3 Working Capital Loan Myths

working capital loans
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It may not be quite as sexy as Greek mythology with its muscly heroes, damsels in distress and gods thunderbolting everything in sight, but working capital loans* have their own mythology.

For those who aren’t familiar, a working capital loan is an unsecured business loan. If you were to get one through Direct Capital, you’d be able to get between $50,000 and $150,000 in financing fairly quickly. While the programs are designed to help those with average to poor credit histories but strong sales or credit card histories, they can be used by more or less any business.

Working capital loans can also be used for everything from marketing to hiring to paying your taxes, so it can fit a wide variety of needs. In short, aside from the challenge of making the payments and not biting off more than you can chew, there’s not a whole lot of downside here.

But there are myths here that do a disservice to working capital loans. Director of Client Services Scott Lynch told me about three of the most common and helped shed a little light on what’s real and what isn’t when it comes to working capital loans. All Lynch’s quotes are in…well, quotes.

3 Working Capital Myths

  1. “It’s too expensive.” “Expense is all relative. If you’re getting the ROI that exceeds the cost of capital AND the benefit of more foot traffic, that decision might be prudent for your business.”
  2. “It takes too long.” “Usually the approval to fund process takes 5-7 business days. If you’re working on a SBA or true secured bank loan, expect 3-5 weeks for underwriting and another 2-4 weeks before funding.” That’s hardly unreasonable, in other words.
  3. “I can’t afford it.” “When taking on additional debt, businesses MUST weigh out the risk-reward properly. If your banking on increased revenues and business because of a cash infusion, you must also calculate the increased customer traffic into your decision making process.”

As with any kind of financing, you’re going to want to examine your finances ahead of time and be cautious, but a working capital loan can really help you out. If you’re interested in learning more, call Direct Capital today.

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*Working capital not available in the following states: AK, DE, ND, VT