Why Do Small Businesses Seek Alternative Working Capital Financing?

Alternative-working-capital-financing-580x387As a business starts to grow, it’s can be difficult to keep up with the cash needs. Even with plenty of inventory or plenty of orders to fill, waiting to be paid can really put a strain on your business. Cash flow is important and businesses often seek alternative working capital loans to help cover daily expenses.

Alternative working capital financingprovides a business owner with the ability to leverage accounts receivable for financing. Often, this can help a small business fulfill a large order or help with manufacturing. Here are a few reasons why business owners turn to this type of financing.

Lower credit requirement

Since the business will be able to leverage the accounts receivable, most lenders don’t require a high credit score for approval. In fact, your credit history may not play much of a factor in funding at all. Instead, the lender will look at how much you have in accounts receives, along with the structure and customer base of your business.

Faster funding

Funding comes much faster with a working capital financing compared to bank financing. Business owners often need funds and they cannot wait a few weeks or even a few days to get cash. With most working capital loans, the application, approval and funding process are much faster than any other method of business funding.

Alternative working capital financing solves the cash flow problem

Of course, the main reason a business decides to use alternative working capital financing is cash flow. Many businesses grow faster than their cash reserves can support. This provides an issue often involving orders needing fulfilled and a lack of inventory.

With working capital funding, business owners can get the money they need fast. This allows for purchasing necessary items, manufacturing products and fulfilling orders on time.

If you need cash for your business and you cannot wait for bank financing, alternative working capital financing may be the answer. You can borrow against your accounts receivable and get the cash you need fast.

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