Small Business Loans - How to Get Approved Online in Six Minutes
When you're in need of funding, working capital loans are an excellent way to improve your cash flow and pay off your long-term debt. You can easily compare rates and apply online in just six minutes. These loans are backed by the SBA and can be very useful to small business owners who don't have much collateral or a good credit score. These loans can help you stay ahead of your competition while reducing your overall borrowing costs.
First of all, you'll want to consider your personal credit score. If you have a personal FICO score of 530 or higher, you're likely to get approved for working capital loans. A higher score will ensure better terms and rates. If you're unsure of your score, you can use an online credit score checker to see if you're eligible for a loan. Once you've assessed your credit score, you can begin looking for a lender.
Another option for getting funding is applying for a collateralized working capital loan. Secured working capital loans are backed by assets, such as your accounts receivable. In order to secure a secured working capital loan, the lender will request that you provide a link to your deposit account or payment processor. However, unsecured working capital loans are less secure and will usually carry a higher interest rate due to the lack of collateral. Some small businesses carry their expenses on a credit card or line of credit.
Working capital is the cash available to a business to meet its day-to-day expenses. The money obtained through a working capital loan can help balance operating expenses in times of cash shortage. Many seasonal businesses have difficulty operating during certain months of the year due to decreased revenues. This type of loan is a good way to balance operating expenditures while eliminating the risk of bad debt. You should be careful not to get into debt with a working capital loan because it can be overwhelming.
Before you apply for a working capital loan, it is important to understand your assets and liabilities. The working capital ratio is the same as your overall assets minus liabilities: 62,500 assets minus $50,000 liabilities. Value Penguin recommends that you aim for a ratio of 1.2 to two. Moreover, it is essential to know your company's asset-to-liability ratio. When comparing working capital loans, it is important to remember that a working capital loan is not meant to replace your long-term business goals.
Many companies experience ebbs and flows in their cash flow. Some businesses have seasonal slowdowns and can't buy large quantities of inventory at once. Working capital loans help these businesses survive these times by allowing them to make necessary repairs and replacements. This helps them meet demand from customers and can also help them hire additional employees. It's a win-win situation. If you have bad credit, a working capital loan could be a good option for you.