The Emergency Working Capital Solution

Sometimes things just happen and when they do, you may need an emergency business loan to help you through this difficult time. Whether your issue is related to the coronavirus pandemic significantly impacting your business or some other disaster has come up, the good news is that there are solutions available to help you out. By reading on, you can get a look at some of the options that you have available to you so that you can find the working capital solution that works best for your small business.

How Lack of Working Capital Can Affect Your Business

Many small business owners struggle with working capital at some point during their business. This is something that can have a lasting impact on the future of your business if you let it keep you down without finding the funding solutions to help. In this section, you can learn about how lack of capital can impact your business and help you understand why seeking emergency working capital solutions are so important.

Impacts Daily Operations

Without working capital, your daily operations can be significantly impacted. You may not have the funds that you need to make it through the day, forcing you to find ways that can save you money while still operating as efficiently as possible. If this is a problem that continues on, it can mean trouble for your business. For instance, maybe you don’t have the working capital that you need to buy the necessary inventory to keep your business going.

Hurts Morale

When your business runs out of working capital, this can impact the employees by them losing benefits or may not get paid on time. If employees lose their benefits or don’t get the money that they are relying on to live, this leads to a loss of morale in the company. You won’t have loyalty to your company and productivity will decline. You may also lose your best employees to the competition.

Impedes Growth

In order to grow your business, you need to have the working capital to invest back into the company. If you don’t have the working capital to create new products or expand to other locations, your business will become stagnant. This will cause customers to seek out other businesses that can better meet their needs, causing you to lose business.

Harder to Find Investors

Investors can be assets to you, especially if you want to develop a new line of products or otherwise expand your business. However, if your business is struggling with a lack of working capital, this can discourage investors from working with you as you will be viewed as a risky investment.

Emergency Working Capital Options for Businesses Impacted by the Coronavirus

A major issue that businesses are currently facing is the impact of the coronavirus pandemic on their business. Between shutdowns and limited capacity regulations, many businesses have felt the impact this pandemic caused their business. This section will take a close look at the different emergency funding solutions available to you if your business was impacted by the pandemic.

SBA Express Loans

When the CARES Act was passed in March 2020, it made changes to the SBA Express Loans program. Previously, this program would take up to 45 days for businesses to get approval but under the CARES Act, this funding does offer a faster turnaround so that you can get the money that you need faster. You could get a turnaround of between 36 and 72 hours. With this option, you can get funding of up to $350,000 for terms up to 10 years. You may be required to put up collateral.

SBA Disaster Loans

This was a program that businesses originally turned to during the pandemic, but it has been around long before this crisis began. The goal of this program is to help businesses through emergency situations. This program offers funding of up to $2,000,000 and terms for up to 30 years. You can expect an interest rate of about 3.75% with these loans. It’s important to know that with these loans, it could take a little longer to get approval and your funds.

EIDL Cash Advance

For businesses that just need a little help until they get approval from another financing option, this cash advance gives businesses $10,000 with minimal requirements and without the need for repayment. This can be an excellent option to consider to help you out as you wait for approval from other funding sources.

Coronavirus Alternative Working Capital Loans

Some industries during this time were considered to be “high-risk”, such as restaurants or businesses that rely on a lot of foot traffic to succeed. This is a working capital option that helps small business owners that may be considered high risk but need working capital as soon as possible. You don’t have to go through a lot of paperwork to get these loans, they have minimal credit score requirements, and you can get your funding relatively quickly. You can get funding for between $10,000 and $5,000,000 with terms of between 1 and 5 years.

Alternative Finance Options for Small Businesses

There are alternative finance options for emergency working capital for businesses that need it. There are plenty of options that you can consider for your emergency working capital needs. If you need solutions fast, alternative financing options can be the perfect solutions for your needs. This section will take a closer look at these financing options so that you can make an informed decision as to which one is the best option for your needs.

Merchant Cash Advance

What’s appealing about this option is that it’s a lump sum cash advance that you pay back with your future profits. The advance gets paid back through an ACH (Automatic Clearing House) payment, where debits can occur daily. You need to have a steady business to accommodate these loans, otherwise, you may end up in greater financial trouble.

A merchant cash advance is generally considered to be the last resort because it’s important that you have regular payments so that you don’t default on your loan. You can get your money within days with this option, meaning that you get the funding that you need fast. These are also typically unsecured loans, so there’s no need to put up collateral.

This option does have higher interest rates but can be the perfect solution if you are running out of options for finding the working capital that your business needs to stay afloat. Just be sure that you are bringing in enough business on a regular basis to pay back the loan according to your payment schedule.

Business Credit Card

If you have a business credit card already or can get one quickly, this is an option that you can consider. Depending on the balance that you have currently on the card and what your credit limit is, you may be able to use this option as emergency funding to get the working capital that you need. This is a temporary solution that you can use while you are waiting for funding to go through. You should pay off what you use for capital as soon as possible because otherwise, you are just accruing more debt by only making the minimum monthly payments. This additional debt can make it harder for your business to overcome this temporary crisis.

