Working Capital Loans

A working capital loan is a short-term loan a business can use to cover its day-to-day operational expenses and cash flow gaps, such as payroll, inventory, and rent. These loans provide flexible funds to manage seasonal fluctuations, unexpected costs, or growth, and they are not typically for long-term investments in assets like equipment. 

How they work

• Funding operational needs: 

The primary purpose is to fund the difference between a company’s current assets and current liabilities, which is the money needed to run the business smoothly between paying suppliers and receiving payments from customers. 

• Flexible use: 

Unlike loans for specific assets, the use of a working capital loan is often not restricted, allowing businesses to apply the funds wherever the need is greatest. 

• Short-term nature: 

These are short-term loans, though the repayment structure and terms can vary depending on the type of loan. 

• Repayment options: 

Repayment can be structured in different ways, such as daily or weekly payments from credit card receipts, or through more traditional structured repayment plans. 

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