Lack of Capital: A Common Reason a Small Business Fails

Lack of Capital: A Common Reason a Small Business Fails

There is an expression that goes, “people don’t plan to fail, they just fail to plan.” No entrepreneur going into business does so with a plan to fail, but inadequate access to working capital and other financing options is a huge contributor to a business’s lack of success and ultimate failure. Many factors go into a business owner’s lack of working capital, from a low credit score and inability to borrow from traditional financing sources to operational issues affecting cash flow.

It is important for you as a business owner to understand the root of the problem with respect to your lack of financial capability and alternatives to traditional funding, including working capital loans. This understanding will help you when working with business financing professionals such as MY Company Funding to provide you with financing options that keep your lights on and doors open to your customers.

How Lack of Funding Hurts Your Business

Your business depends heavily on its ability to sell products, get paid and meet obligations in order to reload your inventories, expand and grow your business. Within this interdependent chain are factors, which by themselves, threaten your ability to meet future obligations as well as lead to business failure. To build up your working capital, your current assets must be greater than your current liabilities.

Unfortunately, a component of your current assets is your accounts receivable. When you work with customers who are slow payers or out of cycle with your accounts payable or bills you pay, you wind up with a cash flow situation that is unsustainable over time. Having several months of cash available to you to fund those gaps in funding would be ideal for most businesses. When you lack the ability to access funding resources like those traditionally provided by banks, your business suffers.

When you work with customers who are slow payers or out of cycle with your accounts payable or bills you pay, you wind up with a cash flow situation that is unsustainable over time.

Options for Meeting Working Capital Needs

One of the options you can consider when it comes to securing funds for your business is a working capital loan. Working capital loans provide funding to your business under terms that are most agreeable to you and the way you do business. These loans take into account different factors such as the size of your accounts receivable, the amount of time it takes to collect on your outstanding bills, current liabilities, the size of your inventory and the amount of cash flow needed to adequately run your business. These factors, when taken into account, can provide you with a loan to meet your short-term needs of 30, 60 and up to 90 days.

Solving Your Financing Needs

MY Company Funding serves as a financing partner for businesses of all sizes. We provide alternative options to traditional business funding that are designed to provide you with the working capital you need in order to survive and grow. These options range from working capital loans to equipment financing and invoice financing.

Whatever your need is for additional access to capital, we offer short-term working capital loans for credit scores all the way down to a 500! All you have to do is simply provide an application and bank statements. Have questions about working capital? Call us today at 740-917-4960 or visit us online and begin the process today!

Ready to improve your cash flow? Click here to contact us today!