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Working Capital Fund, What Options Does a Business Owner Have?


Many say that getting a working capital fund from a bank over the last 3 years has been impossible but over the last 18 years that I have been in business, I really never remember it being super easy to get a working capital fund from a bank in the first place. Yes, there were a few months during the bank crisis/ Lehman Brother collapse when the world went crazy and banks refused to give out any new funds and when the banks were really tough on renewing existing funds but in general, getting a working capital fund has always been challenging.

However, as a business owner, if you are unable to get any form of working capital fund at some point in your business you will have a major problem that will cause you at the least, sleepless nights and at its worst, a closed business.

Nowadays there are other options that a business can turn to for a working capital fund or a safety net. Financing Solutions ( www.payrollfinancingsolutions.com ) is one such company that began based on the owners combined experience of building 6 businesses. Over 20 years, the two owners saw every problem that a business could face and being able to have access to capital was always important for the businesses survival.

In many cases, businesses have more options today than they did 20 years ago to get a working capital fund with banks, factors, merchant funding (credit cards) AND NOW payroll financing companies.

Certainly, if a business can get a bank line of credit that will be the cheapest working capital fund. Keep in mind that a bank will want to review your financials (quarterly or yearly), that the bank will charge a upfront admin fee for the fund, and you will usually have to pay down the line for 30 days during a 12 month term so it isn’t as cheap as one things it might be. There are some serious costs in having to get reviewed or certified financials from your Accountant and often trying to pay down the fund to zero for 30 days is next to impossible for a fast growing company.

A Factor is going to want a long term relationship and the costs because of that long term relationship will costs you some serious money. Also, getting involved with a Factor is like being hooked on a drug, it is hard to get off them and when one looks back after getting off, you then realize how much you wasted.

Merchant Funding is another option for those of you who accept credit cards but for many businesses, the amount they are willing to fund is very small and it is very, very expensive.

Payroll financing or payroll funding is a new solution to allowing businesses to have an available fund or line of credit for emergencies. Often, you can get a very quick answer for the fund and Payroll financing companies are not bound by any government due diligence. As a result, if you have a strong business with a proven track record, you will get the fund and it will not have a detrimental effect on your business from a credit standpoint.

Financing Solutions (www.payrollfinancingsolutions.com) provides fast business funds of $5,000-$100,000 to good small businesses with sales of $500,000-$7 million that can be used for working capital.

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