It’s no surprise to anyone that money makes the world go ‘round, especially a small business owner. Money is needed to pay your suppliers and workers, for marketing, and maintaining an adequate inventory. The more money you have in your business’ coffers, the easier it is to meet your day to day financial obligations and reinvest into growing your business. But sometimes you may find yourself needing to fill the gaps or looking for a boost to take your small business to the next level. You may need working capital for everyday needs such as seasonal dips in revenue, maintenance costs, or payroll. You may need to “up” your inventory or invest in new equipment. Maybe your business is experiencing a gap between services rendered and payment. While customers and clients can tell you that the money’s on the way, you can’t very well turn around and tell your landlord, workers, or suppliers the same thing. This is when you need to look at capital loans.

First of all, you need to determine your business’ working capital. Add up your business’ liquid assets (cash, accounts receivable, etc.) and subtract its liabilities (payroll, monthly bills, debt payments, etc.) This is your business’ working capital. Hopefully it is a positive number, but if it is not, know that many businesses struggle with maintaining working capital. Since your working capital is a measure of your business, it is crucial to constantly monitor it. This number will be one of the main points of interest of lenders and creditors, but you should also have extensive knowledge of your profit and loss statement, seasonal fluctuations, and the amount of outstanding accounts receivable.

When you begin looking for a small business loan, keep in mind that they are not all alike. You need to do your research to find the loan that best meets your needs and goals. While a line of credit from your bank offers the lowest financing rates, you may not be approved or you may need cash fast. In this case, there are several lenders available to help you with all of your needs. These lenders use a variety of criteria such as (but not limited to) the age of your business, veteran status, credit score, working capital, and/or geographic region. If your credit is lacking, expect to have a higher APR. It is especially important when comparing your options that you consider the APR to determine the true cost of the loan, including all fees. Evaluate and compare a variety of small-business loans and lenders. Take your time to carefully decide which is best for you, your business, and the specific situation.

If you need additional advice or help with comparing and finding the loan best suited to your small business, give me a call. I’ll make sure you have all the information necessary to make the right decision so your business can continue growing and succeeding.