You can think of working capital as the money that is available for the everyday running of the business. For many small to medium (SME) businesses it is a vital measurement of business health. Typically it is used to cover things like wages, inventory marketing and any other expenses which a business incurs day-to-day within normal operation. Businesses should ensure they always have a healthy working capital balance to ensure they have the capacity to fund existing business and grow, as required. Find the best working capital loan for your business today.
What is a working capital loan?
Put very simply, you can calculate your working capital by subtracting your current assets from your current liabilities. Here is a handy excel document that can help you calculate your working capital.
One of the biggest challenges for small businesses in Australia right now is obtaining business loans for working capital. Typically the major banks require you to have these loans as secured with expensive guarantees or collateral. Increasingly banks require small businesses to have large personal guarantees, sometimes even requiring that the own puts up their family home as collateral. This kind of secured loans for small business has been a huge road block to small businesses being able to fulfill their potential but thankfully the rise of alternative online business lenders mean unsecured working capital loans are easier to get now.
An unsecured working capital loan will allow you to continue to run your business even if you can't cover all the costs right now. This means that through the unsecured business loan you buy yourself time to generate extra revenue, letting your business reach its potential.
How do I calculate working capital?
An unsecured business loan for working capital can be one of the best ways to ensure your business reaches its full potential. Because these types of loans are often simple, fast and easy to understand many small or medium business owners prefer to use them. If your business is experiencing some temporary cash flows issues it may be the perfect solution for you.
Using an online business lender like this one means you will avoid the long wait times and endless amounts of paper work that you will have to go through to apply at a bank.