Working Capital Loans

Who Qualifies for Working Capital Loans?

Like with most First Down Funding funding programs, our working capital loans require that applicants have been in business for a minimum of 6 months and can provide business bank statements with steady revenues. Furthermore, working capital loans are for those who have short-term investment needs or cash shortages. Otherwise, qualifying for funding with FDF is easier and simpler than qualifying for a traditional bank loan. With FDF, business financing is quick, requires less paperwork, and is often available to business owners with poor credit.

How to Apply for a Working Capital Loan

As always, the First Down Funding application process is simple. If you follow these steps in order, you can make your loan process even easier.

Consider Your Needs

How much funding do you need? How will you use your funding? When you know the answers to these questions, you can work with FDF to fulfill your needs. We’ll help you find the best type of working capital loan for your business. If you’re unsure about anything, feel free to give us a call.

Gather Your Documentation

When you gather your documents in one place, you can finish your application quickly. FDF business loan applications are already fast, but you’ll get the most out of the process if you have your documents available right away. Here’s what you’ll need for your application:

• Driver’s license
• Voided business check
• Bank statements
• First Down Funding 1 Page Application

Submit Your Application

And now for the easy part. Simply fill out your application online. You can also give us a call if you’d prefer.

How Does a Working Capital Loan Work?

So, how exactly do working capital loans work? Let’s take a closer look.

What is a Working Capital Loan For?

Most business loans, such as business term loans or equipment financing, are meant to cover a significant, long-term investment. Working capital loans, on the other hand, are for smaller, short-term investments and everyday operations. Since the investments are smaller, it may take longer for business owners to see any significant ROI. That’s why the fixed payment schedule of a business term loan doesn’t work in these situations. When you choose FDF, we’ll work out a repayment schedule that will work best for you and your business.

Different Types

Now, the term “working capital loan” refers to a very broad category. Within this category, there are several sub-categories. Below are some of your working capital loan options.

Short Term Working Capital Loan – the most common choice. If you only need a small amount of funding, – say a few thousand dollars or so – then this type of funding could serve you well. This business loan is based on the daily and/or monthly costs of running your business. You would pay back your business loan in as little as a few months, and the frequency of your repayments can vary depending on your situation.

Merchant Cash Advance – Just like a term business loan, a merchant cash advance provides you with a lump sum of money. Unlike a term business loan, however, this type of financing doesn’t have a fixed repayment schedule. Instead, you pay back your merchant cash advance with a portion of your credit and debit card sales. If your business has consistent credit and debit card revenue, then this option may be the best choice for you.

Accounts Receivable Factoring option. This is often the best choice for borrowers with unpaid invoices and receivables. We can purchase your unpaid receivables for a discount and then pay you, the borrower, right away.

Working Capital Line of Credit – This is a more flexible option that gives you access to a pool of funds, without having to borrow a lump sum that you’ll have to repay interest on. You can use as much or as little as you need, only when you need it, and pay interest on what you borrow.

SBA Loans – These loans are guaranteed by the Small Business Administration for those who are approved, and meant for anyone looking to refinance working capital needs.

How Much Do Working Capital Loans Cost?

Like with all business loans, your cost will depend on a) the amount you borrow, b) your interest rate, and c) the amount of time it takes for you to pay back the loan. At First Down Funding, our working capital loans start at a 9% interest rate. Because working capital loans often involve smaller amounts and faster repayment schedules, many business owners find that they spend less money on working capital loans than they would have for other business loan options.