Types Of Working Capital - Opportunities Do Exist In A Difficult Business Lending Environment

In today's restricted lending environment, many types of working capital that was available only a few short years ago have been severely curtailed. Many of the larger commercial banks are "sitting on their hands" taking advantage of the cheap money provided to them under different government programs and not necessarily lending this money back out to the small businesses that have acute working capital needs.

Despite the fact the government has increased its support for the Small Business Administration or SBA, this option is still extremely hard to qualify for given today's lending restrictions. Because many businesses are considered "credit challenged" due to the downturn, it has become increasingly difficult to replace lost lines of working capital cash that banks were previously clamoring to sign businesses up for.

However, there are a few types of working capital that may be available, even if you or your business has less than perfect business or personal credit. The key to many of these loans is to have a decent credit card processing volume, a decent cash flow that is provable with bank statements, or both. These so-called merchant cash advances, which advance an amount against your future credit card receivables, are hallmarked by high rates and fees.

On the flip side, these cash advances are short term loans that last no longer than 12 months, with payments being made daily out of credit card proceeds. They also can handle difficult credit situations that many banks and business loan companies would not even consider. Keep in mind you may need to switch processors and/or pay upfront fees as a condition of receiving this type of working capital cash.

There is also a new, more cost effective option called a credit card receivable loan that can handle businesses with a predominantly cash or credit income stream and features rates that can be as much as 50% less than a comparable cash advance with no upfront fees or requirement to switch credit card processing companies, but can also handle the credit-challenged business that needs a working capital term loan that is both cost effective and flexible.

Hopefully, this brief overview if the different types of working capital will get you thinking in some new directions that don't involve getting told "no" at your local bank. Want to know more about affordable working capital term loan alternatives? Click below now.

Neal Coxworth is an entrepreneur and a 17 year veteran of the consumer credit industry with experience in originating, underwriting and processing mortgage, student and consumer credit loans.

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Types Of Working Capital