Working Capital Loans Explained by Atlanta Business Consultants
April 12, 2021at11:00 PM
As you understand, it’s common for small business owners to run into situations where they don’t have enough funds to cover their short-term expenses.
Working capital loans, one of our offerings at SEED Financial, are a helpful solution for business owners facing these circumstances.
If this is the first time you’re hearing about this option that can save you many inconveniences and lost opportunities, and enable you to grow your business while running it more smoothly, we’re just about to explain it.
For further clarity on working capital loans in Atlanta, our business consultants are always happy to take your questions.
Learn more below.
What are working capital loans?
Working capital loans are money that you borrow from a lender to help you meet the day-to-day expenses of running your business. Typically, that includes such overhead items as office and factory rent, salaries and wages, security, and daily consumables like stationery or fuel for vehicles.
What are the different types of working capital loans?
There are different types of working capital loans, each with its own repayment terms and circumstances that it’s suited to.
Here are details on the various types:
Small business administration loans
Small business admin loans are offered through state authorities and the federal government. There are subtypes that fall under this category:
7(a) loans: guarantee portions of the total amount, with capped interest rates and limited fees
504 loans: long-term financing for buying or repairing equipment, machinery, real estate, and other assets
Microloans: small loans of $50,000 or less to help businesses start operations and grow
Just know that they’re difficult to qualify for, with highly stringent acceptance standards. Dealing with both lenders and government representatives also makes them cumbersome for business owners short on time.
Also known as term loans, installment loans are similar to the kind you’d get from a traditional bank. You get a lump sum and you’re required to repay in fixed, regular payments over a stipulated period. Each payment includes an installment to make up for the original sum plus interest.
Interest rates and installment amounts are determined by the repayment period.
Lines of credit
Lines of credit are a type of working capital loan that comes highly recommended by SEED Financial. The way it’s structured makes it ideal for accessing working capital as and when you need it.
Lines of credit work like this: you get a maximum of credit line, and you can draw cash from it according to your needs. Once you’ve reached that limit, you’re required to pay off the debt. At that point, you’re free to start all over again with your credit line reset to the maximum.
Briefly, somewhat less common types of working capital loans for Atlanta businesses are:
Invoice financing: whereby your accounts receivables or unpaid invoices are used as collateral. This enables you to get the amount you’re owed by customers early, on the condition that you pay a premium
Short-term loans: which are similar to installment loans. The major difference is that, unlike installment loans that peg interest against the borrowed amount, short-term loans come with a fixed fee
Do you need a working capital loan for your Atlanta business?
If a cash injection at market-leading favorable terms is something you feel can help your business run smoothly and expand, which is almost certainly the case, we’d like you to join the hundreds of businesses that use our solutions.
Like them, you can enjoy a relationship with a lender that has an ethical approach to financing, and one that prioritizes transparency and sound financial practices above all else.
Always have the money you need to keep your business running and growing every day. Apply for your working capital loan from SEED Financial now.