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Working Capital Loans

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Why Sunwise Capital

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Fast and easy one-page application. It takes less than 5 minutes to complete.

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Top Rated

Flexible financing and tailored funding solutions to your unique goals and needs.

Are You Eligible for our Working Capital Loans?

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Time in Business

1 Year Minimum

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Yearly Revenue

$200,000 +

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Loan Amounts

$10,000 to $2M

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Credit Score

680 + FICO Score

Loans for Working Capital What Are They?

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A working capital loan is a short-term business loan used to meet urgent capital requirements. They are also known as “working capital” loans because they cover operating expenses while waiting for customers to pay invoices.

This working capital solution is a short-term financing option that helps fund day-to-day operations until cash flow improves. It’s a form of borrowing money against expected future income. Think of a working capital loan as an advance payment against future revenue or expected profits.

These loans are “secured” by inventory or accounts receivable and get paid back over six months to two years.

Business owners often need help with how to get started with a new business venture.

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Many entrepreneurs need help to raise funds to get their businesses going. This challenge is where working capital loans come in handy. These loans are perfect for small businesses that need quick access to cash.

Working capital loans are available from banks, credit unions, online lenders, and local community development organizations. Many banks offer these loans without collateral; however, most banks require borrowers to provide personal guarantees.

When a loan goes into default, the bank will go after the borrower directly. But, if you qualify for a working capital loan, you won’t have to worry about personal liability.

Working capital loans come in many forms, including secured and unsecured lines of credit with loan amounts up to $2M.

Business owners should consider their operational expenses (and any unexpected expenses) before taking out a working capital loan.

Loan Program: What Is It and Why It’s Important

Working capital is the cash you must pay bills or buy inventory.

To summarize, working capital consists of four fundamental factors:

  • Cash and cash equivalents.
  • Accounts receivable (AR)
  • Inventory.
  • Accounts payable (AP)

Your working capital should cover all of the company’s short-term expenses. When calculating your working capital, you must include all costs related to running your business.

A firm’s working capital is its current assets minus current liabilities.

  • Your company’s current assets are its physical possessions.
  • Current liabilities are the bills and obligations you owe.

If a company has $100,000 worth of inventory but only owes $50,000 in debt, it has $50,000 in cash to invest in marketing campaigns, hire employees, etc. Companies often need more money to cover expenses to grow and expand.

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To What Extent Can a Business's Working Capital Be Increased?

Working capital is an integral part of any business. As a business owner, you have several ways to increase working capital.

Working Capital (2)
  1. Reduce Operating Cycles: File Invoices on Time
    Spending money on a project starts your operating cycle, and the work payment closes the capital cycle. Limiting time between these points is crucial and sending invoices weeks later will slow profits and damage cash flow.
  2. Thoroughly Credit Check New Customers
    Bad credit might affect accounts receivable. Make sure your clients can pay their bills. Depending on the order, you may check a client’s credit before signing a contract. New customers should have lower credit limits until they become reliable payers.
  3. Collect Outstanding Invoices
    For cash flow, your accounting staff must regularly track past-due accounts. Inquire about late payments. Discovering any obstacles keeping your client from paying is vital. Incentivize receivables, so customers pay on time.
  4. Cut Operational Costs
    Spend transparently. Start by breaking down your budget. Avoid company overspending. Restrict wasteful spending.
  5. Boost Sales
    More sales mean more revenue, which improves working capital. Expand sales and try new marketing channels.
  6. Manage Inventory and Avoid Stockpiling
    Unsold items in your warehouse is money languishing on the shelf. To eliminate excess inventory and maximize cash flow, time your supplies and items to arrive when needed. Inventory management software helps businesses manage this element.
  7. Lease Your Equipment
    Technology changes daily. Investing in new equipment might be costly, and leasing can help you avoid expensive, recurring technological investments.
  8. Utilize Accounts Payable
    Keeping great creditor connections can boost working capital. This strategy requires strong credit. Good credit and contacts will help you negotiate extended payment terms if you have cash flow issues.
  9. Invoicing and Reporting Transparency
    Transparency with bills and reporting helps you understand your business’s financial situation. You can quickly check your books to see how long your company takes to process an invoice or where it is in the payment queue. In this manner, you can anticipate cash flow shortfalls or unanticipated expenses.
  10. Success Requires Collaboration
    No one is an island, including corporations. Ensure your organization has reliable cash flow, with many employees responsible for ensuring positive cash flow.
  11. Use Tax Incentives
    Another wise strategy to enhance your working capital is to take advantage of any tax incentives your firm is eligible. Businesses and investors investing in their provinces or states receive benefits. Tax incentives are granted for many reasons since they help firms remain competitive.
  12. Handle Debts
    Debt management can boost working capital. This technique begins with timely debt payments to avoid penalties and fees. Set up automatic electronic payments.
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Ways To Increase Your Cash Flow

