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Working Capital Loan Considerations: What You Need to Know

Small business owners have plenty of things to manage to keep their business growing. From a budget standpoint, there are many factors to consider in terms of equipment costs, inventory, payroll expenses, and other financial considerations. When you’re caught in the middle of these financial matters, consider applying for a working capital loan.

Working capital ensures that you will have enough cash flow to successfully run your business. Small business loans are often the best solutions if you suddenly find yourself in a tight situation financially.

With that in mind, here are things to consider before applying for a working capital loan.

The Amount of Funding You Need

Some lenders offer a maximum loan amount in the range of $150,000 to $200,000. Before you apply for one, evaluate your available funds, determine the amount you need, and finalize the purpose of the loan.

Borrowing not enough or too much can hurt your business. Instead of dealing with debt or fund shortages in the future, consult with a lender before moving forward. A lender will talk about your business’ needs before recommending loans and rates, as well as help you determine the loan amount that works best for your current financial situation.

When Do You Need the Funds?

If you need immediate funding, perhaps a traditional bank loan or an SBA loan is not the way to go. These loans can take weeks of processing before you receive any funds. The shortest waiting time for these types of loans is three days to a week.

Instead, look for a lender that can give you money within a few days, or even on the same day. These types of loans, however, may require applicants to offer collateral before they get funding.

Settle Unpaid Debt

Having unpaid debt could prevent you from getting approval for a working capital loan. If you have financial concerns like credit card loans or debts, lenders may be hesitant to work with you. Generally, it’s a good idea to pay off your debt first to improve your chances of approval.

Determine Your Lender’s Expectations

Every lender has a different set of requirements. You may work with a traditional bank that prefers bank statements, excellent credit, and a business plan. Other lenders may require you to earn a specific amount of revenue tied to the length of time you’ve been in business. Here are other requirements lenders may ask from you:

  • Invoice history
  • Tax records
  • Credit score
  • Business plan
  • Bank statements
  • Collateral
  • Personal guarantee
  • Annual revenue

Determine the Loan’s Specifics

It’s important to know the length of time you’ll need the funds. Most small business owners need short-term funding to draw a check or to bridge a gap between jobs. Most lenders, however, do not offer short-term financing solutions. If you need a custom solution, get in touch with a lender immediately to discuss your options.

Once you’ve settled these considerations, you can have a good chance of getting that much-needed working capital loan. It’s best to work with a lender who can help determine your needs. They can help you sort through your options, work out a payment plan, and make sure you get the capital you need ASAP.

When you need funds fast, Probably has got your back. We make quick small business loans easy with our flexible options and simple processes.

Get started with your loan today.

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How to Manage Your Working Capital & Avoid Deficits

The working capital is one of the biggest points of concern for any business. Big or small, enterprises need to maintain a healthy flow of working capital. Although business experts say that negative working capital doesn’t necessarily mean the business is doomed, it should at least keep the sales and account managers on their toes. 

What Is Working Capital?

Working capital is the cash fund that sustains your everyday operations. It is a measure of a company’s liquidity: higher working capital means a company’s earnings are greater than its liabilities. Working capital is used to pay off short-term debts, buy inventory, and pay for everyday operating expenses.

When the working capital is running short, businesses apply for working capital loans from banks or non-institutional lenders. 

If you look up working capital loan definitions and uses, you’ll notice that many consider it a short-term remedy to cover the costs of daily operating expenses. It’s mainly because working capital loans must be repaid in less than a year. Businesses, therefore, cannot depend on working capital loans for long-term funding needs.  

Manage Your Working Capital to Maximize Working Capital Loans

Businesses that get approved for working capital loans must work doubly hard to regain their financial health. They need to maximize their loans and generate revenue from them so that they can pay the loan on time and have a net income. 

For business owners and entrepreneurs who want to avoid risks, the goal regarding working capital should always be to avoid deficits.

How do you manage your working capital loan? Here are some tips:

1. Be smart in stocking inventory

You have to closely examine if the cost-savings from bulk-buying a raw material is more beneficial than equally distributing resources for purchasing all materials needed for production, for example. If you are a retailer, you’ll want to increase the inventory of your in-demand products to make sure that you don’t run out of stocks and potentially shake the confidence of long-established partners and customers. Similarly, you don’t want to waste money on stocks that don’t sell well. 

