Our goal at Lending Valley is to provide all small business owners access to the best loans possible for their business. You can rest assured we will get you the best rates in the market!
Every small business needs access to a healthy level of working capital. This working capital helps businesses to expand and reach the next level of growth. Accessing this working capital is no easy task, though, and it has often been incredibly difficult for small businesses to do so.
Thankfully, the times are changing and more modern lenders are leveraging the latest technology and an understanding of small businesses to meet the needs of their borrowers. Here’s a closer look at exactly what small businesses need working capital loans for, and how those loans can be accessed.
Before we explore some of the common reasons that small businesses need working capital loans, let’s start by defining exactly what working capital loans are.
Essentially, these loans are taken out by businesses that need some relief when it comes to handling the daily needs of a business. Of course, there are lots of expenses associated with running a business and all of these expenses must be met – it’s how businesses steadily move along.
Some businesses may find, though, that they are occasionally unable to meet those expenses. This can be problematic for a small business and as such, some small business owners decide to pursue working capital loans.
There are positives and negatives to these loans, of course, but many small businesses are left without an option in a range of circumstances.
Here’s a closer look at just some of the scenarios where small businesses may need to access a working capital loan quickly.
Every business needs to have the right tools in order to function properly. Countless small businesses rely upon equipment to facilitate their work and as they grow their equipment needs also evolve in tandem.
Let’s imagine that a nascent store has experienced some impressive early growth. The small business owner may come to realize that a second till is required to process the high volume of transactions that are taking place in the store each day.
If they lack the working capital, small business owner would have to access a working capital loan to finance the purchase of the new equipment. This would be a smart business decision, given that the second till could expedite the customer journey and increase the total amount of sales.
– Expand the Team
Almost every small business will hope to reach the point where it can hire employees to facilitate future growth. This isn’t cheap, though! Aside from the salary, it can be very expensive to pay for the appropriate headhunting and HR fees.
Of course, those employees will have to be trained and provided with a range of additional equipment, which further increases the costs that are incurred by a small business.
Small business owners have to expertly balance growth with investment and use working capital in a prudent manner.
– Unexpected Tax Bills
Taxes are never fun and for most small business owners, they can become a real headache. Trying to navigate the complex world of taxes can take up a lot of time and if it is done improperly, potential fines and further punishments.
It can be very difficult to accurately assess the impact of a tax return, and some small business owners may find that they receive unexpected tax bills. It’s important that those tax bills are paid promptly and in full – some businesses may find that they require a working capital loan in order to achieve this.
– New Marketing Initiatives
Small businesses must intelligently and efficiently market their services to acquire new customers. It can be a difficult balancing act knowing exactly when to invest in marketing – small business owners must strike while the iron is hot but if they are too fast, they may find that their investment was for naught.
If a small business lacks the working capital to market their business, they will have to find a funding source. This funding can then be reinvested into marketing initiatives to inspire future growth.
– Purchase New Stock
Lots of businesses need to purchase stock from wholesalers. Small businesses will call upon their working capital to purchase higher volumes and a more wider variety of products. This can lead to increased sales and boosts to the bottom line of a business.
Some small businesses may find that with other expenses, though, they lack the working capital to reinvest into their stock. This might also mean that they fail to capitalize upon flash sales and discounts.
Small businesses will often secure a working capital loan to take advantage of new stock offers and purchase the items that they need to sell.
– Maintain Daily Operations
Every business has daily operational costs and small businesses are no different. Small businesses have to pay rent and utilities while also fixing damage to their property. These payments can come at unfortunate times when small businesses lack the working capital that they need.
In those instances, some small businesses will turn to a working capital loan to tide themselves over.
As you can see, working capital is incredibly important for small businesses. Until very recently, though, it was incredibly difficult for small businesses to access this funding.
New and more modern lenders understand the specific challenges of small businesses and offer a faster and more pleasant experience. Here’s a closer look at what small business owners can expect when working with such a provider.
– A Simple Application Process
Traditional lenders offer antiquated application processes that take a long time to complete and require mountains of information from applicants. This can be frustrating and given that there’s no guarantee of success, small business owners are often left frustrated and with wasted time behind them.
New lenders offer smooth and simple application processes that respect the valuable time of small business owners.
– Lots of Guidance
Traditional lenders often have thick layers of bureaucracy that needs to be navigated and given the large volume of applications they receive, they often offer sub-par guidance to applicants.
New lenders understand the specific challenges of small business owners and as such, they are capable of offering accurate and specific guidance to applicants. This helps applicants to save time while also boosting their chances of success.
– Quick Decisions
In the past, lenders had a tendency to leave applicants in the dark for extended periods of time. This meant that small business owners didn’t know where they stood and what the status of their application was.
Now, modern lenders are happy to offer incredibly fast turnaround times to keep their applicants informed. These fast turnaround times mean that whatever the decision, small business owners are free to act and plan their next move.
– Fast Funding
Traditional lenders are often slow to release funding, too, meaning that small business applicants might have already missed the boat when it comes to covering their emergency expense.
More modern lenders often release funds within a matter of hours, giving small business owners the working capital that they need, when they need it. This approach means that small business owners are better able to tackle their challenges head-on.
We hope that this closer look at working capital loans has been useful for you. As you can see, working capital is essential for small businesses and it’s critical that those businesses are able to access working capital loans when they need them.
