital loans can allow brands to plan. For largely seasonal businesses, they can cover those months or seasons where sales are reduced or non-existent, but daily expenses still need to be covered.

Is A Working Capital Loan A Line Of Credit?

Working capital loans are not a working capital line of credit. Rather, they’re a more traditional type of financing in that the loans can give you access to a specific amount of cash you can use to fund the operations of your business.  

A business line of credit is a type of small business loan that gives business owners access to funds as needed. The difference being, they only borrow a specific amount (up to an established credit limit) based on those needs at any given time. The benefit of a line of credit is you only pay interest on the actual dollar amount you borrow, not the entire limit you’re approved for. You can continue to draw on your credit line as long as you don’t exceed the limit and you make timely payments per your terms.  

Is A Working Capital Loan Right For My Business?

A working capital loan might be a viable solution to consider if you’re experiencing tight cash flow issues. If you’re looking for help covering everyday expenses to keep your business running smoothly, the funds you borrow can give you some breathing room until you have a chance to get caught up - either through increasing sales, a busy seasonal period or through another means of increasing revenue.

Working Capital Loan Benefits

  • Keep Ownership – Get the funds you need without giving up any percentage of your business interest.

  • Prepare For The Future – Make sure you have cash flow that keeps things running smoothly.

  • Flexibility – Use funds for the things you need, today. 

  • No (Or Little) Collateral Needed – Keep your assets and your sanity intact. Let your business speak for itself during the approval process, without having to risk assets or inventory. 
     
  • Fast Approval Process – Traditional loan application processes can take weeks. A working capital loan can be approved fast, often in as little as 48 hours.

Working Capital Loan Cons

While there are multiple benefits to working capital loans, there are some drawbacks to be aware of, too. First, working capital loans can be tied to your personal credit history, so if you have poor credit, any defaults or multiple missed payment dings, you may have a difficult time securing funding. Another con may be you have a slightly higher interest rate compared to some other business loans.

How Does It Work?

  1. Apply for a working capital loan
    Start your working capital loan application process online.

     

  2. Provide Assembled Brands financial information
    With just a few pieces of financial and background information, you can start the process and be well on your way to having access to funds that can help you grow your business and cover daily overhead expenses.

     

  3. We inform you of our decision
    After careful review of your business and your financial standing, we inform you of our decision and make an offer for financing.

     

  4. You accept our offer
    If you agree to the terms of our offer and accept the loan, you’ll have the money you need in no time at all. Just a few more simple steps and you’ll be in the green, literally.

     

  5. We complete our process and you get the funds
    On our end, we complete all the boring behind the scenes tasks - completing legal and insurance documents, possibly doing an inventory audit...all that fun lender-type stuff.

     

  6. You get your money
    Our quick approval process means you can have money in your account fast, so you can get back to work, focusing on what you love most…running and growing your business.

Frequently Asked Questions 

  • What Can I Use A Working Capital Loan For?
    • You can use your working capital loan funds to finance your everyday operations. From payroll to purchasing more inventory, a working capital loan gives you the capital you need to, well, work.

       

  • Do I Need To Have Good Credit?
    • Generally speaking, you typically need somewhat decent credit to get approved for a working capital loan. That said, Assembled Brands takes a holistic approach to reviewing your company. We’re committed to working with you and trying to find a solution for your funding needs.