A working capital loan can be a terrific option for businesses that are small, new, don't have typical collateral or just happen to be in a cash flow slump.
This type of debt may be a good option for businesses that have limited cash reserves and require cash to cover their daily costs. Working capital financing can give businesses a chance to survive, especially seasonal businesses that usually go through a decline in revenue during the off-peak months.
A working capital loan is generally a short-term solution to a short-term problem, and it isn't the best way for a business to fund long-term investments or projects. For businesses that need to borrow for that type of reason, it’s better to evaluate a business term loan as a potential solution.
