What Are The Best Financing Options To Use When I Need Working Capital?

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Currently, there are different financial products in the market focused on business owners who need working capital such as term loans, lines of credit, and cash advances, here we explain each of them and when you should use them.

A business owner may face adversities such as emergencies, whether it is having to invest in inventory purchases when cash flow is low, paying payroll, or taking advantage of business opportunities. But how do you know which is the best financing option for these types of cases?

In this article, we show you the best options:

WHAT IS A FUTURE SALES ADVANCE OR MCA?

This financial product is not a loan, but the purchase of a percentage of future sales to be received in exchange for a cost that the lender establishes based on the level of risk presented by the business.
You can get from 50% to 150% of the monthly income reflected in the business bank account.

This financial product is ideal when:

  • The use of the funds is clear and will bring a quick return on investment.
  • The business needs quick capital to continue operations.

If you wish to apply for a Merchant Cash Advance, click here.

WHAT IS A TERM LOAN?

This is a loan that must be repaid on a fixed term and with fixed installments that can be monthly or weekly. This is a type of loan that supports a business need.

It can be short or medium-term and vary from 6 to 24 months. As its name indicates, it has a fixed payment and frequency, i.e., it does not change.

This financial product is ideal when:

  • Cash flow is low
  • Looking for quick working capital

WHAT IS A LINE OF CREDIT AND WHEN SHOULD IT BE USED?

This product is a type of commercial financing called revolving credit, which means you only pay for what you use. Once you’ve paid it off, it’s available to you again.

This financial product is ideal for when:

  • You have the need for working capital for new projects, temporary payroll, hiring new personnel, or investment in marketing.
  • You need a backup in case of emergencies.

Remember that with us you can check your options without upfront fees and without hurting your credit score.