In the business world, getting a step ahead of the competition is no easy feat.
To say few can rival the kind of competition you can see in the business world is an understatement.
That being said, you’ll need all the help you can get if you are to get ahead.
While you need to cover a lot of bases, ensuring you have sufficient SME working capital loan available at all times should rank high in your priority list.
Let’s face it, if you want to thrive and be a step ahead of the pack, you have to be able to cover the essentials (payroll, marketing costs, and other financial expenses) that will help ensure the day-to-day operations of your business are sustained.
This is where SME working capital loan comes in.
In essence, the specialized loan type granted to businesses to cover the daily financial needs of the business is called working capital loan. While tempting, it should not be used to purchase long term assets or investments.
The importance of working capital loan cannot be overemphasized.
Sure, you may have successfully secured startup financing and established a stable customer base but all those would prove futile if you don’t have the working capital loan to sustain and fuel your growth.
What makes working capital loan alluring?
For starters, it offers the following peerless benefits:
You are able to maintain company ownership. If you are to receive funding help through another source like an equity investor for instance, you would need to give up a significant percentage of your company.
However, if you borrow from banks and other financial institutions, your only obligation is making sure the payments are made on time. That is where your obligation to the lender ends. That means you get to retain your freedom to run your business however you deem fit sans outside interference.
You are equipped to handle financial needs that may arise. Even if your business has enough in terms of fixed assets, bankruptcy is still a likely scenario if it can’t cover its monthly needs.
No doubt about it, insufficient working capital can lead to increased borrowing, financial pressure, and even tardy loan payments, among other things. Eventually, you’d find yourself slapped with a low credit rating.
A low credit rating can mean banks will most likely charge a higher interest for any loan you are granted. Fortunately, you can easily avoid the abovementioned scenarios from occurring if you have access to working capital loan.
You can utilize the money however you deem is best. In general, banks and lenders have very few restrictions (if there are any to begin with), on how the money you borrowed is used.
The unwritten understanding is the money will be utilized to enhance revenue opportunities and maintain day-to-day operations.
In addition, some financial institutions offer shorter terms for loans granted. That would mean you get to infuse the much needed money in the business without having to worry about planning for years just to pay the obligation back.
Processing and approval of working capital loan is often fast. Unlike other typical business loans, applying for a working capital loan won’t eat up a significant amount of your precious time.
Some business loans often require excessive paperwork, lengthy approval process, putting up collateral, etc. and it can still end up getting denied.
Fortunately, you don’t have to go through as much hassle when it comes to applying for working capital loans. In addition, you’ll also get access to the money almost instantaneously, usually within a week after the loan application has been approved.