Our Top 6 Choices of Fast Working Capital for Small Businesses

May 2022

If you have a small business, by now you must know that profits are not realized immediately. This can make day-to-day expenses difficult to keep up with. But with a fast-working capital loan, you can get the boost you need to pay necessary bills without having to lose a percentage of your own company.

In order to find the best way to expand your operations, we have provided you with our top 6 fast working capital options that you need to be looking at.

What Is A Working Capital Loan?

In case you don’t know, a working capital loan is a loan that any business can take to finance their everyday operations. These loans provide working capital to cover short-term operational needs, so you don’t need to recur to buying long-term assets and investments.

How Can Working Capital Benefit Your Operations?

These sorts of loans are meant to help your business in the short term, so you can still grow your daily assets and have access to cash when you need it the most. You can use working capital to hire more staff, make sure payroll is covered, cover the costs for maintenance or repairs, add inventory to your sock, or even maintain operations when your business is on a low season, just to make a few things.

How Much Working Capital Do You Need?

The amount of working capital your small business needs to run smoothly will depend on the type of business it is, the operating cycle it’s on, and the goals for the growth of the company.

Working capital is calculated as current assets or current liabilities. You can find these on your balance sheet as a line item. Current assets can include cash, accounts receivable, marketable securities, and other liquid assets. Current liabilities are the financial obligations you have due within one year, such as income taxes, short-term debt, and/or accounts payable.

Our Choices for Working Capital:

1. Online:

You can now find expedited access to fast funding for small businesses online, more than ever before. Online funders are virtually always going to be your fastest funding source, once you accept an offer you can receive funds within two business days or less. By picking the right funder, you can expect a simplified loan application process, with more flexible credit history requirements than those imposed by big banks.

A good way to ensure your funder is a good one, check reviews and scores of the company at Better Business Bureau, also making sure they have a real address in the country where you live.

Additionally, the easiest way to find an alternative funder is to get pre-approved by One Park Financial, which then gives you access to a network of more than 30 funders and funding experts who will help you quickly sort through your options.

2. Peer-to-peer:

If you have a solid credit history of 700 or above, you can try peer-to-peer funding. These platforms connect small business owners with funders - such as individual investors, hedge fund managers, or investment banks.

It’s important to mention though, that while most of these platforms do deliver funding faster than traditional banks, you should check the FAQs and terms. The speed of an individual offer will depend on where it originates, and if it's a large investment bank, it’s unlikely you'll see fast cash availability.

3. Micro-funders:

Like peer-to-peer, this method’s speed depends on who is offering the loan. These loans are designed for up to $50,000. Many microloans can be community-based organizations, bigger non-profits, individual investors, or companies (ranging in size from small to big corporations).

These loans may come with an offer of free consulting to small business owners, often from retired business executives or financial consultants. This is not the best option for business owners who need super-fast access to funds, but typically a very affordable option.

4. Personal loan:

A personal loan is the fastest way to access funding since it’s unlikely that a family member or friend will insist on reviewing your credit history before extending you a loan.

Nonetheless, we've all heard the horror stories of family relationships or friendships gone bad due to unpaid loans. Choosing another financing option is often preferable.

5. Invoice Financing/Factoring:

It's not uncommon for small businesses to wait 30-90 days for invoices to be paid. When business is slow, those unpaid invoices can cause significant cash flow problems. An invoice financing loan provides expedited access to funds. There are two options for invoice financing: a factoring loan and a discount loan.

With factoring, the funder gives the borrower a portion of the amount due on invoices. The funder then collects the full invoice amount, plus fees and interest. With invoice discounting, the funder loans the business owner a percentage of the invoice, but the business owner is responsible for collecting the payment and paying back the loan along with fees and interest.

Learn more about invoice factoring and if it is the right choice for your small business?

6. Merchant Cash Advances (MCA):

This is a particularly great option for a small business owner who needs a fast infusion of funds. Merchant cash advances are typically easy to qualify for since you don't need a perfect credit history. Usually, all you need is a business bank account.

An MCA is an advance on money that you will earn in the future. Once received, you pay back the advance via a set percentage of the daily or weekly revenues. For small businesses that see daily transactions, such as restaurants or stores, this can provide an easy way to access funds quickly. The funders will look at a business and its receipts to determine whether to approve the advance, so small business owners with low credit ratings are often able to get approved for a merchant cash advance.

According to a recent Small Business Credit Survey (SBCS) by Federal Reserve Banks, 79% of those who applied for a merchant cash advance were approved, as opposed to 62% of the applicants for a business loan. Additionally, the SBCS report found that the chances of being approved for an MCA by an online funder were significantly higher than gaining a loan approval from a bank or credit union. And while money from a bank loan may not be available for a month or more, according to a study by Harvard Business School, MCA funds are typically deposited into the business owner's account within 72 hours.

How Can You Easily Access Small Business Funding?

Getting a hold of funding that will aid your daily operations has never been easier. With One Park Financial, you can pre-qualify in just three minutes! All you need to show is that your business has been running for at least three months, and earning at least $7,500 in gross monthly revenue.

Ready to get started? Fill out our form and one of our funding experts will find the best option for you and your business!