The terminology used to describe business matters may be confusing at first. Especially if you are a business newbie, learning the significance of these terms is important. An example of an important business term is “working capital”.
Working Capital in Brief
Every business has day-to-day expenses such as payroll, electricity bills, supplies, and rent, among others. Working capital is the amount of cash a business has on hand to cover these day-to-day business expenses.
Working capital can be a positive or negative number. It is calculated by subtracting your liabilities from your assets. If the resulting number is negative, or too low, you might conclude that a working capital loan may be needed.
Examples of Working Capital Loans
Here are a few common ways to finance shortfalls in working capital:
• Working Capital Loans. These are generally short-term loans specifically designed to smooth out temporary working capital shortfalls. The repayment period is often short, often between 6 to 18 months. Both secured and unsecured types can be considered.
• Lines of Credit. A line of credit is a sum of money that you can tap into as your business situation dictates. You get approval for a line of credit ahead of time. Then, as needed, you can use it.
• Merchant Cash Advances. A merchant cash advance can be an excellent way to keep working capital positive. In this arrangement, a lump-sum payment is made to you. It is gradually and incrementally paid off by your business’s future credit card sales. In essence, you’re essentially selling your future sales at a slight discount.
Seek Expert Assistance
DAL Commercial Capital invites you to work with them in learning about and obtaining a working capital loan. Give them a call today to explore your options, including their merchant cash advance program for small businesses.