Securing a working capital business loan is the best option for receiving funding to potentially allocate for inventory or marketing needs. A working capital loan can be a great asset for small business owners. Arguably…this type of loan is the best, smartest, and most efficient business loan established businesses can apply for. Working capital is defined as all of the business’ assets minus its liabilities. For many small businesses, this is the difference between failure and success, especially for new or startup businesses.
In short, a working capital loan is a loan that is tailored for businesses to help them with both their daily expenses as well as all operating expenses and it’s not based on your personal credit score or personal guarantees. We have compiled the five best loan programs and the ways a working capital loan can help your business prosper this holiday season.
1. Bump up your online brand
During the holiday shopping season, brand recognition is one of the key factors of success. Getting your brand in front of consumers can make or break your holiday cash flow. In order to get ahead of your competitors, it is best to start ramping up your online presence, or at least making plans on how you will do so, months in advance. Having a working capital loan with competitive rates, high loan amounts, flexible repayment term that’s not based on personal credit can allow your business to pay for digital marketing costs like paid social media posts, email marketing campaigns, or even hiring a digital marketing agency to take care of all of your holiday marketing needs.
Some common ways a working capital loan is used to help with online branding are:
- Paying for awesome content. Whether it is photos or videos, distributing engaging content on your business’ social media channels are sure to catch the attention of your target market.
- Optimizing your website. Making sure that your company website is easily found and accessible is key for the holiday shopping season. You may need to hire a professional to make sure that your website includes SEO buzzwords so that your business can be easily found on Google and to make your website mobile friendly for all of your online shoppers.
- Targeted ads. Programmatic ads may be pricier, but they are the best way to get in front of the right audience at the right time. They result in highly qualified leads that your business can then convert to lifetime customers.
- Social Media Ads. Many shoppers are making and sharing their holiday shopping purchases online, so hitting them online while they are in the shopping mindset is almost a guarantee your business will make a sale.
2. Supply your business with discounted stock
As any business owner would know, businesses cycle through fast and slow business seasons. During a slow time for businesses, the vendors and suppliers your business uses most often are more likely to offer discounts to purchase inventory. Companies do this to make money during a usually slow time for them so that they can continue their operations. Applying for a working capital loan before the holiday season hits allows your business to have some extra cash to stock up on merchandise at a discounted rate before your store gets extremely busy.
One type of working capital loan that can benefit your business in this buying process is called a merchant cash advance. This type of working capital loan can work in two ways for your business:
1. The merchant cash advance loan provider (usually an online lender) gives you an upfront loan in exchange for a percentage of your future debit and credit card purchases.
2. An upfront loan that is repaid through a set amount of daily or weekly withdraws directly from your bank account. This is used for businesses that are traditionally cash only.
Merchant cash advance loans have a quick turnaround time and the funding time is usually in a day or two and doesn’t require lengthy application processes. And, often, when your business’ sales are down, your repayment amounts will be too. So, it’s a win win!
3. Increase your business’ odds at getting approved for better loans for small business
Because of their flexibility, working capital loans are very easy to get approved for and make payments on. Getting the loan and paying it back in full on time allows your business to qualify for more loans of greater amounts. For this reason, it is best to get a working capital loan before the holiday season so that you can get approved for a larger one by the time the holiday shopping season rolls around.
Having approval for a larger working capital loan for your business by the time the holiday season rolls around in your back pocket can pay for things such as…
- Seasonal Employees. 90% of holiday retail sales are projected to occur in person at the store’s physical location. Help to keep your customers’ shopping experience quick and happy by hiring a few more hands.
- Pay for extra inventory. 20 to 40% for yearly sales for small businesses happen during the holiday shopping season between Thanksgiving and the New Year. Stock up on your products before the rush begins.
Working Capital Loans can also act as a safety blanket to cover any unexpected business costs or emergencies that occur during the holiday season.
4. Keep more money in your business’ savings
Using the funds your business gets through a working capital loan can help your business put more money into its savings account. By using the money, you receive from a short-term loan to pay for your business’ operations, you are using less of your business’ profits, thus saving your business more money in the long run.
Short-term loans are given in one lump sum and paid back in fixed installments over a short period of time. Knowing that you borrowed money for running your business and any business expense will also help you to reevaluate the things your business spends money on. This will help your small business craft a better budgeting plan to pay off the loan and help your business save smarter in the future.
5. Save yourself time and prevent stress
In the end, any small business loan is meant to help your business succeed and thrive. Working capital loans save you and your business time, money, and stress. Get your small business loans through a provider you trust. If you aren’t sold on working capital loans, Wise Business Loans provides an array of loan types. Some of the small business loan types options we have not discussed yet are:
- Small Business Administration Loans. These loans are sometimes called SBA 7A loans and help small businesses get the funding they need to grow and expand.
- Medium Term Loans. These types of loans provide a high loan amount. They also offer longer and flexible repayment timelines.
- Equipment Loans. This type of loan is specifically for machinery and equipment needs. Interest rates for these loans are often higher, ranging anywhere from 8 – 30%
- Line of credit. Here, the lender will provide the business owner with an “open line” of credit for a predetermined amount.
- Startup Loan. This is a loan to fund a brand new business. For these types of loans, the interest payments don’t start until 9-15 months after you receive the loan.
Getting your loan through Wise Business Loans is a great option for any small business that has been in operation 1+ years. Find out if your business qualifies for a working capital loan, and at what rate, here.
A working capital loan can be a valuable asset to your small business this holiday season. Working capital loans have helped so many small businesses stay afloat when they did not have the means to continue daily operations.
Take it from Matt. His business was rapidly expanding, and he did not have the capital to keep up with it. After obtaining a working capital loan, Matt says, “I can now pay my suppliers within their terms, my stress has been greatly reduced by not having to wait for payments from my customers, and I can focus on the day to day operations of my business rather than the financial matters that prevented me from doing such before.”
Want to stay in the loop about working capital loans or business loans in general? Wise Business Loansloves to provide the latest and greatest information on working capital loans and other term loans, line of credit or unsecured small business loans that may be a good fit to help you grow your business!