Just like it sounds, working capital is a source of funding which allows a business to meet its operational business requirements on a daily basis. It is primarily used to cover business expenses, as well as the cost of operating a business in a given environment. Growth capital, on the other hand, is used primarily to service loans and advances which are taken out for the purpose of helping a business grow. This might mean buying new equipment, taking on more employees, purchasing more inventory, or whatever it takes to get to the next level. Here are some strategies you can use to acquire the growth capital you need in order to expand your business and realize your long-term objectives.
Sources for Growth Capital
One of the most historically popular sources for growth capital is a traditional lending institution such as a bank. Such lenders will always have the lowest interest rates and can provide several financing products to help with business growth. Unfortunately, the approval rate for such conventional loans has become relatively low, so you’ll need to consider other options for growth capital as well.
The Small Business Administration offers term loans and lines of credit which are commonly used for the financing of construction for new facilities and expansion of existing ones. Growth capital can also be secured through asset-based loans from various sources, and these will depend on your ability to produce collateral which has marketable value in the business world.
Alternative lenders can also provide funding for growth capital, and you’ll have a much better chance of being approved by an alternative lender than you would by a traditional bank. Loans from alternative lenders will typically cost you more because the lender assumes a greater risk than a traditional bank does, but the speed and access to funding are far greater through an alternative lender than through other sources. There is also a variety of financial products that you can take advantage of from financial alternative lenders so that you can put the money to use in achieving your growth objectives.
Does your small business require capital?
Having both working capital and growth capital is essential for the success of any business, and if your small business is in need of one or the other, we may be able to provide assistance. Contact us at Norris Commercial Capital so we can discuss some opportunities which may be available to you.