How a working capital loan can work for you and your business

Running a small business comes with its fair share of challenges, especially when it comes to managing finances. Whether you are looking to expand your operations, invest in new equipment, or simply cover day-to-day expenses, having access to sufficient working capital is crucial for the success and growth of your business. 

“Having an adequate working capital balance keeps your business operating without fail, as your time as a business owner is spent on growing your business and not on looking for emergency financing,” said Entrepreneur Fund’s Director of Business Finance Michael Lattery.   

A working capital loan is one of the most powerful tools available to small business owners. These loans provide access to cash that can be used to fund a variety of projects and investments that would otherwise be out of reach due to limited funds.

However, simply obtaining a working capital loan is not enough. To truly benefit from it, you need to understand how to make it work for you.

That’s where the Entrepreneur Fund comes in.

Not only are we a leader in providing working capital loans based on the unique needs of your business, but we pair your loan with our strategic advising services to ensure you’re getting the most out of your loan. Our team can work with you to fine tune your cash flow projections, navigate emergencies, create a customized plan for growth and much more.

By leveraging working capital loans and the advising EFund pairs with them, small business owners can make major investments in their businesses and position themselves for growth.

“The Entrepreneur Fund was really great to work with from the beginning. They helped us with a small loan for working capital, and also some loans for purchasing equipment. What was unique was their local representation and the fact that it wasn’t just about securing a loan, but really about advising our business. We’re very passionate about automation and the product we make, but we do need help with business advising. Their advice has been really spot on with what we need to grow as a company.”

Jason Wobbema, owner of Advanced Machine Guarding Solutions in Hibbing, Minnesota.

Five ways a working capital loan can work for your business

1. Managing Cash Flow

Working capital loans provide immediate access to funds, helping to bridge the gap between outgoing expenses and incoming revenue. This ensures that your business can meet its financial obligations, pay suppliers, and maintain a steady cash flow.

2. Seizing Growth Opportunities

Working capital loans can provide the necessary funds to invest in marketing campaigns, purchase inventory, upgrade equipment, or expand your business operations. This infusion of capital enables you to seize growth opportunities and stay ahead of the competition.

3. Managing Seasonal Fluctuations

Many small businesses in our region experience seasonal fluctuations in sales and demand. During slow seasons, it can be challenging to cover fixed costs and maintain operations. Working capital loans offer a flexible solution, allowing you to bridge the gap during lean periods and ensure business continuity.

However, Lattery says, “There is only one sure-fire way to address seasonal cash flow issues, and that is planning ahead so you can prevent them. Projections will allow you to know and fund your working capital needs in advance.”

For help with determining your seasonal working capital needs, contact your EFund advisor.

4. Addressing Unexpected Expenses

Emergencies and unexpected expenses are an unfortunate reality for small business owners. Whether it's a sudden repair, equipment failure, or a global crisis like the COVID-19 pandemic, having access to working capital loans can help you navigate through these challenging times. It provides a safety net, ensuring that your business can continue operating and recover swiftly from unexpected setbacks.

5. Building Credit History

Taking out a working capital loan and making timely repayments can help build your business credit history. Establishing a positive credit history is crucial for future financing needs, such as larger loans or lines of credit. A strong credit history increases your chances of securing favorable terms and rates in the future, especially when working with traditional lenders.

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If you're a small business owner looking to fuel growth, address cash flow gaps, or navigate through unforeseen circumstances, working capital loans can be a valuable tool to propel your business forward.

Reach out to your EFund advisor today or contact us to learn more about how a working capital loan could benefit your business.