When it comes to starting your own company, running one, or purchasing an existing one, we all know that it takes money to make money.
However, the questions of “how much money”, and “for what”, will be roaming the minds of new entrepreneurs.
Many ‘newbies’ to the entrepreneurial, SME (small and medium-sized enterprises) world, are often unclear on where to put their capital, whom to borrow it from, and how to plan for current and future costs.
As a non-bank lender who specialises in secured business loans, we thought it might be helpful to provide some understanding of working capital.
Working Capital Meaning
What is it and why do you need it?
When it comes to running a business, ‘working capital’ is a term used to measure the financial strength of your company. It is the difference between your business’ current assets and current liabilities.
Basically, if your current liabilities outweigh your current assets, this is a red flag that you need to seek financial advice.
- Current assets: cash, accounts receivable & inventories
- Current liabilities: accounts payable, financial debts & obligations
So how can you safeguard your business from the unwanted scenario of liabilities outweighing assets?
One option is a working capital loan.
Working capital loans are short-term loans that will help you finance your essential daily operations, including:
- Rent & utilities
- Salary & wages
- Office supplies
- Sales & marketing fees
- Accounting & legal fees
- Repair & maintenance
- Purchase of stock & materials
Planning for Working Capital
Planning for working capital requires careful consideration of where to place funds in your business.
The first step you will need to take is consulting with a financial adviser.
This step is important as it will inform you of how much capital you will need for each of the daily costs of your business; i.e. the ‘working capital’.
It is often the case that, many ‘newbies’ to the SME world overlook the planning involved with short-term, daily costs, as they are too busy focusing on the long-term.
But it is the daily costs (and funds) that will keep your business afloat; particularly when you are just starting out.
Once you have consulted with a financial adviser and figured out the costs for your working capital, the next step is to ensure you have sufficient cash flow to operate your business.
Non-Bank Lenders Business Loans
This is where we come in.
In the case of bank rejection, as a non-bank lender, we can provide less rigid and speedier short-term lending options to help you with your business.
There are a variety of short-term small business loans that non-bank lenders can help you with when it comes to purchasing an existing business, starting your own one and general funds you need for running one.
- Non-Bank Bridging Loans: non-bank lenders can provide short-term secured funding options, in the aim to fill or ‘bridge’ the gap between selling a business or property and purchasing another.
- Non-Bank Working Capital Loans: non-bank lenders can help achieve your funding requirements that you may need for your daily operations and provide you with these funds quickly.
In addition to short-term loans, non-bank lenders like Core Finance, also provide secured lending on other commercial and business loans including second mortgages, start-up funding and fixed asset financing.
Working capital funding is a positive and active management of your business, which shouldn’t be disregarded.
So, if the bank says no, ensure to consult with a registered financial adviser or contact a credible non-bank lender like Core Finance.
Written by freelance writer Alix Dougherty
In need of working capital? Bank said no?
Contact Grant Donoghue at Core Finance: an experienced non-bank lender.