Qualifying for a Working Capital Loan

Qualifying for a Working Capital Loan

Businesses that need cash have two options: taking out a loan on their assets or taking out a loan on their credit. But what if a business doesn’t have physical assets or credit for a loan? Many businesses that are just starting out may not be able to apply for traditional loans. Luckily, if they have revenue, they can consider applying for a working capital loan instead. 

The Benefits of a Working Capital Loan

Small businesses need to have cash at hand. Without liquidity, even a successful business can falter. Cash is used for the purchasing of equipment and products, in addition to the payment of salaries — it doesn’t matter what a company’s assets are or how many clients they have if they cannot come up with working capital. A working capital loan can be used to:

  • Bridge a financial gap. Companies can occasionally find themselves experiencing a shortfall, whether it’s because they overextended or had an unexpected issue arise. To recover, you need the capital to continue your business processes.
  • Invest in new equipment. If you need new equipment to improve your operations, you may need to finance it first. Then you’ll be able to increase your revenue moving forward.
  • Expand into new markets. Market expansion often requires that you invest significant funds. More importantly, most expansions that fail do so because they weren’t able to maintain liquidity.

Applying for a working capital loan only require evidence of revenue, in the form of the last three bank statements for your business. Other loans often require that your business is in operation for several years or that your credit be very good.

How to Get a Working Capital Loan

Applying for a working capital loan only requires evidence of revenue, in the form of the last three bank statements for your business. Other loans often require that your business is in operation for several years or that you have excellent credit. If your business has not been in operation for some time and it does not have good credit, you can find yourself personally guaranteeing the loan. A personally guaranteed loan can consume your personal assets if it is not paid back.

But a working capital loan is based on your actual earning potential. You can also get loans for new equipment that is based on the value of that equipment. Both of these types of loan can be used even if your business is unable to produce credit statements. Once a working capital loan is authorized, it can be funded in as little as 24 hours. Money can be deposited into an account to be used, and payments will begin based on the loan agreement.

There are many reasons why you might need working capital — and you often need it fast. As long as your business has a bank account, you may be able to qualify for a loan from $1,000 to $2 million. Contact MY Company Funding with any of your working capital loan questions.