2. Prioritize your key suppliers and pay them on time

This is to ensure that your business relationship stays strong. If you have a good relationship with your vendors, you’ll be in a better position to negotiate for more favorable contracts later.

3. Follow-up on your receivables

Make sure you’re sending invoices on time and take note of delinquent payments. Not to say that you must be aggressive in collecting delinquent payments, but neither should you be too lax that others are taking advantage of your generosity. Draw the line between gestures of good faith and savvy business management. 

4. Increase your working capital

Look for other ways for your business to increase its income besides improving your process for receivables. Some options you can consider are selling long-term assets, refinancing debts, making personal investments (i.e., put your personal money into the business), and getting equity funding by inviting investors to your business.

Contact Probably Yes for More Information on Our Working Capital Loans

Managing your working capital, especially the funds you receive from a working capital loan, is crucial for ensuring your business’s success. 

If you need to increase your working capital as soon as possible, consider applying for a working capital loan from Probably. We specialize in financing startups and expansion plans of small businesses. 

Explore our funding options. Apply for a working capital loan today.

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Tips for Maximizing Your Small Business Working Capital Loan

So, you got approved for a working capital loan. Congratulations! Many small businesses struggle to get approved for loans because of various reasons (e.g., lack of a substantial track record to prove their profitability, low business, or personal credit scores). Getting the much-needed funds for your business has no doubt removed a huge burden off your shoulders. But don’t let your relief lull you into a false sense of security.

‘Working Capital Loan’ Definition

In a nutshell, a working capital loan is a loan that provides working capital for a business – easy, right? It is usually awarded as a line of credit. It isn’t, however, ideal for solving recurring, long-term financial problems.

A working capital loan is meant to keep a business running by funding its day-to-day expenses and help keep it keep money in the bank — that is, have profit left after paying off bills and overhead costs.

Here are some tips on how you can make the most of your working capital loan:

  1. Strategize the order of priority for your payables. Working capital loans are never intended to solve long-term problems, as you cannot use it to pay off massive debts at once. This is especially true if you receive the loan as a line of credit: there’s a limit to how much you can borrow over a specified period.  Are there suppliers with whom you cannot afford to have a sour business relationship? Prioritize settling your bills with them, then propose an alternative repayment scheme for other suppliers who’re willing to give you an extension on your payments.
  2. Now that we’re on the subject, prioritize paying your people their salaries. The cash flow might be the lifeblood of a small business, but it’s the people in your organization who keep things running. Having said that, you may have to reevaluate your employment structure for redundancies and teams that are not generating income. If it comes down to it, you’ll want to keep the people who are making a profit for your business.
  3. Do better on securing your receivables. Given that you don’t have a limitless line of credit, you need to draw cash flow sources from other, more sustainable places as well. Your receivables are the first things you should look into. Review your invoicing process. Are you sending them out on time? Do you follow-up with your customers regarding their payments, or are you too lenient on delinquencies? Do you often make billing errors? If you can correct the flaws in your invoicing, your cash flow will improve, and you’ll be less inclined to max out your line of credit each month.
  4. Increase your capital by exploring other income sources. Many small businesses that seek working capital flows are seasonal: they depend on the influx of income for the months when their services are needed to sustain them during the off-season months. When the revenues fall short, however, businesses will be under massive strain during the slow months. A working capital loan can help weather this period, but it could backfire when payments are due and revenues are still trickling in. A better solution would be to explore other ways to generate income even as you tap on your line of credit. This way, you can increase your working capital and stay afloat until you’re back in season.

Probably is Here to Help Get You the Small Business Working Capital Loan You Need + Use it to the Fullest!

Don’t let your working capital loan do all the work when your business is struggling to stay afloat. Maximize it, increase your capital, and allocate your resources where you can get returns as quickly as possible.

If you need a lifeline to keep your small business’s doors open, you can find a solution here at Probably. We are a financing company offering flexible, innovative, reliable, and transparent funding options for small businesses.

Contact us to apply for your small business working capital loan.

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Working Capital Loans for Businesses with Bad Credit

Cash flow in any business is a big deal, but your working capital gives you the financial capability to handle one-off emergencies. When a piece of equipment breaks, when there’s a sudden shortage in supplies, or when you take on a new business endeavor, you need access to money that won’t affect your bottom line. This is why owners of many small businesses apply for working capital loans.

But how do you get a loan for your business when you have bad credit?

