Working Capital Loans
In the current financial climate, obtaining loans in Australia can prove rather challenging; Universal Finance Pty Ltd have the working capital solutions you have been looking for when it comes to meeting your ongoing financial requirements.
Universal Finance can help you to secure a capital loan and keep the momentum of your business going during difficult times for so many Australians. The traditional sources of finance like banks and credit unions can have exceptionally strict lending criteria and are currently very nervous and reticent to offer capital finance loans as they have seen too many businesses close and default in recent months.
Luckily, Universal Finance have the trust and backing of a wide range of private investors and are able to cut out the middle man and put our clients in direct contact with a provider of working capital funding. This saves time and unnecessary administration and creates a culture of increased transparency between all the parties involved. Extra fees can also be avoided this way, and we want nothing more than to keep as much of the money in our clients' hands as possible at the time when they need it the most.
Our goal since 1999 has been to be a finance company that caters to all sections of the market, from more traditional lending sources and recipients to those who find themselves with restricted credit and other financial difficulties. We can help you to secure a working capital loan, irrespective of your credit background or financial history.
Working capital Funding From Universal Finance
Working capital is what businesses rely upon for everything from small, essential purchases that facilitate the smooth running of the operation, to significant ones that will further their interests and growth. Cash flow is an ever-present spectre for so many Australian businesses, especially those that have struggled to stay afloat during the most difficult financial period in recent history.
A working capital loan can provide a much-needed boost to your running costs and help to keep your cash flow at a workable level.
When you put yourself in the capable hands of Universal Finance, we will seek out and secure your required working capital funding, offered in the form of an unsecured business loan. This simplifies matters in terms of security, or collateral, as none is required and represents a valuable lifeline for many smaller businesses. Securing working capital finance without assets has saved many Australian businesses from financial ruin because they were unable to secure any alternative working capital solutions.
The structure of working capital loans
Once you have been approved for working capital funding, you will receive a lump sum to use as you see fit (with the proviso that it is used for business purposes only) right from the word 'go'.
Much as with any other form of borrowing, you will then be responsible for repaying the capital loan in instalments over an agreed period of time. Lenders are often very flexible when it comes to working capital loans and it is generally possible to secure an agreement of anything from three months to five years when it comes to the repayment period and this can mean the difference between staying afloat or not for many struggling businesses.
Your dedicated team at Universal Finance will always do their best to connect you with lenders that are best suited to your individual needs and amenable to any accommodations you may need if you are not able to make repayments on your working capital finance over the shorter term.
Interest rates on capital finance loans
The rate of interest that you are offered on your working capital loan will typically be based on the lender's assessment of the risk involved. Your business' turnover and financial history will certainly be taken into consideration, as will both your business and personal credit ratings. This gives your lender a better view of your ability to service other debts, including running costs like rent and utility bills. Higher credit scores give them more confidence in your stability and ability to repay any working capital funding that they provide. This generally leads to higher offers with lower interest rates but is not guaranteed.
Other factors affecting working capital funding
Your business will have to be seen generating enough revenue to support your capital loan repayments. Typically, your lender will require a minimum turnover of $5,000 before offering a working capital loan. A higher turnover will allow for a larger capital loan and, as the overall risk will be deemed less, will also mean a reduced interest rate.
The value of your business' assets will also be counted towards your offer of a working capital loan. Any valuable equipment and machinery will be assessed and added to the lender's summation of your borrowing capabilities. These assets do not form part of any security against the loan, as working capital loans are unsecured. They are merely another tool used by lenders to gauge the financial situation that you find yourself in and respond accordingly.
The existing debts that your business has will play a large part in the determination of your borrowing power. If a significant proportion of your cash flow is already accounted for in the form of other debts, and you are struggling to keep up with repayments on those, then it is likely that your approved amount of any working capital loan will be smaller.
Advantages of working capital finance
The immediate lump-sum this kind of loan provides is perfect for any situation that requires a rapid and efficient financial solution. Within the confines of your business, the distribution and use of this capital loan are totally at your discretion and it can be used to ease problems that threaten to overwhelm the whole operation.
Another positive element of working capital solutions like these is that you can claim the interest on your working capital loan repayments as a tax deduction. This can save a considerable amount of money depending on the interest rates involved and the duration of the repayment scheme.
Get in touch
If you have any questions or comments about Universal Finance Pty Ltd and our working capital solutions, then please do not hesitate to contact us. One of our experienced team members will be only too happy to discuss your exact situation and requirements.
FREQUENTLY ASKED QUESTIONS
What can working capital funding be used for?
Because working capital loans are generally unsecured, you can use them however you see fit, as long as it is for business purposes only. This can give your business some much-needed breathing space and provide short-term flexibility.
The reasons why you might wish to augment your working capital funding are as many and varied as there are businesses that need them. Some examples of the boost received from a lump sum capital loan might include:
Being able to purchase essential items and equipment needed to operate during busy periods when inventory gets low.
Covering staff wages and other entitlements or allowing you to increase your staff numbers as required.
Necessary cash flow in the day-to-day operation of your business.
The decisions on how to distribute the money are yours and yours alone.
How do working capital loans work?
For a detailed breakdown of how working capital loans work, please see the above article. In brief: your eligibility for an unsecured lump sum capital loan will be assessed by potential lenders. This will include them viewing your credit ratings, the turnover of your business and its assets and liabilities. Once this has all been taken into account, lenders will offer you a working capital loan of an amount that reflects that eligibility as they see it with appropriate interest rates. The duration of capital finance loans can be quite flexible and ranges from three months to five years.
How much can I borrow as a working capital loan?
As with the interest rate that your working capital loan is awarded, the amount that your business will be able to borrow depends largely on its existing debts and assets. Turnover and general financial stability will also be factors, as will your personal and business credit ratings. Once these have been assessed, lenders will make you an offer based on their findings. Broadly speaking, unsecured working capital loans tend to range from $5,000 to $500,000.
What are the pros and cons of working capital loans?
The immediate and obvious benefit of a working capital loan is that it can help a situation that requires a rapid injection of cash, whatever the reason (within a business context)
Working capital funding, although it is closely scrutinised and assessed, is relatively easy to obtain and comes without any hindering requirements. Once the amount and conditions of the capital loan are agreed upon, the cash will be made available as a lump sum immediately. This immediacy can be a lifeline in desperate situations for smaller businesses and has prevented many of them from ceasing to operate.
An added bonus of these kinds of working capital solutions is that they are unsecured, and no collateral or security is required.
The only downsides of working capital finance are that the interest rates are dependent upon your existing financial situation, which may not be optimum. In the cases of any default in payments, the owner stands to have their personal credit rating negatively affected.