Working Capital Loan is to support daily cash flow and operational of the business. This funding is not buy capital asset or for long term capital in the business. There may be situations where you need funds for short duration and you are aware there that funds are coming but delayed due to some reason.
Working Capital is the money available to operate the immediate and short-term needs of your company. And, many times business cash is tied in other activities and you might need some additional cash for short term.
Working capital loans, as suggested by the name are meant to finance everyday expenses (such as pay employee wages) related to the daily operation of a business. It is not meant to be used for things such as investing or buying long term assets.
As a company grows, it starts to tie up a lot of cash in the day to day operations of the business that has nothing to do with its profits or losses. This type of cash consumption is called working capital. In accounting terms, working capital is equal to current assets minus current liabilities. In everyday terminology, working capital is what your customers owe you plus any inventory you have built up minus what you owe your suppliers and employees. Working capital also includes any cash you have in the bank.
What should you use a Working Capital Loan for?
Maybe you know that you will have a number of slow months during the year, you can use the loan to meet your payroll or other recurring payment obligations during those months. Or, perhaps you need to stock up on inventory before the coming holiday season and you don’t have enough cash on hand. Along the same lines your loan would allow you to be able to take advantage of discounts on purchases offered to you by vendors.
Small businesses use these short term loans for to cover unexpected losses as well. Perhaps you have increased expenses due to additional marketing efforts, new employees, or relocation of an office. Or the time has come for you to update, expand or renovate your current office space or product lines. Maybe the economy has led to you having an additional number of slow paying customers and you need to make up funds. And it’s possible that some recent operating losses could have reduced or depleted your cash reserves. To put it simply, for just about any business looking for some quick financing, a working capital loan is definitely a great choice to consider.
Why Konnect Financial for Working capital loan ?
At Konnect Financial, we arranged working capital loans for businesses within 2-3 hours.
Konnect Financial can help you if your business needs cash and working capital loan is an excellent solution. A working capital loan with Konnect Financial offers more benefits than an overdraft from a bank, most notably a much easier approval process. A working capital loan is an unsecured debt, which means it doesn’t require the collateral or security of a bank loan. The end result is you have a
better chance of getting approved. Our team includes financing professionals who specialize in working capital loans, merchant cash advances and flexible small business loans, so you can count on getting expert recommendations and customer service.
Fast Cash for Business Success
Konnect Financial offers working capital loans that are hassle-free and tailored to meet the specific needs of your business. Once you fill out and submit our one-page working capital loan application, we will arrange funding with a fast credit decision. Plus, Konnect Financial can provide your business with a working capital loan of up to £150,000 in as little as one day. For immediate funding and busy business owners like you, this is an excellent news.
Once you receive your cash, you can use the money as you see fit for your business. Use the cash to renovate, purchase new equipment, increase your inventory or expand your operations. You can even use your working capital loan to consolidate high-interest debt or pay taxes.
Speed and Flexibility
One advantage of working capital financing is that most eligible companies can obtain short-term loans, including accounts receivable credit lines, inventory loans or bank lines of credit, in a short period of time. The loan amounts are typically a fraction of revenues and are tied to assets that quickly convert to cash. Working capital financing is generally flexible, with varying interest rates and repayment terms. This flexibility can help companies with seasonal or periodic fluctuations smooth out cash flow.
Short-Term Options
Accounts receivable credit lines and factoring, which occurs when your company sells its receivables to a third party at a discount, directly tie to your company's accounts receivables. As your company'srevenues and associated receivables grow, the credit line increases. As your company needs more money, these working capital options make those funds available. These also provide a viable choice for smaller or newer companies without the operational history or balance sheet strength to qualify
for a bank term loan or unsecured line of credit.
Medium-Term Options
Your company can also finance working capital with a term loan. Short-term working capital financing addresses cyclical needs throughout the fiscal year. Mid-term working capital financing provides the funds to purchase additional inventory and generate the receivables that increase working capital. For companies with growth prospects over the next few years, this option provides
access to a steady stream of capital to cover gaps created by growth-related expenses.