How Truecore Capital supports businesses facing short-term capital needs – payroll, bills, or unexpected expenses
Every business, regardless of its size, experiences those moments when cash isn’t flowing in at the rate that bills are flowing out. From payroll to utilities to supplier invoices and a seasonal dip in revenue, these short-term cash-flow gaps can cause real stress and risk. That’s where a working capital loan can make a difference.
At Truecore Capital, we offer working capital financing solutions designed to help businesses bridge that gap, stay operational, and position themselves for the next opportunity. In this blog we’ll walk through what a working capital loan is, how it can be used, key benefits, what to watch out for, and how you can decide if it’s right for you.
What is a Working Capital Loan?
A working capital loan is a type of short-term financing product used to support a company’s day-to-day operating needs, not long-term growth investments. According to the Corporate Finance Institute, it’s designed to “provide working capital for short-term capital expenditures, such as wages, rent, debt service payments, or to finance … activities, such as sales and marketing or research and development.”
In Practical Terms:
– It might be used to cover payroll when receivables are delayed.
– It could fund utilities, rent, or supplier invoices when there’s a temporary cash gap.
– It might help a business ramp up inventory ahead of a sales surge, cover seasonal lulls, or absorb unexpected expenses.
How Truecore’s Working Capital Loan Can Help You
Our working capital loan offering at Truecore Capital is designed to meet the business realities of today – fast processes, flexible usage, and strategic support. Here’s what we provide:
– Quick access to cash: when you’ve got bills due, payroll to meet, or unexpected costs, you shouldn’t wait weeks.
– Flexible usage: use the funds where you most need them: payroll, utilities, rent, supplier payments, or seasonal build-up.
– Transparent terms: we strive to bring clarity on rate, term, repayment, and you remain in control of your business – no equity dilution.
– Tailored for your industry: whether you’re a business owner, service provider, manufacturer or other equipment-industry partner, we understand how your capital expenditure and working capital needs differ.
Key Benefits of Using a Working Capital Loan
1. Maintain Operational Continuity: when facing a cash-flow pinch, a working capital loan allows you to keep operations running smoothly – pay your team, make your rent, avoid disruptions.
2. Take Advantage of Opportunities: With a new contract coming in or a spike in volume, you may need extra cash for inventory, materials, and labor. A working capital loan enables you to take advantage of immediate opportunities rather than waiting for receivables to catch up with you.
3. Bridge Seasonal or Cyclical Gaps: Most businesses go through slower periods (off-seasons) or have upfront funding needs that only pay off later. A working capital loan allows you to even out those cash-flow swings so you’re not force to make unfavorable decisions (e.g. turning down work, delaying purchases).
4. Retain Ownership and Control: Unlike equity financing or some long-term debt, a working capital loan means you maintain control of your business.
What to Consider and Watch Out For:
While working capital loans are an incredibly powerful tool, it’s important to match the product to the need and understand the trade-offs:
– Shorter repayment terms: working capital loans usually have shorter maturity periods and may require quicker repayment than a term-loan.
– Higher interests or fees: Because of the short-term nature and sometimes higher risk, interests/fees may be higher compared to traditional longer-term financing.
– Use-case appropriateness: these loans are best for operating expenses and short-term gaps, not long-term investments like a large equipment purchase or real estate; those would require more traditional financing.
– Ability to repay: since the timeline is shorter, you’ll want confidence you’ll be able to meet payments and not worsen cash-flow.
– Lender terms vary: every lender is different when it comes to eligibility, collateral requirement, draw terms, repayment schedule, and pricing. Make sure to review terms carefully.
When Is a Working Capital Loan a Good Fit?
Here are typical scenarios specifically relevant to business owners, dealers, manufacturers, and service providers where a working capital loan can be very useful:
1. You have an upcoming payroll and your receivables haven’t yet posted: this loan would cover the gap, avoid risk, and keep operations running smoothly.
2. You are a dealer or distributor, and you have secured a large purchase order, but need to pay for inventory or supplies in advance. You can draw on the loan, fulfill the order, then repay once revenue comes in.
3. You have seasonal ups and downs – such as in construction, agriculture, or manufacturing – where you might need cash to cover fixed costs during slow months.
4. You encounter unforeseen interruptions – such as supply delays, price increases, or tariff/labor spikes – and you want to minimize risk while keeping the business moving.
5. You want to act on an immediate growth opportunity – such as adding workforce or expanding your service line – but do not want to tap long-term debt or give up equity.
If any of these resonate, Truecore Capital’s working capital loan might be the bridge you need. We specialize in Commercial Financing and understand the nuances of your business: the cycles, the working capital demands, the margins, and the risk profiles. If you are facing a short-term cash-flow gap, need to cover upcoming bills, payroll, inventory, or seasonal fluctuations, let’s talk about how our working capital loan offering can support your business.
Ready to Explore Your Options?
Give us a call at (805) 422-7342 or submit a quick contact form below and one of our specialists will reach out to you shortly.
Source:
– Corporate Finance Institute, “Working Capital Loan,” [https://corporatefinanceinstitute.com/resources/commercial-lending/working-capital-loan/].
July 5, 2024
by Augustine Sung