At Mulligan Funding all of our Working Capital Financing options are fast and simple. You can get an approval within hours and receive funds within days. We have a variety of lending programs to meet your business needs. Small business working capital loans can be the perfect solution!
In today’s economy, it’s nearly impossible for most small businesses to obtain the working capital financing they need from banks. It’s been most of our clients' previous experience that the only way they could get a loan from a bank was to prove that they didn’t need one! That’s both insulting and illogical. If you didn’t need a business loan why would you be applying for one in the first place?
Below are the basic requirements for all of our loans:
How does that compare to banks and other traditional lending sources?
Mulligan Funding Loans
Traditional Bank Loans
Possible uses for small business working capital loans include but aren’t limited to the following:
Don't allow the traditional banking process and restrictions to constrict your business growth and success. Being a business owner often requires being innovative and thinking outside of the box in order to compete and succeed. Obtaining working capital financing for your business from rigid and extremely conservative lenders can be a daunting and time consuming task, that more often than not ends in failure. Don't allow their business model to control or limit your business goals. We believe in entrepreneurs. You work hard in your business and we here at Mulligan Funding work hard to partner with business owners across the country to achieve their financial goals. We look for reasons to say "Yes", when others say no.
Obtaining financing for your business doesn't have to be difficult! Our Working Capital Loans are fast and simple. For more information, contact one of our friendly and knowledgeable financing experts today. Small business capital doesn't have to be hard to get.
Give us a call at (844) 336-6639
Working Capital Loans – Weighing Out the Pros and Cons
Definition of a Working Capital Loan
Your business’s working capital is equivalent to the amount of cash you can access quickly, otherwise known as cash liquidity. Working capital is required by every business to pay its various operating expenses. Such business expenses would include but not be limited to taxes, payroll, workman's comp, vendors and other overhead for its day-to-day operations. An insufficient amount of working capital can easily result in slowed growth and in some cases even the failure of an otherwise sound business.
In accounting terms, working capital is the difference between your business’s current assets and its current liabilities. In everyday terminology, working capital is what your customers owe you plus any inventory and cash that you have, minus what you owe your suppliers, employees etc. If current assets are less than current liabilities, your business is running a working capital deficit and will have trouble funding day-to-day expenditures. A business can be very profitable but still be short on working capital due to their customers slow invoice payments, or one of their accounts declaring bankruptcy. A working capital loan can be a life-saver in those instances.
Working Capital Sources
Growing businesses need continuing access to working capital financing to fund further growth and maintain solvency. This can become a stumbling block for most business owners at some point in their growth though because of tight bank restrictions on traditional small business loans. Business capital loans are essential to a thriving business. But fortunately business owners have several other options to obtain working capital financing. Some examples would be factoring, installment credit for purchases, invoice discounting, merchant cash advance, business line of credit, business loans for women, commercial paper, letter of credit etc. But you'd probably be surprised to know the most commonly used source business funding.
The Most Common Source of Working Capital Loans for Small Businesses
The #1 place that small business owners turn to meet their working capital financing needs is to their personal assets! Although this financial solution may be the easiest, it's rarely the best solution. All too often, the money "loaned" to the company never or rarely gets paid back.
Accessing personal assets to fund your short term business needs usually creates the potential for significant long term liability. This strategy can result in less money working for you in other investments such as financial instruments, property or other physical assets that have the potential to appreciate over time. This in turn can result in a substantial shortfall in the investment portfolio that you're counting on to fund your retirement income goals.
Additionally, draining your personal assets can result in a major crisis in the event of an unforeseen downturn, disruption or added expense to your business income. If you invade your personal assets for day to day expenses, what will you do in an emergency? And don't forget, if there is a downturn in your business profits, it will be much harder to access a small business loan for your business at that time. You will be considered a much higher risk because of your situation. It's much wiser to protect your reserves until absolutely needed.
Unlike procuring a small business loan with SBA guidelines, this type of alternative business funding is meant to address expenses related to the daily operation of a business. These working capital loans for small business are not meant to replace longer term business financing. Small business capital shouldn't be restricted or constricted. You as the owner know best how to utilize the proceeds of your loan.
Small business owners seeking to obtain financing through traditional sources such as banks or credit unions find that there are severe restrictions applied to the use of proceeds of their loan. Unlike traditional lending sources, alternative business funding sources allow almost unlimited freedom to use the proceeds of their small business loan any way that the business owner chooses to strengthen or grow their business. These small business loans are designed to infuse your business with the capital necessary to maintain your operations or to increase your opportunities to create more revenue.