A working capital loan is an outstanding choice if you want to avoid selling company assets after executing the twelve previously mentioned strategies.

A working capital loan can be for almost any purpose, and you may also need to raise additional funds to help with working capital. You could use equity funding, which involves selling shares of ownership in the company, similar to raising money through crowdfunding.

Raising money from investors is another way to get more cash. Investors will lend you money based on how much they think your company is
A revolving line of credit is an excellent option if you want to increase your working capital without taking out a loan or incurring additional debt.

Revolving lines of credit are typically available through banks and financial institutions.

Pros and Cons of Borrowing Money for Working Capital

A working capital loan allows you to borrow funds for short periods to ensure sufficient cash flow. Interest rates vary depending on the type of loan you choose.

Pros:

  • Quick access to funds, flexible terms, and an easy application process
  • Alternative to bank lines of credit to finance new projects, expansion plans, inventory purchases, and cash flow gaps
  • Help companies grow and expand
  • It helps you pay off bills or purchase equipment before you run out of cash
  • Interest rates are lower than other forms of financing.

Cons:

  • Higher interest rates
  • Collateral or assets needed
  • Limited loan amount

Why Your Company May Need More Cash Flow

Businesses often need additional working capital during seasonal peaks and troughs.

A busy season may require additional inventory or advertising, for example.

You may need to spend on a temporary workforce or other project expenses to cover with working capital.

To purchase supplies in bulk, you’ll need more working capital.
A working capital loan allows you to cover daily operations and monthly expenses without dipping into your personal finances.

This type of loan is ideal if you’re running a seasonal business like landscaping or snow removal services.

However, your business must prove its ability to repay the loan before receiving approval.

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Funding Operational Expenses with Working Capital Finance

A working capital loan is a shortterm unsecured loan designed to provide immediate access to business money. Inventory, accounts receivables, equipment, or other assets will typically secure these loans.

Business owners should consider all available financing before applying for a loan. A working capital loan is an emergency funding tool for shortterm needs. Business owners who want to expand or purchase new equipment will benefit from a cash flow loan or need to cover cash flow issues.

Interest rates vary depending on the type of loan, and they are typically taken out during times of financial stress or if there is an urgent need to raise money quickly. Usually, you will pay back these loans within 12 months.

Working Capital (3)

Funding Option with Financial Flexibility Using Online Lenders

Loans for working capital are available from alternative lenders without pledging collateral or revealing any financial information. These loans are flexible, can be used for any purpose, and are available for businesses of all sizes.

Moreover, many kinds of working capital loans are available, and these loans are easy to obtain and offer competitive rates.

Business Cash Reserves: How It Can Fuel Operations and Growth

Cash reserves are essential to any business operation and provide a buffer against unexpected expenses or other financial setbacks.

There are many ways to invest money into your business. Some options include buying equipment, paying off debt, or expanding operations.

Set aside 10% of your annual revenue for working capital. A working capital loan is an alternative to a line of credit or a bank loan, and cash flow loans are short term loans that don’t require collateral.

Make sure you understand all terms and conditions before signing anything. Different working capital loans depend on how much money you need and what collateral you offer.

