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What do you use working capital for?

A short-term business loan that helps businesses cover their day-to-day operations is referred to as a working capital loan. They usually have a short term and are not used when businesses need financing for larger purchases.

All business owners need access to working capital financing in order to support their business. It is crucial to its cash flow and ultimately the success of the business.

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What are the benefits of a working capital loan?

A working capital loan provides businesses a good financing solution for when they need cash quickly.

Lenders can quickly provide funding to small businesses without having to pledge assets as collateral or a having to fill out a ton of paperwork.

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How do you get a business cash advance?

With many different working capital loan options, Orumfy can help you choose which small business loans are right for your business.

Choosing between a short-term business loan, merchant cash advance, invoice financing or lines of credit is now quick and easy.

See what financing options you qualify for in seconds simply by creating your account.

OVERVIEW

A working capital loan provides businesses with financing without requiring assets as collateral.

Funding is quick and you can have immediate access to cash.

Use the cash for day-to-day operations or for any other cash flow needs.

WHAT YOU NEED TO KNOW

How much working capital does my business need?

As business owners the first question you need to ask yourself before taking on any type of short-term financing is what will I be using the cash for?

With many different types of business loans you can choose from, knowing the reasons why you are taking on the funding will help determine which option is best for you.

Taking on more funding than you need can overburden your businesses cash flow while not borrowing enough can make the outcome of the project fail.

Calculate how much cash will it take to achieve your business goal first.

Then you have to evaluate how much you can afford to pay towards that goal without overburdening the businesses cash flow.

Orumfy has designed a Short-Term Loan calculator to help you make your decision.

What should I consider when applying for a small business working capital loan?

When applying for a working capital loan business owners need to consider what they will be using the funds for as well as what financing options are available to them.

How the cash will be used will determine what type of short-term loan would be best.

For example if you need quick access to cash, but don’t need it in one lump sum?

Lines of credit will be the best option here.

In the event you do need a lump sum amount of cash immediately a merchant cash advance would be best.

If your cash flow is in trouble because of slow paying accounts receivable, then you might want to consider invoice financing.

Orumfy’s platform evaluates your business and will help you make the right choice when taking on a working capital loan.

How do you prepare for a small business working capital loan?.

After you have decided how much funding your business needs, and which financing option is best, business owners need to decide which lenders to work with.

Using traditional lenders such as banks or credit unions is one option.

Keep in mind the application process is much longer requiring a lot more paperwork than when dealing with online lenders.

Credit score plays a big role when dealing with traditional lenders.

Banks tend to look for a minimum credit score of 640.

Non-traditional lenders such as an online lender, will work with you with a credit score of 550 and above.

Non-traditional lenders uses different criteria when approving a loan application.

Time in business, monthly average deposits and negative days on your bank statements play a much larger role.

In most cases all you need for online lenders is a one-page application, 3 months of bank statements and a valid form of ID such as driver’s license.

Orumfy made that process even easier, and you can do it all online in just a few minutes.

Orumy’s online platform can pre-qualify your business in seconds, and connect you with national funding companies offering the best rates and terms.

What are different types of working capital?

A working capital loan comes in many different options. Depending on what you are using the cash for will determine which one is best for you.

Here is a brief description of the short-term financing options available to you.

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Short Term Business Loans are an effective choice for business owners in need of financing options for immediate working capital or managing cash flow.

  • Repayment terms range from 3 to 18 months.
  • Most lenders offer daily or weekly payments.
  • With Orumfy businesses can also qualify for a biweekly payment.
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Business Line Of Credit offers small business owners the flexibility and access to funding that regular term loans don’t.

Use the cash when you need it and only pay interest on the amount used and not the entire credit limit available to you as you would with a credit card.

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Merchant Cash Advance is a type of business financing that is based on the volume of monthly credit card transactions processed by small businesses.

This program is an effective choice for many small business owners because it offers a payback schedule that is based on a flat percentage of the credit and debit card sales.

With Orumfy businesses can get approved and funded under 24Hrs.

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Invoice Financing is an important financing option for any business that bills their clients by sending an invoice and needs short-term working capital.

It works by selling your invoice to an invoice factoring company that pays you a large portion of the invoice amount upfront, and the remaining amount minus the interest is released when the invoice is settled.

How does a working capital loan work?

Once the Lender has approved your loan application funding happens almost immediately

Payments are made according to the agreed terms of the loan.

Orumfy has made the application process quick and simple and it only take a few minutes online.

Create your free account today and start growing your business now.

How it Works
Step 1
Create a free account with Orumfy and immediately see how much you are pre-qualified for
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I can do it on mobile!!!

Step 2
Complete the application process and provide the necessary documents
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Not a lot of paperwork?
Great !

Step 3
We analyze your business, and present you with multiple options from lenders, best suited for your business
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Can’t wait!

Step 4
Once the offer is accepted an agreement is signed by all parties
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WOW! That was quick!

Step 5
Money is wired to your banks account within 24 Hrs
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Thanks Orumfy!

How it works
  1. Create a free account with Orumfy and immediately see how much you are pre-qualified for
  2. Complete the application process and provide the necessary documents
  3. We analyze your business, and present you with multiple options from lenders, best suited for your business
  4. Once the offer is accepted an agreement is signed by all parties
  5. Money is wired to your banks account within 24 Hrs
Orumfy can help any small to medium-sized businesses obtain working capital. lets get started

FAQ

What's the difference between working capital and cash flow?

The difference between working capital and cash flow is that the businesses working capital is the money that is used in the daily operations of the business.

The current assets minus current liabilities is used to determine your small businesses net working capital.

Cash flow is the amount of cash being transferred in and out of the business directly affecting its liquidity.

Why might I consider a working capital loan for my business?

A working capital loan is a great solution when you need cash quickly.

In the event of a cash flow crunch, waiting on a slow paying accounts receivable, or to cover upcoming monthly payments working capital financing can provide the necessary funding.

Making timely payments toward your short-term financial debt can significantly help raise your credit score.

Having a high credit score will help you get better terms and lower interest rates and qualify for long-term loans.

What's the difference between a working capital loan and a term loan?

A working capital loan is a short-term financial option that lets business owners borrow money for their business without the burden of taking on long-term debt.

Examples of a working capital loan are invoice factoring, business line of credit and cash advance.

Term loans are long-term loans that provide small businesses capital for their long term goals.

One of the main differences between a working capital loan and term loans is that term loans will require assets pledged as collateral.

Examples of term loans are equipment financing and leasing loans and SBA Loans.

SBA Loans provide a long-term solution for small businesses that are looking to grow their business offering higher amounts of funding with much lower rates.

Lenders like to participate in this program because the small business administration guarantees up to 90% of the loan.

How to calculate your working capital ratio?

The “working capital ratio” also known as the “businesses current ratio” and is the liquidity ratio that measures the small businesses ability to pay its short and long-term debt with its current assets.

A lender will look at the ratio to analyze the liquidity of the company.

The ratio is calculated by dividing current assets by current liabilities.

A lower ratio demonstrates to lenders that current assets are being used to generate maximum possible revenue.

Need advice or have questions? Call us at (877) WHY - ORUM or contact us here.