Anyone who has a business knows that having working capital is very important. So if things don’t go as expected you need to get a loan. We will show you the types of working capital loans.
Many financial institutions offer long, medium and short term loans as a way to help companies reorganize their cash flow and stay in business.
Working capital is what keeps the company running, that is, the amount of money that flows through customer payments and out through payables, employee salaries, taxes, vendor payments, and so on.
Know the types of working capital loans
There are several types of loans that can be made through financial institution. Let’s meet some of them:
In that case you do not need to hire. Usually banks already release a built-in limit to your account which you can use at any time.
The disadvantage of overdraft is that interest rates are often quite abusive, with very high rates. This is one of the most expensive interest-rate working capital loans
This is a type of loan that is very similar to overdraft, but has a lower rate. A secured account is a credit limit that the bank makes available to you based on some guarantee.
These may be receivable by check, electronic credits or duplicates. You must submit these credits to the bank. They will be deducted if your checking account does not have enough balance to cover any expenses.
To get the loan you will have to go through an analysis by the bank, where it will look at your repayment capacity, your cash flow, your past credits, your ability to generate revenue, your SPC and Serasa status and to analyze other factors.
This is one of the types of working capital loans that you need to be careful about, as it requires you to have a lot of planning in order not to get in debt.
First you will need to know how much you need and when you will be able to repay all the debt. Try to use very realistic deadlines, given that unforeseen events happen.
You should do a search of the places where you could borrow. Get to know in detail the lines of credit, interest rates, payment methods, installment amount and everything else you need to know.
Do not close to deal before doing simulations, so you have control and know what you will pay. Be aware of the value of the installment. You should have enough money to pay it all month.
When you can not afford the installments, interest increases, making a snowball that will be difficult to pay
This loan is usually quick and affordable, but you need to be aware of the rates, which can be very high in this case.
Home Secured Loan
This type of credit offers very low interest rates and longer repayment terms. So if you have a good you can use it to get more advantageous loans.
The basic requirement is that you have a property in your name that will serve as collateral. Many people fail to realize dreams for lack of money, but this can be changed.
This loan is also called chattel mortgage, home refinancing or home equity.
With it you give greater security to the financial institution, with this you get bigger loans and with lower rates. Depending on the institution you may offer a property or vehicle.
One of the ways to borrow property is at Finance Everything.
How Working Capital Lending Works
To choose one of the types of working capital loans you need to go to a financial institution and apply. There they will analyze your credit and see if you can afford the debt.
Before applying for credit make some planning and make sure you will be able to pay the installments. They may be up to 30% of your monthly income.
However, it is feasible for this percentage to be lower so as not to risk compromising your budget should an unforeseen event occur.
Loan options will vary according to each type of business and industry in which it is part. In some cases you may get different conditions.
You can find monthly, quarterly, quarterly, half-yearly payment forms or even when the contract ends.