working capital

5 Ways to Get Access to Working Capital (and Fast!)

Does your business need a fast cash injection? The good news? You have options. Remember: Businesses rely heavily on lenders, so don’t be hesitant to go to one.

Nearly 75 percent of small business funding comes from lenders, according to the Small Business Administration (SBA).

Clearly, you have options to avoid cash flow issues, a common problem small businesses face (82 percent of businesses that fail do so because they had cash flow issues).

If you want cash and you want it now, consider these five ways to quickly access working capital.

Get a business line of credit

Functioning much like a credit card, a business line of credit gives you access to actual cash at APRs that are potentially lower than credit cards (depending on your credit score).

The lender sets the amount you can borrow, and you only pay interest on the funds you withdraw. This means you can use only as much as you need and don’t have to agree to a concrete amount to borrow.

Perhaps the best thing about a business line of credit is that you can be approved in as little as one day. And you can use that money for any business purpose. Once you get the cash, put it to work.

Related: 6 Successful Dealmakers Provide Top Tips on Raising Capital

Apply for a term loan

No longer do you have to walk into a bank and deliver a presentation about your business to obtain a term loan. Times have changed—and you can be approved online for a term loan in as little as two days.

With a term loan, you generally need to meet certain requirements when it comes to credit score, annual revenue and years of business (these vary among lenders, so do ask).  

A term loan delivers you a lump sum of working capital to be used for business activity. A payment structure is agreed upon with the lender and you make monthly payments until the loan is paid off in full. 

Take out a personal loan

Wait! Can you use a personal loan for business purposes? The better question is: will anyone stop you? Nope.

A personal loan is a good idea if the amount of money you require isn’t too high, you’re confident you can repay on time, and/or you’re worried about needing collateral to get a business loan. The main benefit of personal loans is that they typically have reasonable APRs (sometimes even very low with good credit).

Personal loans can also be approved in as little as a day. That equals cash at your company’s doorstep before you get your morning coffee tomorrow.

Obtain invoice financing

Have a client that hasn’t paid you yet? Stay cool. According to the National Federation of Independent Business, 64 percent of small business have invoices that have gone unpaid for 60 days or more.

Hopefully, you’re only hearing crickets when you’re exploring your local park and your customers will eventually pay you. In the meantime, you have a solution: it’s called invoice financing.

James Richardson, a chartered accountant, sums up what invoice financing is nicely: It’s a third party buying your invoices for a fee (usually around 3 percent plus a set percentage for each week the invoice is unpaid).

Funding approval from an invoice financing company can take as little as 24 hours, and you typically get 50 to 90 percent of the total invoice amount upfront—giving you the cash you need to run your business.

Ask friends, family or colleagues for cash

According to the Global Entrepreneurship Monitor, 5 percent of U.S. adults have provided startup funding for a business in a given year. The vast majority are giving money to people they know.

Sure, getting money from people close to you may be tricky. You certainly don’t want money to ruin a relationship. But it’s still a viable option—as long as you and the people loaning you money clearly communicate expectations and a repayment structure. You should also be ready to pitch them like you would a lender. Your friends and family are going to want to see your business has potential.

Another strategy is to ask a group of people, as a large loan from one person may stress the relationship.

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Get the cash you need now

There’s no need to panic. Any of these five methods could deliver the working capital you need within 48 hours.

Carefully analyze which method offers your business the best value and potential for growth. As long as you are thorough and resourceful, you can get your hands on the cash you need today to put your business in a better position tomorrow.

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