Working capital loans are a crucial financial tool for businesses, particularly small and medium-sized enterprises (SMEs) in the UK. When sales are slower than expected, these loans can be a lifeline in managing day-to-day operations and keeping your business running smoothly.
But what exactly can they be used for? The truth is that there are more uses than you might expect. If you’re considering applying or are currently waiting for approval, this guide looks at some of the most common ways your business can use these funds.
Managing cash flow
This is perhaps the most obvious use. If your business experiences fluctuating sales during different seasons, you may find that you face cash shortages at certain times of the year. It makes it challenging to cover operational expenses – but a working capital loan can bridge the gap. By obtaining a loan, you’ll be able to continue paying bills, salaries, and other expenses without disruption.
Inventory purchases
Maintaining a healthy inventory is essential for your business to meet customer demand and generate revenue.
However, purchasing inventory can often be expensive and eat into your cash reserves. Working capital loans allow businesses to buy inventory in bulk, often at discounted rates, without straining their finances. This can be particularly beneficial during peak seasons or when launching new products.
Covering operational expenses
Your everyday operational expenses, such as rent, utilities and salaries are critical for helping your business run smoothly. But sometimes, due to unforeseen circumstances or temporary downturns, it can be difficult to cover these costs. Working capital loans provide a boost during challenging times and allow you to pay these expenses without any disruption to your business.
Handling unexpected expenses
Imagine you go into your work premises one day and find that an essential piece of equipment has stopped working. Often, such equipment can be extremely expensive to repair or replace and may not be covered by insurance. A working capital loan can provide fast access to urgent funds, meaning that your business can continue to operate smoothly even if the worst happens.
Navigating economic downturns
The last few years have been an incredibly turbulent time economically. As a result of the global pandemic and geopolitical conflicts, many businesses have suffered from increased market volatility. During uncertain financial times, working capital loans can provide much-needed stability, allowing your business to plan more easily.
Seizing growth opportunities
When an opportunity for growth arises, your business needs to act quickly to capitalise. Whether it’s investing in new technology, expanding to a new location or launching a marketing campaign, these initiatives require immediate funding. Working capital loans make it possible to seize these opportunities without waiting for revenue to catch up.
Improving your credit score
You might think taking a loan out will negatively affect your credit score. However, timely repayment of working capital loans can positively impact it. A higher credit score improves your business’s credibility and increases its chance of being approved for favourable loan terms in the future. For SMEs, this will help you build a strong financial foundation.
Get a working capital loan for your business today
Whether you’re experiencing a slowdown in sales, need to buy new equipment or have urgent unforeseen expenses, Funding Triangle can help. We have 120 lenders ready to approve your funding.
Whether you need £10,000 or £500,000, apply today to get a loan with interest rates starting from 4.8%. With no security or assets required, you’ll receive a decision within as little as one hour.
