Working capital is essential to the success of all businesses. Startups, franchises, medical providers, large corporations, and everything in between need working capital. However, as traditional channels tighten lending requirements, finding a reliable source of working capital that is accessible, affordable, and flexible can be challenging.
The Versatility of Working Capital
Traditional loans are typically designed for a single purpose, such as real estate, equipment, or refinancing. Working capital is multipurpose, so businesses can use it for anything they need without penalty, including:
- Improved purchasing power
- Upgrading equipment
- Hiring employees
- Covering unexpected or time-sensitive costs
- Paying down existing debt
- Business opportunities
- Purchasing inventory
- Managing seasonal sales rushes
Sources of Working Capital
Businesses cannot secure working capital from traditional lenders without taking on debt or putting up collateral. At the same time, many businesses do not want to place debt on the books, and more do not have the owned assets to put up as collateral. Fortunately, there are sources of working capital that are very accessible, without the prohibitively high requirements of traditional lenders.
- Merchant Cash Advances: A merchant cash advance (MCA) is an injection of working capital that does not place any debt on the balance sheet. An MCA is structured around sales, so it does not require collateral or impact credit ratings. Unlike traditional loans with fixed monthly payments, a merchant cash advance has a balance that is repaid from a small percentage of credit card sales, giving businesses the flexibility they need.
- Unsecured Lines of Credit: Unsecured lines of credit are designed for both new and existing businesses. What makes these lines of credit unsecured is that they do not have any collateral requirements, so businesses of all types can get the working capital they need to maintain and grow their operations.
- Accounts Receivable Financing: Businesses often have low working capital reserves because their revenue is tied up in unpaid customer invoices. When a business issues invoices with payment windows of 30, 60, or 90 days, revenue can become staggered, and gaps in cash flow occur. Accounts receivable financing turns unpaid invoices into capital within 24 hours without placing debt on the books. The net result is that businesses can boost cash flow and build up working capital reserves without resorting to traditional loans.
GM Capital Group offers fast and accessible working capital solutions that can be tailored to the needs of your business. To get the working capital you need, contact our team today.