Is a Working Capital Loan Right for My Business?

Business owners that call, email or visit us in-person often ask our Funding Experts “is a working capital loan right for my business?”

As you might expect, this isn’t a question for which we can provide a simple “yes” or “no” – and neither can anyone else, because every business is unique, and has its own distinct financial profile, marketplace footprint, and future potential.

Yet with this being said, we can share some information about working capital loans that many business owners find surprising, because it’s an aspect that they haven’t considered beforehand.

It’s this: while some business owners apply for a working capital loan when they need to cover a temporary cash flow shortage, there are many others who recognize that the funds can be used to invest in their business – and take it to the next level.

For example, business owners can use their working capital loan to add a profitable new revenue stream (e.g. add a new product, service or solution), upgrade their IT or telecommunications infrastructure (e.g. launch a call center to better serve customers), renovate their office space so that they attract customers and talented employees, and the list goes on.

The point is that business owners who receive one of our working capital loans are NOT obligated to use the funds to pay for expenses that we (or anyone else for that matter) deems appropriate. We believe that the best, and frankly, the only people who are qualified to determine what a business needs to invest in is the business owner.

On the other end of this spectrum are banks and credit unions; both of which typically place strict limitations on how business loan funds can be used. For example, business owners who apply for an inventory loan cannot re-allocate those funds to a marketing campaign if they realize that it’s a wiser, more profitable investment. How they use the loan will be written into the agreement terms, and any deviation will represent a default.

What’s more, there are some worthy investments that banks and credit unions will simply not allow in the first place. For example, the owner of a shipping company who applies for a business loan to expand their fleet of trucks will be denied if their bank or credit union believes that rising gas costs will reduce margins and reduce demand. However, that same business owner who successfully applies for a working capital loan through Mulligan Funding will be free to invest it in whatever way he or she deems fit – including purchasing the trucks. Again, we don’t feel that our role is to suddenly position ourselves as our customers’ business advisor.

So, if you’re among the hundreds of thousands of business owners each year who ask themselves “is a working capital loan right for my business?”, remember that your answer isn’t just about the expenses you want to cover – it’s about the INVESTMENTS you want to make. And that distinction could ultimately make all the difference in the long-term success of your thriving business!

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.