Access to capital is the most important aspect of running a small business, and not just because of cash flow obligations. In fact, the working capital that is committed to regular cash flow is often the problem, because opportunities that require a little extra wind up having to be passed over to meet existing bills and keep the orders you’ve already started moving. Luckily, there are financing options, including a classic term loan designed to put that capital in your hands.

How These Short-Term Loans Work

When you take out a loan to get access to capital, it doesn’t matter what you plan to do with it from the lender’s perspective. That flexibility is the point, and it is what makes the loan different from long term loans for buying assets. Interest rates do tend to be higher for short-term loans, but if you get a secured working capital loan that uses a real estate asset as collateral, those interest rates can be controlled and you can access loans without having to worry as much about your credit score.

The value of the asset is the main concern in those situations, along with your business having the net income to cover payments for the loan term. Credit scores calibrate interest rates some, but they do not tend to be the make-or-break criterion when assessing applications.

The payment structures on loans for short-term capital are variable, so it is worth shopping around for the right one to suit your current situation. Many offer interest-only payments until the end of the term and then require a full principal payoff unless you refinance into another loan. Others provide amortizing options or a choice between them.

Make sure you understand the payment obligations, because they matter. If your principal is not due with the monthly payment and you do not plan to have the capital for a bulk payoff, you need to budget additional money into your monthly payments to compensate. That is the upside, though, even the interest-only payment plans offer zero penalty prepayment.

Find a Working Capital Loan Provider Today

Each program has slightly different terms and interest costs, so make sure you shop around until you find the right fit for your business. In some cases, you can even access smaller loan amounts without securing them with an asset, if you’re willing to accept some higher interest rates. Just keep looking till you find your fit.

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