Working capital is the lifeblood of all businesses—it provides the ability to support and grow a healthy cash flow. However, what many business owners don’t realize is that working capital is all around them. So, let’s take a look at a few easy sources of working capital.
First off, did you know that your credit card receipts are a source of working capital? Many small business lenders purchase an amount of your “future” credit card receipts, and this can be turned into working capital.
If your business has account receivables with other businesses that too can be turned into a quick and easy source of working capital: your business sells the outstanding receivables to the lender and the lender gives your business cash for working capital.
Do you own equipment for your business? The equipment can be turned into working capital through a small business loan called a “sale and leaseback”. You sell your equipment to the lender for cash, you then lease the equipment back from the lender for a monthly payment and at the end of the lease, your business owns the equipment again.
Many different types of business credit card are available, and some can be used to provide working capital. You can help conserve working capital by using credit instead of cash for items your business needs.
Another source of working capital is Micro Loans. The SBA backs these quick decision loans. The lender will also look at the viability of your business in order to approve you for working capital.
Locating funding sources for all these types of working capital is easy. You can read more about these types of working capital below:
|Capital Type||Capital Type Definition|
|Micro Loans||These are loans typically funded from $5,000 to $35,000 and used for any business purpose.|
|Credit Card Receipt Advances||A cash advance loan up to a $100,000 that’s secured against your regular occurring monthly merchant credit receipts. The loan is paid back via automatic deduction from future credit card transactions.|
|Sell Account Receivables||Your account receivables are purchased at a small discount and you get cash now.|
|Business Credit Cards||These loans are unsecured and usually do not exceed $25,000. Loan limits are based on your personal credit score and not your time in business.|
|Sale and Leaseback||Sale of an asset for cash, with a contract to lease the asset back from the funding source purchasing the asset. Sales tax can be an issue here with this type of funding.|