A working capital loan is a loan like any other. Except for the sole requirement to specify the loan’s intended use is deprecated. You can use it for anything you want as long as it is business-related. There is a myriad of short-term aspects of your business that need financing. This type of loan ensures that you can try to meet them without having to specify precisely what these are on the loan application.
The Many Kinds of Working Capital Loans
There are quite a few types of working capital loans on the market. From your traditional lines of credit to trade credit, short-term loans, and loans that are personally resourced such as from family and friends. Even the ones you acquire and use for office machinery – equipment loans, basically (whether you choose to purchase or you choose to employ lease financing) fall under the working capital designation because you don’t have to specify the equipment on the loan application.
The Advantages of Working Capital Loans are Numerous
As such, we’ll list just a few of the most convincing ones in this short review. Once you acquire the loan, then you can apply it to any of the multitudes of small liabilities that your business has. This is especially important in the event of unplanned shortages (of product). No collateral is involved in this transfer of funds. You don’t have to worry about losing any business-related assets in the event of default. However, your credit score would take a hit in the latter.
To learn more about some of the advantages and some of the detriments of working capital loans, reach out to the financial experts at 18 Sierra Financial; peruse our blog for specific business topics.