One characteristic of an effective entrepreneur is the ability to multi-task. Successfully running a small business requires managing many different revolving gears.
Working capital is the grease that helps prevent those gears from grinding to a halt. Therefore, this brings us to two important questions: What is working capital, and how do you get working capital loans for small businesses?
Technically, working capital is the (hopefully positive) difference between your business’s current assets and your current liabilities. You need working capital to pay business debts and also to provide you with a margin of protection for short-term creditors. Having positive working capital should ideally be achieved all year long in order to cover payroll and purchase necessary inventory.
So how do you figure out what your working capital needs are? Two words: Operating Cycle. When you analyze inventory, accounts receivable and accounts payable cycles in regards to days, you are using an operating cycle. This means that you focus on three things: Number of days required to collect on an account; average number of days to sell a product; and the average number of days it took to pay your supplier invoice.
Don’t panic! There are many small businesses that can’t use financing from accounts payable alone to finance their operating cycles. If you find yourself in the (not uncommon) situation of falling short of your short-term working capital needs, you do have options. There are working capital loans for small businesses that can help your business through difficult times.
For working capital loan amounts up to $725,000 ARF Financial does not require collateral and offers flexible terms up to 18 months. Small business owners can often receive the loans in 7 to 10 working days, and the interest is tax deductible.
If you would like more information on working capital loans for small businesses, contact the finance experts at ARF Financial today. We’re here to help!