Working capital is the difference between a company’s assets and its liabilities. It indicates a company’s financial stability, its ability to fund its operations, and those activities responsible for its future growth. Since sales demands tend to run in cycles, companies sometimes find themselves with more month than capital. The manufacturing sector is particularly susceptible to their retail clients’ needs who sell more during the holiday season.
Securing a working capital loan allows companies to finance their daily operations during high demand and reduced business activities.
There are several types of financing available to the business owner during their downtimes: term loans, business lines of credit, invoice financing – short-term borrowing against unpaid customer’s invoice.
Working capital loans only cover a company’s short-term operational needs. They do not buy long-term assets like equipment updates or new purchases. If there is a requirement for a collateralized loan, it can delay the process. The interest rates can also be high to help offset the loan source’s potential risk. Terms and conditions can vary depending on the company’s history and owner qualifications.
With all the available loan financing choices to offset working capital choices, choosing the right comprehensive loan option can be a confusing prospect. Let our experts at K-WAM help. We will match the right loan with the right provider for all of your needs. For additional information, send a message to our team, Click here.