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Working capital is the money your business has on hand to pay expenses. It’s the difference between what you take in and what you pay out. The problem for small businesses is that sometimes you don’t have the money you need. You could choose to skip paying your bills, but that’s not a good option. Instead, working capital loans are a positive response to short-term needs. These small business loans are proven problem-solvers for all types of businesses.According to Investopedia, “A working capital loan is a loan that has the purpose of financing the everyday operations of a company. Working capital loans are not used to buy long-term assets or investments and are instead used to cover accounts payable, wages, etc. Companies that have high seasonality or cyclical sales cycles usually rely on working capital loans to help with periods of reduced business activity


Investopedia says, “The immediate benefit of a working capital loan is that it’s quick and lets business owners efficiently cover any gaps in working capital expenditures. In addition to the speed, the other noticeable benefit is that it’s debt financing and does not require an equity transaction, meaning that a business owner maintains full control of his company, even if the financing need is dire.”

But don’t get the idea that working capital loans are only useful for “down” times. Such as when your cash flow falls short. Or you need emergency repairs. That’s not true. In fact, it’s somewhat short-sighted. Working capital small business loans can be a valuable financial management tool. They enable you to keep your business operating smoothly, without sacrificing cash flow or depleting your cash reserves. So they can help your business grow as well as survive.

The US Small Business Administration also emphasizes the importance of working capital. “Positive working capital is essential for your company to meet its continuous operational needs. The availability of working capital influences your company’s ability to meet its trade and short-term debt obligations, as well as to remain financially viable. If your current assets do not exceed your current liabilities, you run the risk of being unable to pay short term creditors in a timely fashion.”


The bottom line here is that small business loans can give you working capital to:

  • Quickly deal with temporary problems such as an unexpected slump in sales. This allows your business to keep moving forward without disrupting sales or customer service. And it protects your business credit rating by ensuring you continue to pay bills on time.
  • Smoothly adjust to seasonal or otherwise predictable cash flow shortages. This allows you to maintain production or replenish inventory as needed, to keep revenue flowing in.
  • Obtain cash to take advantage of an unexpected opportunity. For example, you could take on a big new job, confident you’ll be able to ramp up as needed.

You remain in control of your business. Turning to investors for money could mean giving up a percentage of ownership. And it could mean taking orders from someone else when it comes to managing your business.

You can use the funds for any business purpose. Your lender may not even ask why you need the money. But you should always have a darn good reason for borrowing. And unless it’s an emergency, whatever you do with the money should generate more revenue than the total cost of the business loan.


You could apply to your bank for a conventional or SBA-backed working capital loan. But this makes sense only if you need a very large sum. Say, for a major investment such as remodeling or purchasing high-cost equipment. Applying for a bank loan is cumbersome. And time-consuming. Most small businesses need smaller amounts of working capital, and they need it now. Alternative lenders are a far better source of these small business loans.

With an alternative lender such as United Capital Source, you can:

  • Apply online in just minutes
  • Get approved within 24 hours
  • Get funded within about 72 hours

You won’t need collateral or a personal guarantee. And you can probably qualify even if your business has bad credit. Best of all, unlike banks, alternative lenders offer several types of small business loans. One popular type of working capital loan is merchant cash advance. You can borrow against future credit card transactions. Another popular option is accounts receivable factoring, where you sell outstanding invoices to a third party.

In both these cases, you get your money up front, right when you need it. And with accounts receivable loans, there is nothing to repay, because the lender collects directly from your customers. For merchant cash advance or short-term unsecured loans, UCS offers several repayment options. You can pick the one that works best for your business. That might be:

  • Daily
  • Weekly
  • Bi-weekly
  • Monthly
  • Via credit or debit card transactions

You can also consider getting a business line of credit. This is another source of ready cash when your business needs it.


Working capital loans fill in short-term gaps, but you also have less time to repay. And you’ll pay more in interest than with a bank loan. You’ll want to weigh these factors against the benefits.

It’s relatively easy to get working capital loans. So it might be tempting to overuse them. Or to borrow more than you need. Neither of these actions is good for your business. If you’re constantly in need of small business loans, something is wrong. You need to get your cash flow under control. Why not resolve to make 2017 the year you take steps to do that? Not sure how? Here are nine cash flow resolutions you could consider. You’ll notice smart use of small business loans is one of them.

When you’re in control of your finances, you’re in control of your business future. You can plan better, make quick decisions more effectively, sidestep problems, and be prepared to take advantage of every golden opportunity.

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