Working capital is the lifeblood of every business. Without it, you would only be able to sustain your current operation, because the cash flowing through the business would only just cover your obligations, with no room to innovate, expand, or invest in building clientele. Unfortunately, finding a way to access enough capital to make those moves can be tough since your volume of business might not always be proportional to your cash on hand, especially if you rely on invoice billing. There are many ways to finance working capital, but one of the simplest and most effective is with a traditional term loan.

Secured vs. Unsecured Loans

The first thing to decide is whether you are looking for a secured loan, which you will need to provide collateral for or an unsecured one. Putting up collateral lowers your interest rate significantly, and it can also let you dictate the loan terms to some extent. Secured working capital loans that rely on real estate assets can be between six months and ten years, depending on the lender and the property’s value.

Secured loans also tend to get approved for higher values, since the collateral offsets the lender’s risk. Of course, the reason loans that don’t require collateral are so popular is that putting that asset up for the loan involves accepting additional risk on the borrower’s part.

When To Apply for Your Loan

If you have a decent business credit score and an asset for collateral, it’s not hard to get approval. The best part is, these loans are designed for short-term needs, so you get a decision either way in a few days to a week. That lets you close quickly and put the money to work.

Since you do not have a long wait for approval, you should apply close to the time you need the cash. If you have a seasonal demand swing or a big order coming in, the fast turnaround on the loan will let you use your working capital to generate profits that let you pay down the balance early.

Cash Flow Management With Secured Loans

If you get into a cycle of financing your operations with a loan that you then pay off early, you can move beyond accessing capital when you need it and into long-term operational planning that includes both your cash flow and your extra capital for expansion. This way, you get the chance to make truly long-term plans, with the capital to make sure you can complete each project.