When your credit score falls under the “fair” to “poor” credit rating system, lenders will classify you as a risky client and reject your loan applications. But this doesn’t mean you are out of options. There are other types of business loans available to you, regardless of your credit score.

Working Capital Loans for Businesses with Bad Credit

There are lending options that don’t require a high credit score. Some lenders are more understanding of the causes of bad ratings, especially in business.

Line of Credit

This is considered one of the most popular working capital loans. When you apply for a line of credit, the lender will define the amount you can access. You will be given a repayment plan that indicates when to make payments and how much interest will be charged down the line.

Factoring

Also known as factoring receivables, this type of loan uses your unpaid customer invoices as collateral. Although you retain legal ownership over the outstanding invoices, failure to keep up with repayments gives the lender the right to take over.

Micro-lending

Micro-lending is a type of peer-to-peer financing model where you approach individuals instead of financial institutions for loans. More businesses are applying for this type of loan, but it presents several risks to borrowers, including higher interest rates and longer application periods.

Online Business Loans

The digital landscape has created a new environment where individual lenders are more accessible. Most online lenders will look at your business performance rather than your credit score, making it easier to apply for a loan.

Merchant Cash Advance

This isn’t a loan in the technical sense, but it acts similarly to one. In this financing model, the lender looks at daily credit card receipts to determine if a business can pay back funds in a timely manner. Basically, a small business “sells” a portion of future credit card sales to acquire capital immediately. Most cash advances require daily or weekly repayments.

Probably: Your Financing Partner in Business

Business loans for bad credit exist, but you have to find the right lender to apply for one. Probably understands the struggles small businesses face when applying for loans and we believe every business deserves access to capital.

We have a three-step process for our business loans:
  • First, you need to fill out our online application form.
  • We will then contact you to discuss your business, its needs, and the appropriate financial plan for it.
  • Once we’ve approved your application, you can get your funding as soon as possible.
probably loan options

Get in touch with us to learn more about our financing options for small businesses with great, good, average, even bad credit!

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Working Capital Loans & Bridge Loans: All You Need to Know!

Probably can provide your small business with the working capital loan you need for equipment, payroll, inventory, marketing, taxes, and more! We want to get you the working capital or bridge loan you need to help grow your business and bring your goals in reach.

SIMPLE PROCESS
We want to make working capital loans for businesses simple, easy, and successful. That’s why we believe in clear and transparent loan terms.
FLEXIBLE OTIONS
We work with you to find the perfect working capital loan for your business. Whether you need a little or a lot, our business loans deliver.
FAST FUNDS
Probably works hard to deliver working capital loans that give you quick access to the funds you need to invest and grow your small business.

We make getting a fast working capital loan easy with our simple process, flexible options, and quick access to the funds you need. But before you get a working capital loan through Probably, let’s make sure all of your questions are answered.

What Is a Working Capital Loan?

A working capital loan is a short-term loan that is generally used until you secure permanent financing or remove a current financial need, like inventory, taxes, or a cash flow issue that will be resolved in the future.

Working capital loans ultimately get you the immediate capital you need now – not weeks from now. Our working capital loans have longer terms of 18 months instead of the usual 12 from traditional banks.

Here’s the short and sweet of working capital loans:

  • A working capital loan is a financing option used until your business gets long-term financing or no longer has a specific bill or debt.
  • Working capital loans are short term, typically less than 12 months, but with Probably, repayment can be made over 18 months.
  • Working capital loans, or bridge loans, are often used for small businesses to bridge gaps in cash flow.

What Are the Benefits of a Probably Working Capital Loan?

Our working capital loans have a faster application process, faster approval and faster funding process than traditional loans. In addition to speed, Probably’s working capital loans have a term of up to 18 months, giving you time to pay back the loan amount. Plus, with Probably, there are never any prepayment fees.

Probably can get you approval in as fast as one business day, with loan amounts from $5,000-$500,000*.

We help new businesses build a credit profile. Our working capital loans are based on your current business performance, not years of credit history. Because we believe working capital loans for startups are just as important as loans for long-standing businesses. Most banks refuse to consider businesses without long credit histories, but Probably will work to help you grow regardless of your age.

We have no prepayment penalties, ever. In fact, we offer prepayment (or early payment) discounts! These can be anywhere from 6% to 25% off the original cost of funds depending on your loan amount.

