What is a Working Capital Loan?
Working capital finance is the money a business needs for everyday expenses. It’s imperative that business owners have enough money to run their business smoothly and take advantage of growth opportunities. Your business can receive different types of working capital finance, depending on its specific needs. Common ways businesses finance their operations include loans, credit lines, trade credit, and factoring.
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Advantages of capital loans
A working capital loan offers many advantages over alternative financing options including fast access to funds with shorter approval and funding times. A working capital loan improves financial stability by addressing cash flow gaps and ensuring seamless business operations. Furthermore, you keep complete control and ownership of your business. No need to seek investors or sell shares, so there's no need for any equity dilution.
How to use a capital loan
A working capital loan provides businesses with the flexibility to use the funds as per their specific needs. Some common applications include meeting short-term financial obligations, funding inventory purchases, expanding marketing and advertising efforts to attract more customers, Investing in technology upgrades and infrastructure improvements and addressing seasonal fluctuations or unforeseen expenses.
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Examples of working capital loans
Here's a quick rundown of some common working capital loan options for your small business:
Business Loans
These are traditional loans with a fixed repayment schedule and interest rate. You borrow a lump sum of money upfront and pay it back, plus interest, over a set period. Business loans can be either secured or unsecured.
Line of credit loans
A business line of credit or line of credit loan gives you access to a set amount of funds that you can draw from whenever you need, similar to a business credit card. You only pay interest on the amount you actually use, and once you repay the borrowed amount, your credit line is replenished.
Invoice financing
With invoice financing, you can borrow money against your outstanding invoices. The lender advances you a percentage of the invoice amount, and you pay them back, plus fees, when your customers pay their invoices. .
Merchant cash advances
A merchant cash advance, or revenue-based finance, allows you to borrow a lump sum of money in exchange for a percentage of your future credit card sales. The lender takes a fixed percentage of your daily credit card transactions until the advance, plus fees, is repaid.
Short-term business loans
Short-term business loans are similar to term loans but have shorter repayment periods, typically ranging from a few months to a couple of years. They often have higher interest rates and can be either secured or unsecured.
Asset finance
With an asset-based loan, or asset finance, you can borrow money using your business assets as collateral, such as inventory, equipment, or accounts receivable. The amount you can borrow is usually based on a percentage of the value of the assets you're using as collateral.
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90% of applications
are approved
What Happens Now?
Fast, simple application process
1.Apply online in minutes
2.Approval
3.Receive your funds within days
4.Watch your business grow
Borrow from £1’000 to £1 million
Flexible repayments
No security or collateral required
Application information:
We do not need to carry out a credit check for you to receive your provisional quote. Once your application has been approved in principle and you have confirmed that you wish to proceed, a ‘soft search’ will be then be completed in line with responsible lending regulations. The search is not visible on your credit score. Also, you do not need to provide any security or collateral and we don’t even need to see any form of business plan. That’s why our unsecured business finance facility is flexible and fuss free!
Apply now for your unsecured business loan
Want to chat? Call us on: 0207 101 3880
We connect business to business by working in collaboration with our clients and partners.
Wedge.co.uk has been helping businesses since 1998 and is now part of the Alliance Business Group Ltd.
2nd Floor, 17 King Edwards Road, London, HA4 7AE 0207 101 3880
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