If you are not familiar with working capital loans, these loans are provided by payment processing companies in order to help businesses cover overhead costs or expand their company. While these loans are often available to businesses of all sizes, they are often most beneficial for small business owners. In fact, in many ways, working capital loans can be a far better option for small businesses than traditional business loans. Continue reading below to learn more about three of the ways in which working capital loans can be a good choice for small businesses.
#1: No Or Bad Credit Does Not Need To Stop You From Qualifying
One of the biggest issues that many small business owners face when trying to secure a traditional business loan is that either their business does not have a sufficient credit history or they actually have a bad credit score. With working capital loans, this does not need to prevent you from qualifying for the funds you need. This is because lenders base the amount of your working capital loan on the amount of your recent sales rather than on your credit history. Since these loans are provided directly through payment processors, these lenders will already have access to all of the sales information they need to determine whether or not you qualify.
#2: Repayment Of Working Capital Loans Is Very Simple
Traditional loans require you to repay a specific amount each month until the loan has been paid in full. This may not be a problem some months, but months where you experience slower sales can result in you struggling to pay your loan payment. This is not a problem with working capital loans since your loan payment is collected by taking a small percentage of each payment you process. This means that you don't need to make one large lump sum payment each month. This also means that you never have to worry about making a payment when sales are slow since you only pay towards the loan when you actively have sales being processed.
#3: Working Capital Loans Often Come With A Fixed Fee
Traditional interest rates can end up costing you a small fortune over the life of your loan. That is why the flat fee that is attached to working capital loans in place of traditional interest is often the more beneficial option. Another advantage to choosing a loan with a fixed fee is that you will always know just how much your loan is going to cost you in the end.
Share29 April 2022
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