The Power of Working Capital
Working Capital is the lifeblood of any business. It’s a necessity for a healthy company to function and operate. Many of you may remember Econ 101, in it’s basic definition working capital is evaluated by the current assets minus the current liabilities, which is a common measure of a company’s liquidity, efficiency and overall health. But in it’s simplistic form, it’s the day-to-day cash-flow!
Even very profitable businesses can have working capital problems. It’s no surprise that I talk to business owners almost every day that operate companies doing over a million dollars annually, but still run thin on a monthly basis. Companies of all sizes experience this grind. With outstanding invoices that pile up when dealing with net terms or having to cover up-front costs for new jobs, bills still have to be paid, pay-roll has to be covered and inventory must be available to function. Managing your cash-flow is essential to the health of your business.
Accessing the Cash Your Business Needs
There was a time when your bank would come through and help to make ends meet, whether through overdraft protection with limited fees or even short-term lending options right over the counter. Today, access to traditional bank financing is impossible without having to wait it out for weeks on end along with providing flawless records of impeccable business performance and pristine credit history. Gone are the days when you could access the cash your business needs from the place that actually holds your business’s cash!
When business owners think of loans for their business, they think of 5-10 year traditional loans from the local bank with the drive-through window and complimentary lollipops. These loans are few and far between these days. They don’t make sense for meeting short-term needs. If you needed 50k for inventory for the upcoming holiday season, why would you set your business up to still be paying on that inventory three years down the road? The sensible approach in this situation is to pay that 50k off as soon as possible, in a short amount of time. Short term business loans are a very popular tool for businesses that need to quickly take advantage of opportunities that arise, getting in and out, then moving on to the next opportunity.
The Small Business Administration says they can deliver on a loan in a few short weeks, provided you have gathered the long list of all the necessary paperwork proving your near flawless financial status. I work in the trenches, day-to-day in the action, so I know a thing or two about how this works, and I can assure you that you’re looking at a few short months at best. Short term financing has much higher approval rates, and in a very short amount of time. Working capital can be made available for your business within a couple of business days with very little documentation.
Benefits of Short-Term Lending
â– No Collateral Required â€“ The collateral is the revenue of the business
â– Simple Application Process â€“ Very little documentation required
â– Minimal Credit Requirements â€“ Eligibility is not based on credit score
â– Ease of Accessing Capital â€“ Working capital available in a few days
â– Builds Business Credit â€“ Reporting to business credit bureaus
â– Future Opportunity â€“ Larger amounts, longer terms, better rates
â– Interest is Tax Deductible â€“ Enough said!
Short Term Lending is a great way to get the working capital your business needs to function at its best potential. In a very short amount of time you’ll be able to use this money to capitalize on opportunities for growth, expansion, and maximize your return on investment. You will also establish a banking relationship that will benefit your business long term while satisfying the needs of the business short term.
Give Statzer Consultingâ„¢ a call to speak with a lending consultant or to see what your business qualifies for – 305.746.1470