What are the advantages of a working capital loan?
If you need financing for your company’s everyday operations, a working capital loan is a great choice. Advantages include:
1. A working capital loan will help you eliminate any gap between cash flowing into operations and cash flowing out.
2. You can obtain a short-term loan in a short period of time.
3. A working capital loan is normally flexible with varying repayment terms and interest rates. It is one of the most flexible financial products on the market today.
4. A short-term working capital loan addresses cyclical needs.
5. A mid-term working capital loan will provide you with funds to buy additional inventory and produce the receivables that increase working capital.
1. Naturally, as with any loan, you have to repay it. You are obligated to make your payments, also if your business fails. That is, you still need to make your payments no matter how your business is going – even if you are forced into bankruptcy, your lenders will have the right to repayment before any equity investors.
2. A working capital loan often includes higher interest rates than secured business loans, as they are more risky for lenders. This also means that it can be harder to qualify for this kind of loan.