Where can a small business turn to for working capital in Canada, especially in today’s brutal economic environment? Lenders are beefing up their loan requirements, and they’re only lending to corporations and individuals with top-notch credit. However, some Canadian financial institutions are not as strict, and more understanding, when it comes to getting your small business the working capital it needs.
What Is Working Capital?
Working capital is the cash that companies need to carry out short-term things. It is this concentration on short-term things that sets apart working capital from long-term investments in R&D and fixed assets.
Working capital is the division between current liabilities and current assets. “Current”, once more, means that these things tend to go up and down in the short-term, decreasing or increasing in concert with operating activities. Current assets include inventories, accounts receivable, short-term investments, and cash. Current liabilities include a business credit line from a financial institution, accrued liabilities like taxes payable, and so forth. All of these things turn over and change on a regular basis.
Businesses don’t usually go bankrupt because they’re not profitable. They enter into bankruptcy because their funds get depleted, and they cannot keep up with their payment obligations when they come up. Growing, profitable companies can also just run out of funds, because they need larger volumes of working capital to support new investment in accounts receivable and inventories as they grow.
Working capital financing has helped many small businesses get ahead when nothing else could. It is up to you, as a competitive small business owner, to get the working capital lines you need to move your business forward. Whether you’re developing new products, launching new products, adding e-commerce features to your site, or enhancing your promotion and marketing strategy, working capital lines can help take your business to the next level.
What Are The Terms Typically Like For A Working Capital Loan?
- Loans that range from $5,000 and on up
- Extremely competitive rates
- Terms that can span up to 60 months in duration
- Approval within 48 hours from the time the application is submitted
- Funding within five to 14 business days of the receipt of signed documents
- Programs available for businesses, individuals, and professionals with poor credit
- Funds can be used for whatever purpose the businessman wants
What Are The Benefits Of Procuring Working Capital Loans?
- Start-up capital needed to start, maintain, and expand a business
- Cash flow & operational funding
- Expansion funding
- Machinery & equipment
- Loan consolidation
How Do Working Capital Loans Function?
Financial institutions that issue working capital loans and business lines of credit often do so against the security of personal guarantees or current assets. The amount of credit will depend upon a number of factors, and the financial institution’s loan officers will carefully analyze those factors. The factors include the build up of inventory, the outstanding receivables, and the work in process.
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