components of working capital

4 Benefits of Working Capital Funding

Working capital is the net amount of assets a business has minus current liabilities. This may include accounts receivable minus accounts payable, the value of materials, inventory, and even work in progress.Working capital funding in Kennesaw, GA, also referred to as working capital loans, is a financing option that provides additional working capital so that there’s cash to fund both operations and growth of the business. It basically removes the gap between cash flowing in and out of your business. A working capital loan in Kennesaw, GA, has 4 important benefits you should know about.

1. Short or Long-Term Options

A nice feature of working capital funding is that it can be used for different financing term lengths. A short-term loan would be used for regular expenses throughout the fiscal year. A mid-term loan would provide funds for the purchase of additional inventory or to create more receivables so that the working capital will be increased. Long-term funding could provide funds for future expansion of your business. There are numerous ways a capital funding loan can benefit your business, no matter what time frame you’re looking at.

2. Fast Funding

Another important quality of working capital loans is that they’re a fast way to get the money you need. This is important because in many cases, working capital is needed for basic expenses like payroll and supplies. You don’t have days or, in many cases, weeks waiting for loan approval before you get your cash. Fortunately, this type of financing can be done in just a day or two. This is possible because most of these short-term loans are just a fraction of the company’s revenue and are attached to assets that are easily converted to cash.

3. No Collateral

Most types of small business financing require some sort of collateral. This is often difficult for a business in need of extra operational cash, so a working capital loan is attractive because it doesn’t require collateral.

4. Flexibility

The final benefit of a working capital loan is that it’s flexible both in its terms (interest rate and repayment terms) and its uses. Working capital loans usually don’t require you to spell out how every dollar will be used. You’ll have a lot more freedom with how the funds are used.