5 Ways To Finance Your Working Capital

Accessing the right amount of working capital at the right time is crucial to building a successful small business. There are plenty of options to choose from, depending on your priorities and financial needs. Check out this overview of five common sources of working capital for your business.

1. Working Capital Loan

A working capital loan can be a fast, convenient way to finance your company’s financial needs. While traditional banks may have a long and tedious application process, online lenders like us offer low rates with funding in as little as a day. This type of loan gives you the flexibility to use funds for daily operations, growth opportunities, or equipment upgrades.

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2. Business Credit Card

A business credit card can be an effective tool to have in your back pocket as a business owner. As long as you can keep up with your payments, a credit card can be an easy way to bridge the cash flow gap, especially if a financial emergency crops up. As you continue to build your business credit history, you could also qualify for rewards programs.

3. Line of Credit

Similar to a credit card, a line of credit lets you draw on funds as you need them. Rather than receiving a lump sum and immediately paying interest, a line of credit gives you the option of taking out only what you need. Your available credit drops as you borrow funds and then opens up again once you begin making payments on what you’ve borrowed.

4. Equity Funds

Shark Tank fans are likely familiar with equity financing, which lets an investor buy into your business. You receive an agreed upon amount of cash, and the investor owns a percentage of your company. Once you begin turning a profit, you’ll have to pay investors according to their ownership percentage. It’s important to consult with a lawyer so you can structure a deal that works not only in the short-term but in the long-term as well.

5. Factoring

For companies that rely heavily on invoicing customers, you can hire a factoring company to get your working capital more quickly. You’re required to pay a fee for the service, which entails the factoring service to collect invoices on your behalf. It does require you to relinquish a bit of control, when it comes to communicating with your customers, and can also be costly compared to other alternatives.

Explore your financing options to determine which is the best fit for your company. With a bit of research and due diligence, you’ll be ready to take the next step in your journey as a small business owner.