A working capital loan is a loan borrowed by a small or medium enterprise from a business lender. The loan can be utilized to start, run, or expand a small business. Small business loans are also referred to as working capital loans, or merchant cash advances. A business owner often needs capital to grow their business and achieve their goals without hurting their day to day operations.
If you have a business and plan to expand, you probably have calculated the amount of money you would need to accomplish your goals. A business loan is most useful to small business owners that have the vision of what their Company should look like, if the capital to build the business out was available. Working capital is extremely important to have to reach your goal. Large banks often do not want to fund these types of loan because they tend to be smaller amounts of money and they are also risky. A merchant cash advance or working capital loan takes into account your business cash flow, time in business, and the nature of the business to come up with a risk score that will determine your rate and time to repay the loan.
Working Capital is necessary for the following reasons:
- Kick starting a relatively new business
- Expanding a business
- Meeting the demands of inventory and working capital
- Providing good cash flow system
- Affording heavy and expensive equipment to increase production
There are two type of business loans
- Traditional Loans with an APR
- Working Capital Loans
The best resource for business loans is obviously the Small Business Administration (SBA) Loan. SBA loans offer lower interest rates and no pre-payment penalty. This makes them much harder to qualify for due to the SBA requirement that the business is profitable, among other more stringent qualifications. Therefore, a working capital loan is more attractive to business owners because the qualifications to get approved are much lower.
These loans can be used for working capital, business expansion, equipment financing, debt refinancing, business acquisition and more. Lots of small businesses qualify for working capital loans as they just need to be in business a minimum of 3 months, do not have to show a profit, and the owner’s credit score is not much of a factor.
If your primary goal is to grow your business, getting a working capital loan from Edge Capital is an excellent way to reach that objective. You get the funds you need on manageable terms. Unlike with other lender’s loans, there are nohidden fees, and all costs are shown upfront. Edge Capital will fund your business quickly so you can take advantage of your business opportunity before its too late.
If your business is growing steadily, it may be time to add a new store branch or hire more employees. Edge Capital will provide what you need expediently. Edge Capital offers the best way to get a working capital loan because they have access to capital at a much cheaper rate than the competition.