One of the difficulties that entrepreneurs face is getting enough working capital to keep the business running. Have you been through this? So, know that there is a solution and it can be simpler than you might think.
So it’s time to understand how a working capital loan works.
This is a way to generate cash quickly for your company so that all financial commitments are honored. After all, until your business reaches the point of equilibrium, it is natural to go through a few squeezes for lack of money.
So, read on to understand what the working capital loan is, how it works and why it is worth it.
What is a working capital loan?
Working capital is the money you need to use on a daily basis to honor your business commitments. It can be used to pay employees, buy goods or raw materials, pay taxes and even deal with certain unforeseen events that require an extra amount.
The problem is that many companies have not yet reached a financial balance and this makes it difficult to bear all the expenses that arise. After all, in addition to the planned costs, you have to face the unforeseen. That’s where you need to avail of loans.
It is a good thing that there is a type of loan aimed precisely at restoring or increasing working capital. This is the ideal solution to deal with everyday expenses so that your business does not run the risk of weakening.
How does the working capital loan work?
The main detail of this type of loan is that it is only made for legal entities. So, your company needs to be active and properly formalized. When applying for this loan, you will be asked to present certain documents, such as the CPF and the partners’ identity card, CNPJ, the social contract and the income statements of previous years. Depending on the case, you may need to submit some additional documents, right?
Unlike other types of loans, you are not required to say what the purpose of the money you are borrowing is for. However, it is important to have common sense and use this capital correctly and efficiently.
How to use working capital correctly and efficiently?
The purpose of this loan is not to enable investment in the business structure that will only bring returns in the medium and long term. Keep in mind that working capital should be used for everyday business expenses. Therefore, the extra money you raise in this operation will serve to increase working capital and will be used to take care of these various expenses.
For example, the amount borrowed can be used to honor the company’s financial commitments in those less profitable periods of the year, keeping employees’ salaries and payments to suppliers up to date.
In addition, this loan can be useful to help you build up your inventory before some period of more intense movement. You can also take advantage of these resources to buy goods or raw materials with special discounts that suppliers can offer.
Finally, it is clear that this amount will be well used when covering unexpected expenses, such as special marketing campaigns, additional expenses related to hiring new employees or the costs of moving to another location.
Why is the working capital loan worth it?
Since the working capital loan was created with this business need in mind, it is much more interesting than an ordinary loan. Check out some advantages.
Very competitive interest rates
It is possible to hire this type of loan at more interesting rates when you offer some asset as collateral. After all, financing tends to have a high-interest rate because of the risk that the institution runs when giving money.
On the other hand, offering a guarantee reduces the risk for the creditor, who, in turn, is able to charge a more friendly interest rate. So, find out about this possibility when applying for your loan, okay?
Take this opportunity!
Agility in hiring
When you go to an office or bank to apply for a loan, you usually have to deal with the heavy traffic in the city center, lack of parking spaces and the delay in service. Not to mention the time you fail to dedicate to your business.
However, there are institutions that offer working capital loans with incredible agility. If you choose the right company to make your request, you can resolve everything through an online environment. Dealing with this type of subject without leaving home is great, isn’t it?
Ease of dealing with financial problems
Any business is subject to unforeseen circumstances. However, if your company is still new, you may not be able to handle it yet and you will be in a serious squeeze.
If working capital is lacking, difficulties will arise that may cause delays in payments and, as a result, distrust on the part of the market. Therefore, the working capital loan will help keep your business safe.
Shorter deadlines for solving short-term problems
Some types of loans limit installment amounts, so you are forced to pay monthly installments for a very long period. And the more time you spend paying off a loan, the higher your interest expense will be.
In the case of the working capital loan, it was designed precisely to meet the needs of the business in the short term. This means that you do not need to be limited because of a monthly expense that can last for years.
As this article has shown, it is possible to raise capital quickly without having to pay absurd interest. Thus, you can honor your company’s commitments and even invest to increase productivity and, as a result, profit. Therefore, the working capital loan can be your great ally in strengthening your business.
If you are interested in this great solution and want to take some more questions, contact us right now!