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Types of Working Capital Loans

Business owners often need short term working capital loans to cover cash flow needs until they receive payment from clients or sales. These loans include payroll advances, accounts receivable financing, equipment leasing, and factoring.

Short term business loans

You will repay a small business loan within three to six months. You can get them from various sources, including traditional banks and credit unions and non-traditional ones, such as online lenders.

Business owners repay short-term loans quickly, making them ideal for businesses looking to fund immediate expenses.

Line of Credit

A line of credit allows a company to borrow money based on its current needs. This loan allows big companies to finance large equipment or real estate purchases.

Business lines of credit are flexible loans that allow businesses to access cash quickly. If you want to grow your company while maintaining the satisfaction of your current clientele, a line of credit (LOC) is a viable alternative to consider. There are many different kinds of business lines of credit, including secured and unsecured.

You can expand your firm with the help of a line of credit while maintaining a healthy cash flow. Business lines of credit are available through banks or other financial institutions, and a business owner can receive cash advances without paying interest.

Business owners should consider how much money they will need before deciding whether to apply for a loan. You can secure a business line with collateral, such as equipment or inventory, and the interest rates will vary depending on the loan and terms.

Merchant Cash Advances

Business Cash Advances allow merchants to obtain funds against future sales. You secure an MCA with future accounts receivable. The MCAs are quick ways to access funds without paying interest.

The Merchant Cash Advance will have a factor rate; instead of interest, you pay a flat fee.

Many MCAs are available, including ones requiring a credit check, and are a fast way to raise money for your business.

They’re usually expensive; however, they do not require a lot of paperwork and can fund on the same day with an online lender like Sunwise Capital.

Merchant Cash Advances are significant for new businesses that still need an established track record. Usually, as long as your time in business is six months (3 months for some lenders), you’ll qualify. It is a simple application process and easy access to funding.

You repay these loans over several months with an automatic daily payment that varies with your daily batches based on credit card sales.

Merchant cash advances are short term loans that allow merchants to pay off their bills faster.

Repayment is usually made with a percentage of sales or via an automatic withdrawal.

SBA loans

They are available to small businesses that qualify under federal guidelines.

Qualifying for a Small Business Administration loan is challenging, especially if you need good credit or enough cash reserves.

  • An SBA loan is only sometimes the best option for shortterm financing needs.
  • Your credit score will determine whether or not you qualify for an SBA loan.
  • Qualifying for an SBA loan is challenging, especially if you need good credit or more collateral.
  • An SBA loan doesn’t always provide immediate cash flow.

SBA 7(a) loan

SBA loans are outstanding.

They’re easy to qualify for, but restrictions and repayment terms are limited. SBA loans are outstanding if you’re starting a new company and don’t want to take on debt. The SBA caps interest rates and the repayment term is ten years.

Secured loans

Secured business loans require collateral, which makes them less risky for lenders. The lender will take a security interest in the collateral, protecting it from default. Lenders often offer lower interest rates than unsecured loans.

Unsecured loans

An unsecured working capital loan is typically more expensive than a secured loan. Unsecured loans are more flexible because there’s no collateral required, and there are fewer restrictions on when you make payments. However, this flexibility comes at a price: higher interest rates.

The capital you need reflects how much you plan to spend. Consider taking out multiple smaller loans instead of one large loan. Strategically, you can spread the cost and avoid high monthly payments.

Invoice factoring

Invoice financing (or factoring) is a financing option when a company sells its invoices to another company at a discount. The buyer assumes the risk of nonpayment, and the business owner gets their money once the client pays the invoice. Factoring companies offer this type of financing because they can quickly provide the funds needed to pay bills.

Factoring allows companies to receive immediate funding on unpaid invoices. Factoring companies buy invoices from businesses and then lend them money against those invoices.

Invoice factoring is a way to raise capital quickly from an unpaid invoice. Companies typically sell 80%95% of their invoices to an invoice factoring company, and companies can expect to see a return on investment within 30 days.

There are pros and cons to invoice factoring. Before signing any agreements, read the fine print.