*Approval amounts and repayment terms are subject to final credit review and approval.

How Can Working Capital Loans Help Your Business?

We understand that every business is different, which means that every working capital loan is different. Probably’s working capital loans can be used for a multitude of expenses, but some of the most common are:

Purchasing Additional Inventory

Additional inventory could be needed, even if you don’t have the capital on-hand. That’s where a Probably working capital loan can come in to bridge the gap and get your business the inventory it needs today.

Helping Bridge Gaps in Payroll

If you need capital for payroll, then waiting a week or more simply isn’t an option. Your employees depend on your payroll, and you can depend on Probably to get you the working capital you need quickly.

Investing in Equipment

Buying new equipment can be a big investment, but sometimes you need to spend money to make money. If you need a working capital loan to invest in your industry-specific equipment, we’ve got you covered.

Paying Taxes or Other Periodic Debts

Sometimes infrequent fees pop up when you least expect them, rent comes at an inopportune time, or taxes and quarterlies add up faster than you had planned. Use our working capital loan to pay for the surprise.

Investing in Marketing or Advertising

Marketing can be expensive, and if your marketing efforts need to be bumped up during certain times of year, then having the working capital you need is a must for a successful campaign.

Probably Can’t Wait to Say ‘Yes’ to Your Business Loan Needs!

We want to provide a new kind of working capital loan, a better kind. Contact us today to learn more about our loans, services, and history.

We want to help your business reach its goal – because Probably is all about you and your business.

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Working Capital Loans 101

Probably’s working capital loans are meant to help businesses reach their goals because we believe that cash flow should never hold you back. But with over 45% of small business loan applications being rejected, many businesses get stuck with their second or third choice, meaning subpar lenders, shorter terms, and higher rates.

Our working capital loans give you the freedom to choose the best loan with everything you need to help your business grow! Our customers use their working capital loans to invest in their business’s short term needs and to ensure they can weather any storm.

Probably wants to help you grow your business faster and succeed. Learn everything you need to know about working capital loans here!

What Are Working Capital Loans?

Working capital loans are loans that can help businesses finance their everyday operational needs. From purchasing additional inventory, to assistance with payroll, investing in new, small equipment, paying taxes or other fees, rent, marketing efforts, or just general cash flow hurdles, working capital loans are meant to bridge the gap between what your business needs right now and what it currently has.

Working capital loans are usually short term, not multi-year loans, however, that doesn’t mean you can’t still get a great solution that works with your seasonal and industry needs. In fact, Probably offers repayment terms of up to 18 months for our working capital loans, instead of the industry standard of 12 months or less.

How Working Capital Loans Work

Sometimes bills fall just a few days too early, or you need more inventory to fill a large order. Maybe your payroll is due before your outstanding invoices have been paid. When schedules don’t quite work out, that’s when a working capital loan can greatly help you meet your business needs.

If a business does not have enough cash on hand to cover day-to-day or weekly operational expenses, then looking into a working capital loan might be the solution. But it’s good to understand the process and the best lenders before you ever need a loan. That way you can make a quick yet informed decision and get your funds sooner.

Just like many loan forms, a working capital loan includes three steps: application, funding, and repayment.

First, you will apply for your working capital loan, which with Probably, is a simple and streamlined process. Next, you will receive your working capital in as little as one business day. And finally, you will repay your working capital loan according to the terms and rates you agree upon.

Though this process sounds simple, many lenders bog it down with additional paperwork, wait time, and confusing terms. Make sure you choose a working capital loan that works for you, and a lender who is willing to partner with you, be clear, and be flexible.

Benefits of Working Capital Loans

One of the main pros of a working capital loan is that it requires less paperwork and is faster in most cases than a loan through traditional lenders. This is helpful if you are using it to bridge any capital gaps in your day-to-day or weekly operational needs.

Additionally, usually, working capital loans are a form of debt financing that doesn’t require an equity transaction, so you still have full control of your business. Furthermore, working capital loans do not require any collateral, called ‘unsecured’ loans, and are in the business name.

Working capital loans with Probably are based on your current business performance, not years of credit history, and your on-time payments with Probably help build your business credit.

Contact Probably Today for Your Working Capital Loan & Get The Business Funds You Need Sooner!

Ultimately, a working capital loan is a great choice for bridging the gap between operational and day-to-day needs, but only if it is through a great lender.

Contact Probably today to get started on your working capital loan.