When you’re running a family-owned business, your cash flow management is vital, not only to keep your company afloat, but also to ensure your family’s well-being. A working capital loan can help you in a number of ways. Here are four ways you can use one to support your business.
Avoid Using Collateral
Get an unsecured working capital loan to avoid using your personal property or savings as collateral for your business. Many family business owners feel compelled to get a second mortgage on their home or dip into retirement accounts on behalf of the business.
But just because you can doesn’t mean you should. An affordable working capital loan can connect you with funding while also protecting your personal assets in case you default on the loan.
Keep Relationships Intact
No matter what members of your family are currently part of the business, mixing money and personal relationships can be dangerous. A working capital loan allows you to get your financing on your own terms, rather than being beholden to family members you’ve borrowed money from.
A working capital loan helps you keep the control in your hands, however informal your family loan agreement may be. Get clear terms and expectations from your lender so that you don’t blur the lines between family and business too much.
Keep Your Equity
Another way a working capital loan favors a family-owned business is that it keeps ownership entirely in your hands. You may be planning to leave your company to your children or other relatives. While some businesses may look to outside investors to help with an injection of cash, this waters down the equity you can pass on to your family.
Get Financing Fast
Programs like SBA loans or traditional bank loans have a slow processing time. If your family business needs fast cash, an online working capital lender is better-positioned to get your funds delivered in a matter of just days. Whether you’re cash-strapped or just want to pounce on a great opportunity, fast funding can make a huge difference to family-owned businesses.
The Bottom Line
A working capital loan can be an extremely effective financing tool for family businesses. Contact us to learn more today!