Accounts Receivable Financing

Another standard short-term working capital loan is Accounts Receivable Financing (ARF). ARF allows businesses to borrow against their outstanding invoices. Banks and credit unions usually offer this type of loan.

Equipment Leasing

Equipment Leasing is similar to Accounts Receivable Financing. Instead of borrowing against invoices, however, equipment leasing involves borrowing against machinery, vehicles, office furniture, etc.

Payroll Advances

Payroll Advances are short-term business financing made to employers who need immediate cash to meet payroll obligations. Companies use payroll advances to fund payroll expenses.

When applying for these loans, be prepared to show proof of financial stability. Banks and credit unions require applicants to submit copies of recent tax returns, bank statements, profit/loss statements, balance sheets, and any other documents that demonstrate the applicant’s ability to repay the loan.

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Best Working Capital Loans

Online lenders like Sunwise Capital require a one-page application and the last three months of business bank statements.

Pre-Qualify Online

Minimum requirements to apply:

  • Time in Business 2 Year Minimum
  • Yearly revenue $200,000 +
  • Monthly revenue $15,000 minimum
  • Loan Amounts of $10,000 to $2M
  • Minimum Credit Score Requirement 600 + FICO Score
  • Transparent rates and fee structure
  • Working capital loans are typically paid back with loan terms over 6 -12 months

Fast & Easy Application and Approval Process

The application submission process is fast and easy, unlike commercial banking. The application takes less than five minutes, and you can be approved in minutes and funded in hours.

Minimum/maximum loan amounts vary depending on the type of financing.

Traditional loans from banks or credit unions require a minimum equity contribution of 10% of a project’s total cost and a personal guarantee (PG). All loan applications from a traditional bank require the PG to qualify. All owners must sign a Personal Guaranty Agreement.

Sunwise Capital will provide funding without the traditional PG.

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Receive Same-Day Business Capital Loans

Finding Sources of Working Capital Funding
Working Capital Loans are short term loans that allow businesses to pay bills or purchase inventory.

There are many different kinds of working capital financing available.
A business owner should research all options before choosing which option works best.

Dedicated Funding Specialists

At Sunwise Capital, you work directly with an underwriter, not a salesperson. Our team will find the right funding solution for your business, and we provide personalized service and support every step of the way.

This commitment means we can help you find the most competitive rate and best terms possible. Our sole focus is to make it easy for you to secure the financing you need when you need them.

Our entire team understands the importance of having access to cash flow as soon as possible. That’s why we’re committed to getting you funded fast!

Our process is simple:

1. Fill out the brief one-page application
2. Get approved in minutes
3. Get approved in hours
4. Receive funds the same day
5. Pay Bills
6. Repeat

Get Started Today

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Funding for Your Company’s Working Capital Needs

Working capital financing is usually short-term, making it ideal for businesses that need money immediately. Online lenders like Sunwise Capital are more accessible to apply for and fund than banks or other financial institutions.

Sunwise Capital customizes each business loan specifically for the business, allowing us to offer the lowest interest rates and the best terms possible.

When you apply for working capital, we’ll ask questions about your business to determine if this is the best option.

If you decide to pursue a working capital loan, you should receive an approval within 24 hours.

After approval, we’ll send you a detailed proposal outlining everything you need to know about the loan. You can view the loan details at any time.

Once you approve the loan, we’ll deposit the funds into your checking account the next business day.

The entire process takes less than two days from start to finish.

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FAQ: Working Capital Loans

A Working Capital Loan Is What?

A working capital loan aims to give your company enough money to keep operating while paying off debts.

It’s also known as a “short-term” or “current” line of credit because it’s meant to be repaid within a few months.

Why Do I Need a Working Capital Loan?

Business owners use a working capital loan to cover payroll, rent, utilities, supplies, and marketing costs. They may also use this loan to buy new equipment or expand their operations.

How Much Do I Qualify for Applying for a Working Capital Loan?

Several factors determine how much money you can borrow, including your industry, location, and debt load.

How to Calculate Working Capital

Calculating working capital is relatively straightforward.

