Business Capital: Explained

Starting a business requires both an entrepreneurial spirit and business capital to keep it going. How do you ensure that sales will increase month over month? What will it take to keep your employees happy? Will your marketing efforts pay off? Business capital is the financial resource you have available to execute your business plan. It exists in a couple of different forms.

Initial Capital Investment

An initial capital investment is the money you receive to open your business. This can be in the form of a business loan, investor money, personal savings, or straight from friends and family. An initial capital investment is mainly used for startup costs such as leases, property, new equipment, inventory and supplies that are all needed in order to fulfill your business plan. Don’t get overwhelmed; there are many options (besides cash) for funding such expenses.

Working Capital

In accounting terms, working capital is the measure of your company’s liquidity: assets minus liabilities. In simpler terms, it refers to the money that is available for you to keep your business operating from day to day. You might choose to use your working capital to purchase new equipment or use it cover payroll expenses. No matter what, working capital is an essential to every business.

However, all too often many business owners find themselves struggling to pay for such resources from time to time. When those types of situations arise, it’s important to find a reliable lender that offers working capital loans.

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Why is Business Capital So Important?

No matter how good a new business idea sounds, there are a lot of steps required in order to make it happen. This is why business capital is so important. It allows you to:

• Provide a valuable product or service. It’s impossible to attract clientele without sufficient inventory. Have you ever found yourself shopping online only to come across a product you need that doesn’t ship for 3-4 weeks? This is a turnoff to customers.

• Keep your equipment up to date. Inefficient equipment is almost as bad as having no equipment. If certain machinery is holding production back, it’s time to look into other options. Equipment financing provides you with the machinery you need at an affordable monthly rate.

• Create marketing campaigns. Marketing is an important part of running a business. A sign in front of your building isn’t going to always result in immediate foot traffic. An online presence, branded collateral, and mailers are usually necessary in order to get your name out there.

The Bottom Line

It is important for all businesses to have sufficient business capital. We provide a variety of business loans that are tailored to your specific wants and needs. Contact us for your complimentary consultation!