The Benefits of Getting a Working Capital Loan

working capital loan can help you keep your cash flow in check, which will help you keep your doors open and your business going strong.

When it comes to running a business, cash flow is king, and like many of the things in life you take for granted, you don’t miss it until it’s no longer there.

According to Entrepreneur up to 82 per cent of businesses fail due to an issue around cash flow. That’s not sales or even profitability, but cash flow – an inability to match their incomings with their outgoings when they fall due. It is one of business’s most significant misnomers that a business fails because nobody wanted the product. Some of the most spectacular business failures have been successful and profitable companies whose very success can often be the cause of their cash flow issue in the first place.

So, what does a working capital loan achieve?

Flexibility for Growth

The difficulty with growth is it can be hard to anticipate. Long-term debt instruments have a certain finality about them regarding the amount that can be borrowed and the repayment terms they have. If circumstances change, they can become a lead weight. A working capital loan won’t become a long-term drag on your balance sheet.

Cost Smoothing

Not all expenses come in equal instalments. Costs such as taxes, insurances, or holiday bonuses can seriously knock your bank account for six. If your business is seasonal, this can also present a problem. A working capital loan can help smooth out these ups and downs.

Grow your business

All businesses seek growth – but growth requires inputs, be it stock, staffing, equipment or marketing before sales come rolling out the other end. The faster the growth, the bigger the level of upfront investment that is necessary to meet the demand that is coming in. If you have sufficient lag between that initial cost of production and payment from your buyer, it can be a severe drain on resources.

It’s not just businesses that have to wait for payment that can get into trouble either. Retailers have long had the good fortune of receiving cash payment upfront while not needing to pay suppliers for 30, 60 or even 90 days. The difficulty of managing this surplus cash, and resisting the urge to spend it, can prove a downfall when the bills finally come due. When you do need to access funds in a hurry, working capital loans can be a lifesaver. Unlike more heavy-duty loans, they require less security and simpler approval.

Sticking to your budgets and avoiding impulse purchases are great ways to ensure that you keep your cash flow in check. No matter how well you plan, there will still be gaps that you need to be ready for, and a working capital loan can help your business continue to grow.

Bigstone Finance can offer fast, flexible loans from $10,000 to $5,000,000 for assets and equipment for your business.

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