Small businesses face a variety of ups and downs regarding their revenue. After all, a busy season can bring in a cash windfall, but down times can make it more complicated to manage your cashflow. After all, monthly expenses and overhead do not disappear just because it is a seasonal slow period in your industry. Understanding your gross working capital can be key to knowing the financial health of your business.
Working capital loans, a form of small business lending, can be a way to help you manage your cashflow and cover overhead costs during slow periods or to help finance opportunities for growth. Read on to learn more about how a working capital loan might be right for your business.
Maintaining Cashflow for Growth
It can be challenging for small businesses to make sure they have enough operating capital for their day-to-day expenses. You need to manage your cashflow to cover payroll, inventory, marketing opportunities, and other daily operation expenses. As a small business owner, your goal is to maintain enough cashflow to not only keep your business afloat, but also keep it in a financial position that can sustain growth.
Working Capital Management is Critical
Clearly, it is important to understand what revenue your business has coming in but also what is going out in expenses and capital investment for growth. When you are successfully managing your working capital, then you are going to maintain a balance between growth, profitability, and the liquidity of your business.
Part of your working capital management is going to involve tracking the results of efforts to manage your inventory, your debt, revenue, and payments to your suppliers. Therefore, it is important to be aware of what is going out and what is coming in.
You may also find that a line of credit could be the answer to address your business’ cashflow needs. After all, it can be tapped to keep your day-to-day operations running smoothly, while also providing credit terms to fit your needs.
Benefits of Working Capital Loans
When you have access to working capital financing, then you are giving yourself the flexibility to invest in your company. A word of caution: these loans are not meant for long-term investments. However, if you are looking to invest in your business in terms of inventory or equipment, then a working capital loan could be a viable option.
As part of managing your business’ cashflow, you may need an influx of cash through financing. Working capital loans can be a way to receive that influx, but it needs to be part of an overall financial plan for your business. When you utilize a financial strategy, you can be sure that your business will thrive through various financing options.
If you are considering a working capital loan for your business, contact us today to discuss your eligibility.
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.