A working capital loan is a loan that finances the daily expenses of a business. It is designed to help maintain the cash flow needed to cover things such as wages, inventory, and marketing. Working capital loans can be a great option for small businesses; however, it has become increasingly difficult to secure this type of financing from a traditional lender. Many will ask you to provide substantial collateral, such as your home.
Today, there are working capital solutions for all kinds of businesses in Canada; however, you must make sure the type and timing of the financing meets your needs.
What are the types of working capital loans?
The most common types include:
- Credit Line: These allow you to draw funds as you need them and only pay interest on the outstanding balance. Credit lines are often are the cheapest option but can be difficult to qualify for.
- Short-Term Loans: These offer a fixed interest rate and payment period. There are now short-term loans delivered online, such as those offered by Lendified, that offer better rates than other alternative financing options and do not require you to put up collateral.
- Accounts Receivable (AR) Loans: These loans are based on your confirmed sales orders. AR loans typically have affordable interest rates and are available to businesses who have a proven history of paying off debt.
- Merchant Advance or Factoring: These are based on your company’s future credit card receipts. Merchant advance loans are known for their simple approval process and high interest rates.
How quickly can I get my funds?
The timing can range from days to weeks and varies according to the lender and loan type. When evaluating your options, find out the time and steps required for each stage of the funding process (application, approval, closing, and transfer of funds). Lendified has streamlined the process for short-term loans so that you can apply in minutes, get an instant decision, electronically sign your agreement, and receive your funding in as fast as 48 hours.
Is a working capital loan right for my business?
Whether you want to take advantage of an opportunity or simply supplement your cash flow, a working capital loan can be one of the easiest ways to get the funding you need. If you believe a short-term working capital loan is right for your business and want to avoid the lengthy process of getting approval from a traditional lender, then consider using an online lender such as Lendified. We offer fast, easy, and affordable loans to business across Canada.
What are you waiting for? Apply online in less than 10 minutes and get an instant decision with no-obligation.