If you need to get extra funding for your business, going to the bank and spending countless hours to go through the application process can truly be a waste of time – especially considering their stringent criteria, and the extensive documentation required.
To ensure a smooth and hassle-free process, National Business Capital has designed a top-notch online system that allows you to apply in minutes and get dozens of offers straight away.
So, if you are looking to apply for a working capital loan online, here are some of the quick and easy steps you’ll need to take in order to secure one:
Step 1: Find a Trustworthy Lender
Getting financing online can be daunting, as you can easily end up applying with an untrustworthy or inexperienced lender.
When that happens, you can end up paying interest rates far above market norms, hidden fees, or suffer from unfair loan terms such as very short repayment periods or large penalties for early repayment. The worst cases can lead to data theft, loan scams, and identity fraud.
All of that will likely have a negative impact on your credit score as well – if a loan is structured unfairly or with unreasonable terms, you might struggle to make repayments, which can lead to defaults and damaged credit score.
So, if you are looking to secure a working capital loan online, make sure that you are applying with a trustworthy financial institution, such as Specialty Finance Group National Business Capital.
Our highly skilled and experienced team has secured over $2 billion in financing for business owners across more than 27,000 total transactions, and we are a proven market leader in funding $100K – $5M+ transactions.
When choosing a financial institution online, always pay attention to reviews, client testimonials, and experience, to ensure that you are avoiding predatory business loans.
Step 2: Plan The Use of Your Working Capital Loan
Planning is key if you are looking to secure a working capital loan online and maximize its benefits to your business’ advantage.
Having a clear perspective on how you plan to use the business capital loan, and what are your comfortable terms and rates will help you make a better decision during the application process, especially when comparing different offers.
A working capital loan can be used for a variety of day-to-day business operations, including:
- Purchasing inventory or raw materials
- Paying off short-term debt or existing loans
- Handling unexpected expenses
- Covering operational expenses, such as rent and payroll
- Managing cash flow gaps
- Funding short-term projects
- Meeting seasonal demand fluctuations
- Upgrading or repairing equipment
- Covering tax obligations
- Having a financial cushion for slow periods
However, keep in mind that working capital loans are more suitable for short-term business needs – if you are looking for extra funds to cover long-term needs, you might benefit more from business term loans or a business line of credit.
Step 3: Prepare Your Documentation
The next step of the process when it comes to applying for a working capital loan online is to prepare your documentation. As we mentioned earlier, banks tend to require more extensive documentation compared with online lenders, so keep that in mind before applying.
Having all your documents prepared will not only save you time during the application process, but will also get you a response from the financial institution faster.
You may have to show more or less documentation depending on the lender, but overall, we are looking at the following:
- Business Information – Including your business’ legal registration, your EIN, a comprehensive business plan (especially if you are not an established business yet), and an article of incorporation (if applicable).
- Financial Statements – When applying for a working capital loan online, lenders will want to look at your balance sheet, your profit and loss statement, cash flow statement, as well as your bank statements. In addition, be prepared to show your tax returns for the past 1-3 years, as well as Accounts Receivable and Accounts Payable Aging reports.
- Business Debt Information – If you have any outstanding loans, this information will have to be disclosed to the lender, including payment schedules. This will help calculate your Debt-to-Income Ratio, and determine your overall creditworthiness. Provide a list of all your current business debts, including amounts, rates, and terms.
- Legal Documentation – In addition, you may have to provide legal documents, including lease agreements, franchise agreements, and contracts with suppliers or clients that can ensure future revenue.
- Collateral Documentation – If you are applying for a secured working capital loan online, be prepared to show an appraisal report of the collateral that you are planning to offer – such as property or equipment. Make sure that it’s recent, otherwise the expected revenue if it was to be sold would be outdated. You will also have to provide proof of ownership of any collateral, such as title deeds or ownership documents.
While most financial institutions will check your credit score, it is always recommended to obtain a business credit report from one of the major credit bureaus, Experian, Equifax, or TransUnion.