First, add all your accounts receivable (money owed by customers) and subtract any outstanding bills. Next, add up all accounts payable (money owed to vendors).

Finally, divide the total accounts receivable by the entire accounts payable. This formula shows how much cash you should set aside to cover these two categories.

What methods exist for boosting a firm’s available cash on hand?

There are three ways to increase working capital:

1. Increase sales
2. Improve cash flow
3. Decrease fixed costs

How much do you need?

Your working capital line of credit should be at most 10% of your company’s annual revenues, but the specifics will determine this.

What is the procedure for obtaining a working capital loan?

Sunwise Capital requires a one-page application and the last three months of business bank statements.

Your lender may require collateral to secure the loan, which means something of value you pledge as security for repayment.

Collateral options include:

  • Equipment
  • Inventory
  • Accounts receivable
  • Loans against property
  • Other assets

Can I get a working capital loan if my business isn’t profitable yet?

Yes! Many companies start with little or no profit. Payments are usually made daily, weekly, or monthly automatically via an electronic transfer.

Which is better, a working capital loan or a term loan?

When a business needs additional funds to grow its operations, it seeks a term loan. Owners repay long-term loans over a specific period.

Working capital loans are short-term loans, and you can expect to repay these immediately. A company will use them when it needs extra cash to pay down existing debt or purchase inventory.

A Guide to Using a Working Capital Loan

Use a working capital loan to repay existing debt, finance growth, or purchase inventory.
You can repay the loan using one of the following methods:

  • Payments made directly from your bank account
  • Automated electronic transfers
  • Cash advances from your personal checking account

Are You Likely to Qualify?

You’ll likely qualify for a business loan if you have a solid track record of paying back previous loans.

However, it’s important to note that lenders don’t always look at past performance.

Can You Afford the Payment?

You will need to prove that you can afford to make the payment if you intend to use the loan to settle other outstanding debts. Most online lenders will determine this by analyzing your bank statements.

To qualify, you must show monthly income to cover the interest and principal payments.

Will Your Vendors Offer You Payment Terms?

Some businesses offer vendors terms like “net 30” or “net 45.”

Vendors who do this expect payment within 30 days or 45 days after receiving the invoice.

Most vendors won’t accept anything less than net 60. That means they want payment within 60 days of receiving the invoice, but they may extend the deadline if you ask them to.

Working capital loans: what are the advantages?

Do you need or benefit from a working capital loan?

  • Increased cash flow
  • Reduced borrowing costs
  • Ability to buy inventory without having to sell stock
  • Flexibility to meet unexpected expenses

Should you get a loan for working capital?

A working capital loan is a fantastic choice for many small businesses, and it gives you access to immediate funding while allowing you to continue operating during the process. But before you apply, consider these questions:

  • Do you have a solid financial history?
  • Have you ever taken out a business loan before?
  • Do you know how much you can borrow?
  • Do you have any outstanding bills?
  • Does your company have any significant assets you can sell to help fund the loan?
  • Does your business have a good credit rating?

Can you answer “yes” to all of these questions?

If so, a working capital loan might be just what you need to keep growing your business.

Get a Working Capital Loan Today with Sunwise Capital

Working capital loans from Sunwise Capital are an excellent option for small businesses that want to expand their operations without paying high-interest rates and need quick funding. They’re beneficial for startups because they allow you to borrow money from banks and credit unions at low rates, so you won’t have to worry about paying exorbitant fees.

The main drawback to these types of loans is that they require collateral, meaning that you must pledge assets like real estate or equipment as security for the loan. However, suppose you can secure a line of credit through a bank or credit union. In that case, you’ll be able to use the funds to fund your startup without worrying about the costs associated with borrowing from private lenders.

Get qualified today for a working capital loan and get same-day funding.

Sunwise Capital offers customized financing solutions for businesses. Repayment terms vary based on the amount borrowed, and Sunwise Capital provides flexible payment plans to repay your loan quickly without stretching yourself too thin.

You’ll receive a decision within 24 hours.

If you’d like more information about our loans, contact us online or call us at 888-456-9223.

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