Possible uses for a working capital loan would include but not be limited to the following:
Having this type of flexibility allows you to utilize the funds from your loan virtually any way that you need to. This is a huge advantage over traditional business financing options offered by banks. This freedom provides you with the ability to meet any difficulties or opportunities that may arise. Even a business that looks great on a P&L statement can find themselves in trouble if they have sizable fixed assets and no liquidity.
One of the most common strains on a business these days is slow paying customers or clients. It's entirely possible to be sitting on a large amount of account receivables that go beyond your stated terms for invoicing, while having to meet shorter deadlines with your own suppliers and payroll obligations.
Fast Business Loans
If you've never worked with an alternative business funding source before, you're in for a pleasant surprise! If you are used to dealing with banks to acquire a small business loan, than you're probably expecting a lengthy application and approval process with a high degree of certainty that you will not get approved for a loan. Welcome to the world of working capital loans!
When dealing with a reputable lending source such as Mulligan Funding for your business financing needs, you can count on a simple one page application. And instead of the approval process taking weeks or even months like it would with a bank, the average approval takes place within hours and the business funding is within days. Contrary to popular belief, fast business loans really do exist!
Short Term Business Loans
Imagine having access to a working capital loan with small affordable daily payments that only last an average of 8-10 months, with no pre-payment penalty. There are no large monthly payments to come up with every month. The debt will be retired quickly not requiring a long term repayment obligation. Also, in the even that you find having additional capital would be helpful, there's an option to "top-up" your loan once it's reduced by 50% of the amount scheduled to be paid back. Short term business loans address your business's financial needs without huge long term payment obligations.
Unsecured Business Loans
Working capital loans usually don't require collateral in the traditional sense. Banks and traditional lenders often require specific collateral that they assign to a business loan. They may use equipment, property, receivables etc. to secure their interest in the loan. This can hamper the business owners' ability to liquidate an asset assigned as security to a bank loan. Although there will be a corporate guarantee required to procure the loan, no specific collateral will be assigned to a working capital loan. Unsecured business loans provide much more freedom to make daily decisions that positively affect your business.
Working Capital Financing vs Equity Capital Financing
Equity capital refers to the portion of a company’s equity that will be obtained by trading stock to a shareholder for cash or an equivalent item of capital value. Equity comprises the nominal values of all equity issued (that is, the sum of their “par values”). Share capital can simply be defined as the sum of capital (cash or other /assets) the company has received from investors for its shares.
A working capital loan allows the business owner to maintain 100% ownership of their company. While this strategy may bring in needed dollars, there is a huge tradeoff for that money. The investor or investment firm will obviously be entitled to a portion of your company stock and profits but they will also require substantial input to daily operations and capital expenditures for as long as they are invested with you. There will likely be a substantial profit for the investor (and cost for you) when you wish to purchase your stock back. Small business working capital loans allow you to run your business however you choose without outside interference, and no long term financial obligations.
Higher Re-payment Rates than Banks
Unsecured business loans have a higher risk level for lenders. Therefore the rates they charge for their money is usually higher than those charged for secured business loans. Additionally, many businesses that fail to meet strict banking guidelines from tradition lending sources, find that they do qualify for unsecured business funding from alternative business funding sources. But the same logic applies, with greater risk comes greater financial reward for the lender. Because the rates are somewhat higher than traditional sources, every effort should be made to make certain that the loan can be utilized to the fullest extent possible to add profit and stability to the company borrowing the funds.
Shorter Term Business Loans
Are short term business loans an advantage or disadvantage? That depends on your business needs and capital requirements. These types of loans aren't structured to accommodate long-term business goals or comprehensive business projects that will need higher capital investments with longer terms of repayment. While working capital loans are ideal for a short term influx of capital to address important financial needs or goals, they certainly wouldn't be the proper financial solution to pay off a balloon note due on a mortgage. Also, there are times that you only need capital for a short amount of time. It doesn’t make sense to access someone else's money for longer than you can create a return on invest or solve a problem with the funds.
After reviewing the advantages and disadvantage of working capital loans, you should have a good idea if this type of working capital financing makes sense for you and your business. If you're looking for fast, short term business loans that provide maximum flexibility it would be difficult to find better a small business loan than a working capital loan from Mulligan Funding. Contact us today and have a no obligation, informative conversation with one of our financial specialists to see if this type of loan is a good fit for your business funding needs.