Working Capital 

Overview 

Typically, commercial loans are designed to pay for a particular item or expense. For example, a construction loan will pay for new property development, and an equipment loan covers the cost of machinery. While these financing options are excellent, they can be limiting.

If a business needs funds to cover operational expenses, it needs flexible funding. Fortunately, many lenders offer working capital financing. Here’s a quick breakdown:

Working Capital Line of Credit:

A company opens a new credit line, enabling it to borrow as much or as little as it needs. As the business repays its outstanding balance, the funds are added back to the account.  

Merchant Credit Card:

These credit cards have relatively high limits and favorable interest rates. As a business builds a repayment history, it can increase its borrowing capacity.  

Term Loan:

To save on interest, it’s often better to get a working capital loan. These loans can pay for any operational expenses, including payroll, utilities, and debt refinancing.  

Factoring:

For companies with outstanding invoices, they can receive up to 80 percent through a factoring agent.