If you don’t already have a business credit card, it can be pretty easy to apply for one. But you should be aware that you will generally have to wait about a week to be able to start using this card. There are some downsides to this approach. One downside is that you may not have the funds to cover what you need to use the credit card and you risk going further into debt. The advance of a business credit card is that you can build up your business credit score by paying off your card on time.

Short-Term Loan

Short-term loans are among the most popular loan options for small businesses who are looking for emergency working capital. This option doesn’t have a very complicated application process and you can sometimes get your money in as little as 24 hours. It also has a short-term, truncated repayment schedule. This means that you can pay back the loan in either a few months or up to a year.

This is a great option that gets you fast and easy money when you need it for whatever you need it for. That’s why this is such an attractive option for small businesses. Whether you need to add inventory or put it towards some emergency expense, this allows you the opportunity to get the funding that you need. However, it’s important to remember that these loans have higher interest rates so it’s a good idea to pay them off as soon as possible to avoid going further into debt.

Invoice Factoring

This may not be an option that you are familiar with. With invoice factoring, you can get quick funding for your business using pending invoices from your customers. You do have to prove that these invoices are still unpaid before you can take advantage of this option. If you can prove that you have unpaid invoices, you can sell the accounts receivable to the factoring company for upfront money. This company will then give you a cash advance for this money, which typically equals about 80% of the value of the invoices. The company will then pay you the rest of the invoice, minus the mutually agreed upon fee when your customer pays your invoice.

If you need money fast, this could be a good option to consider. You do have to consider the fact that you could lose money depending on the fees you need to pay the company and when the customer pays you your money. For a quick lump sum of cash, this could give you a great solution to get you over a short period of difficulty.

Installment Loan

Another option is an installment loan. This type of loan is very similar to the type of loan that you get from traditional lenders. These loans have fixed payments that are made for the term of the loan, with principal and interest. The repayment term is longer than what you would get with an option like a merchant cash advance. This type of loan is a secured loan, so you will need to put up collateral to qualify.

This is another common option for businesses that need emergency working capital. One reason why this is a popular choice is that the application process is quick and easy and will be processed much quicker than with traditional loans. This means that your business can get the money that it needs potentially within days of their application. These also have fixed interest rates, meaning that your business won’t have any surprises and will know exactly what to expect with the monthly payments.

Line of Credit

For businesses that have been around for a decent amount of time, getting an option like a line of credit could be a good idea. This is a unique option for a couple of reasons. For one thing, you only borrow what you need if you don’t require the entire amount right away. If you don’t borrow from the entire amount of credit, you only make payments based on the money that you do borrow from. Once you pay all that back, your line of credit will be replenished and can be used again as needed.

This is a great solution that lets you fix one problem, such as if you need working capital to add new inventory. Then, after you pay this money back you can use it for another issue that you may have. You can also borrow for different expenses as needed, but this will require you to make higher payments to pay the money back. You can get a short-term option that just gives you enough help to get by, offering a smaller amount of credit.

Why Alternative Funding is the Right Choice for You

Alternative funding can be the best solution for you, particularly if you are struggling to get funding from traditional lenders. It’s very common for small businesses to have a time where they are having issues with working capital, which is why they try to find solutions to get the emergency working capital that they need to overcome these problems. Alternative funding can be a good approach because they have so many different options that can help you in your specific situation. Whether you need to purchase new equipment or to buy inventory, there are a wide variety of solutions that can help your business get the funding that you need.

You can get the short-term solutions that you are looking for with alternative funding. But what makes these options so good for small businesses? There are actually plenty of benefits that you can get when you choose alternative funding. First of all, it can be easier for small businesses to get the funding that they need. From more lenient requirements to a simple application process, you can have a much easier time getting the funding that you need from alternative lenders.

Alternative business funding is a quicker process, meaning that you can get the funding that you need faster. Part of this is because the application process is much simpler, so there’s less paperwork for the lender to go through when approving or denying loans. This leads to businesses getting their money faster than with traditional lenders. In some cases, you can get your money within 72 hours of applying for funding.

Alternative funding is also great because of its flexibility. You can find options that give you more flexibility in how you spend your money rather than having strict restrictions on where you can only spend the money in certain ways. You can spend the money as you need it without worrying about these strict rules. You also get flexible payment options in some cases, allowing you to find a solution that will work for you.

As you can see, alternative funding can be the perfect solution for small businesses that are in desperate need of emergency working capital. You get a quick and painless application process, where you can get the funding that your business needs fast. This can be exactly what you need when you are trying to get emergency working capital to keep your business going, even if you are going through a difficult period.

Conclusion

It can be overwhelming for your business if you find yourself in a situation where you need to find emergency funding. The good news is that there are alternative finance solutions that can help you out and overcome these difficult times that you are currently facing in your business. Understanding your options can help you better decide on which solutions will work best for your small business.