Did you know that almost a third of failed start-ups cite “running out of funds” as the reason for their failure?
That is only the tip of the iceberg. The same source also found that 8% of these new businesses went out of business due to lack of financing!
What is more, big banks rejected 75% of small business loan applications back in 2018.
These statistics paint a somber image of business financing in the United States. Still, that does not mean you no longer have any options to get fast working capital funds when you need it the most.
Thanks to working capital loans, you can get the funds you need to cover your overhead expenses.
The question is, what exactly are these loans and what types of expenditures can you use them for? How fast are these “fast” loans and when can you expect to receive the funds?
All these, we will answer in this post, so keep reading to learn how you can benefit from these loans!
The Lowdown on Working Capital Loans
First, let’s answer your question, what is working capital funding?
At its core, it is one of the types of loans you can use to fund your overhead expenses. These are the costs that allow you to continue your day-to-day operations, such as rent or mortgage. Utilities, insurance, marketing, and office supplies also fall under overhead costs.
You can also use these loans to paythe salaries of your hardworking talents. In fact, it can cover the costs of any other operational needs that need funding ASAP. Be it a fixed or variable expense, a capital loan can help cover it for you.
Now that you know what capital loans are and their uses, let’s talk about why you would want to apply for them and how they can get you out of dire financial pinches much faster than a bank loan.
Businesses Backed by Loans Have a Higher Profit (and Survival) Rate
Companies backed by business loans are much more profitable than those without loans. That is a fact, one proven by a study of almost 5,000 for-profit organizations.
It found that businesses with loans had twice the revenue of those without a loan after three years. Also, loan-backed businesses made four times the revenue of those with a personal loan.
It is not only about making more profits though — loans also raised survival rates. The same study found that businesses with loans were 19% more likely to survive than those without debt.
While these are cases of start-up funding, they are still applicable to overhead funding. For one, because financing allows you to keep running your business even if it is in danger of being low on funds.
For example, being behind on office rental payments puts you at risk of temporary closure. The same goes for delayed payments for electricity, water, and Internet service. If you cannot pay these bills on time, you may end up closing shop.
A capital working loan can help you quickly take care of these small business expenses. As such, the sooner you apply for such funding, the sooner you can worry less about missed payments. That, in turn, allows you to focus on making your business profitable.
Fast Working Capital Loans Help You Keep Your Valuable Talents
In 2018, U.S. businesses let go of 21.9 million employees. At the same time, almost as twice as many (over 40 million) workers quit their jobs.
While there are a lot of reasons for these layoffs and resignations, many have to do with salaries. For instance, it can be due to an employer having no funds to pay employees’ salaries. It can also be regular delays on payouts, which workers can no longer deal with.
Now, keep in mind that it is far more expensive to hire new employees than keep existing ones. Furthermore, your current talents may already be the best you could ever have. So, if you lose them or have to let them go, your business can suffer massive losses.
You can prevent these with the help of working capital loans. By giving you access to funds when you are running low, you can still pay your talents’ salaries. You do not have to put them in a tight financial spot that may prompt them to leave your company.
Address Temporary or Short-Term Cash Flow Problems
Sudden problems, like clients backing out or not paying on time, can happen to any business. Projects falling through or unexpected equipment failure can also cause cash flow issues.
If you find your business in any of these situations, consider taking on a capital loan. Reputable lenders will tell you their decision in as little as 24 hours. If your loan application gets approved, you will receive the funds you need within 24 hours.
With such quick decisions and loan disbursements, you can deal with cash flow issues ASAP. Again, this lets you keep your business operating with the least disruptions.
Take Advantage of Big Opportunities as They Arise
Capital loans do not just protect you from cash flow shortages — they can also help you grow your business. A good example is if a client offers you a big project that you need to hire more people to handle. In this case, you can use a capital loan to fund your potential overhead expenses.
You can use the funds to finance the employment process. The loan can also cover the purchase of needed materials or fees of service providers.
Do Not Let Your Business Fall Behind: Get Backed by a Working Capital Loan Now
There you have it, everything you need to know about fast working capital loans. Used properly, they can become a solid and powerful financial management tool.
By giving you access to funds when you need them the most, you can worry less about disrupted operations. Most importantly, you can safeguard your business from risks of failure.
Ready to get the funds you need to cover your overhead expenses? If so, then be sure to apply for our capital loan ASAP! We will give you a loan estimate and repayment quote as soon as we receive your info.
Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.