Managing Working Capital Loans

Managing working capital is key for every successful business. If you do it right, you’ll have the flexibility to invest in your company’s growth and cover your day-to-day expenses.

Working capital loans can help you pay operational costs, such as rent, payroll and debt payments. You shouldn’t use them for long-term investments, such as buying a plot or a fixed asset.

Banks offer the lowest financing rates on these loans, so if you own an established business with strong cash flow, you may want to start with one. Many working capital loans can be used for multiple business needs, so consider how you plan to use the proceeds before you apply.

Working capital loans for everyday needs

The term “working capital” can encompass virtually every facet of your finances, but ultimately you need it to, keep your company operating. That could include coping with seasonal dips in revenue, covering maintenance costs, keeping your payroll up to date or managing your inventory.

Working capital loans if you have unpaid customer invoices

Any company that works in the business-to-business sector will face gaps in cash flow, namely when clients pay e.g. 30, 60 or even 90 days late. To help keep your business running while waiting for payment, consider invoice financing, a financing method in which the bank fronts you the money from outstanding invoices. 

As long as the companies that owe you money have strong credit, HFC can front you cash even if your business is new and you have poor credit.

When looking for a working capital loan, it’s important to compare all of your options based on Annual Percentage Rate (APR), which represents the true cost of the loan including all fees.

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