Working capital is vital for all types of businesses. It’s the cash available for the day-to-day expenses associated with running your business and is a measure of both your company’s efficiency and short term financial performance.
Cash flow plays an immense role in covering payroll, inventory, marketing campaigns and any other financial expenses that you may have while running your daily operations. To grow and expand, businesses should maintain enough operating capital.
With alternative online lenders like firstamericanmerchant.com, you won’t have any difficulty to get approved for capital loans. FAM can help you avoid preparing lots of paperwork. Also, you’ll avoid the application processing time required by traditional loan providers.
First American Merchant is a reputable and award-winning business loan provider and processor that specializes in the high risk industry. FAM is rated A+ by the BBB.
Types of Capital Loans
Here are some of the most common capital loans that you may apply for:
- Bank Overdraft Facility or Credit Line
You’ll be required to pay for the interest applicable to the amount of money overdrawn. It typically makes up 1 to 2% above the prime rate of a bank.
- Short Term Loans
These usually require a fixed interest rate and payment period. It’s possible to get a short term loan without collateral if you have a good history with your bank.
- Equity Funding via Personal Resources or Investors
Personal resources, including investment from friends or family and home equity loans, are common for these loans. This type of capital loans can be the right choice for new businesses having been in business for a long time.
- Accounts Receivable Loans
This type of capital loans is based on confirmed sales order value of your company. If you don’t have an established track record for paying debts, you may have difficulty obtaining it.
- Factoring or Advances
Factoring or advance loans value is based on future credit card receipts. This type of capital loan is the right option for businesses that accept credit card payments.
- Trade Creditor
You’ll be offered a trade credit facility by the current or potential supplier if you have an established history of large orders from them. As a rule, your company’s credit history will be thoroughly checked.
Capital loans serve as unsecured debt. That’s why you aren’t required to provide traditional collateral. A capital loan is ideal for businesses that are small, a startup or are experiencing low cash flow.