Why Does My Small Business Need Working Capital?

Working Capital Loans - 2 Min Read

As a small business owner, the last thing you need is a lecture (or a blog post!) telling you that your revenues need to exceed your expenses. There’s nothing insightful about this, and it’s certainly not “advice”.

However, the vast majority of small business owners don’t start out generating profits from day one. Instead, they strategically take on debt – usually in the form of a business loan – so they can put their business in a position where it is consistently or, even better, increasingly in a positive cash flow situation. Or in simpler terms: revenues and profits keep rising, both in terms of dollars and percentages, year after year.

And that’s where working capital can make all the difference to your small business. Why? Because without working capital, you may never able to put your business in the enviable above-noted position – because, as the old saying goes, “it takes money to make money”. In this context, working capital is the first part of that equation. Your profits down the road are the latter.

So, in light of the above, what can your small business do with working capital? While every small business is unique, below are some common purchases and investments that have helped our customers elevate to the next level:

  • Marketing & Advertising

Your small business may have clear and compelling advantages over your larger competitors, including responsiveness, personal care, and in some cases, even price positions as well (due to lower overhead costs). Investing in marketing and advertising campaigns can help you communicate these advantages to your targeted customers, attract them into your business, and turn them into loyal, long-term fans.

  • New Staff Members

As a small business owner you can’t afford to start recruiting as if you were a multinational enterprise (though hopefully that will be the case in a few years’ time!). For now, however, you may find it both necessary and profitable to hire key new staff members or specialists, such as sales or technical professionals. Working capital will give you the cash you need to bring them on board.

  • Additional Inventory

You may discover that your customers are open to purchasing additional products from you – which, unfortunately, you don’t carry. Working capital can be used to purchase the inventory you need to fulfill this added demand. Or, you may simply need to stock up on products so that your marketing and advertising campaigns (as noted above) lead to happy customers, rather than frustrated ones.

The Bottom Line

As you can see, working capital isn’t just about “making more money than you spend”. For most small businesses, it’s about putting themselves in a position to be successful.

At Mulligan Funding, we proudly provide small business owners like you with transparent working capital loans. Unlike bank loans, you don’t need to secure your working capital loan with collateral, you can spend the funds in any way that you choose (such as those suggested above), and you don’t need perfect credit or years of credit history.

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.