Step 4: Assess Your Creditworthiness
While this step is not obligatory, and you may go ahead and apply for a working capital loan online without it, we highly recommend that you do the exercise of assessing your creditworthiness before you begin the application process.
This will give you a clear perspective on what to expect when applying, whether you are more likely to get approved or to get rejected, and what are the approximate terms and rates that you may end up getting.
To assess the creditworthiness of your business:
- Check your business credit score with the above-mentioned institutions. If you have a bad credit score, you may still be able to get a working capital loan online, but it can be more challenging unless you are applying with an alternative financial institution such as National Business Capital.
- Analyze your financial statements to determine your financial stability. Review your balance sheet, check if you have a good debt-to-equity ratio, and whether you have more assets or liabilities. Examining your income statement and your cash flow statements will also be essential.
- Calculate key financial ratios, such as Debt-to-Equity Ratio and your current Ratio. These financial metrics will help you determine if your business is overly reliant on debt, which is important for lenders. You will have to prove that you are able to cover your short-term liabilities to a certain extent.
- Evaluate your debt levels, and compare them to your income and cash flow. High levels of debt relative to income can negatively impact your creditworthiness, which is not going to be great if you are looking to secure a working capital loan online.
- Examine your business credit utilization, and review it from the perspective of the lender to see if they will see responsible credit management from your side. It is important to ensure that your credit utilization ratio is below 30% – you can calculate it by dividing the amount of credit used by the total available credit.
Step 5: Begin The Application Process
Now that you have prepared all the documentation, determined your creditworthiness, and selected a reputable lender, it is time to begin the application process.
The time it takes to apply for a working capital loan online, and receive an answer from the financial institution, may vary widely – for example, banks tend to be tedious and can take weeks and months to review and approve your application.
However, non-bank lenders such as Specialty Finance Group National Business Capital have a fast and streamlined application process. With NBC, you can apply securely within minutes, review dozens of exclusive offers, and receive your funds in as fast as 24 hours!
Qualifying For a Working Capital Loan With NBC
If you want to qualify for a working capital loan, look no further than National Business Capital. With $2+ billion financed since 2007, multiple awards, and an experienced team of Business Finance Advisors, we have everything you need to find the best financing options for your project.
Are you ready to get started? Apply here.
Frequently Asked Questions
What Are the Eligibility Criteria for a Working Capital Loan Online?
Eligibility criteria for a working capital loan online typically include factors like your business’s credit score, which reflects its creditworthiness, and consistent revenue demonstrating cash flow stability.
Lenders also consider the length of time in business, often requiring at least 6-12 months of operation, and current debt levels to assess repayment ability. Some lenders may also review personal credit scores and financial statements.
How Quickly Can I Get a Working Capital Loan Online?
You can typically get a working capital loan online very quickly, often within 24 to 72 hours, depending on the lender and the completeness of your application. Some lenders offer near-instant approvals, especially if you’re applying through an automated platform.
The speed of funding also depends on how quickly you can provide the required documentation, with some loans being funded on the same day as approval.
Can I Qualify for a Working Capital Loan With Bad Credit?
Yes, you can qualify for a working capital loan with bad credit, though it may be more challenging. Some online lenders specialize in working with businesses that have lower credit scores, but they often charge higher interest rates and fees to offset the risk.
Lenders may also consider factors like strong cash flow, consistent revenue, or require collateral to secure the loan, making approval more likely.
What Happens if I Can’t Repay the Loan?
If you can’t repay a working capital loan, several consequences may follow. The lender could impose late fees and increase interest rates, escalating your debt.
Defaulting could damage your business and personal credit scores, making future financing difficult. If the loan is secured, the lender may seize collateral. In severe cases, legal action could be taken against your business, potentially leading to bankruptcy.
Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.
Joseph Camberato
Joe Camberato is the CEO and Founder of National Business Capital. Beginning in 2007 out of a spare bedroom, Joe and his team have financed $2+ billion through more than 27,000 transactions for businesses nationwide. He’s made it his calling to deliver the educational and financial resources businesses need to thrive.
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