There are several different types of small business loans and many reasons why you may have to borrow money. For example, you may need to know where to turn to get a short term business loan for working capital.
When you own a small business, it is difficult to obtain fast business funding. Therefore, to avoid wasting precious time, it is important to know which lending organizations are most likely to approve your application for a short term business loan for working capital.
Who Provides Short Term Business Loans for Working Capital?
Many alternative lenders offer short term business loans for working capital. However, you must do your homework and read the fine print before deciding which is right for your small business financing needs.
There are traditional factors and merchant cash advance companies that can help with instant business financing but this money can come at a cost that you might not be willing to pay. For instance, they may charge very expensive fees or require long term commitments that could tie up your money for as long as two years. Also, they have terms that allow them to dictate how your clients pay their bills and how you run your business.
The best choice is a spot factoring company, like Financing Solutions (www.fundmypayroll.com). They will provide you with the short term business funding you need right now without all the hassles.
With Financing Solutions, you can get money for working capital in less than 48 hours. In addition, you can pay the money back quickly, typically in a few weeks or months, with no penalties or early repayment fees.
How to Make the Best Use of Short Term Business Loans for Working Capital
Statistics have shown that the reason most small businesses fail within five years is that they simply run out of cash. Having a supply of working capital is the best way to avoid this business-crushing dilemma.
Due to accounts receivable gaps, it is very easy to fall into the trap of not having enough cash on hand. You can think of working capital as the cash bridge you can use between the time orders go out and when you actually get paid.
It can be used for big expenses such as relocation and emergency business financing, or the ordinary items that make up your daily operating routine like making payroll and paying rent. This may be especially helpful for businesses that experience seasonal fluctuations.
Working capital can also be used to fund growth. When profitable opportunities arise, you will have the immediate business funding you need to take advantage of the offer without moving the money from other important areas of your company.
How to Increase Your Working Capital
As you know, the two biggest drains on your cash flow are most likely your accounts receivable and how much inventory you have on hand versus sales. Managing these issues correctly can significantly affect the strength of your business.
One thing you can do is to change your billing practices. For example, give customers 30 or 60 days to pay, instead of 90. Then, provide incentives for those that pay early. Also, you can work to get a better handle on how much inventory you actually need each month, instead of stocking so many extra supplies and free up additional cash.
Of course, if these things are not possible, you can always turn to Financing Solutions. They can solve your working capital needs.