WORKING CAPITAL

Cash flow is the life blood of any business. A Working Capital solution can provide that much needed capital infusion that may arise due to slower than normal A/R factors, an emergency repair or if your business is experiencing rapid growth.

Our Working Capital approvals are based specifically on your business’s cash flow. Most people are familiar with DTI (Debt to Income Ratio) when reviewing personal loan options. With working capital solutions, underwriters review the business’s maximum PTI (Payment Threshold Index), primarily focusing on deposits, debits and average daily, weekly and monthly balances. In this way, the underwriter can tailor the payment around historical cash flow data and ensure what should be, comfortable payment options for the business.

While terms for working capital loans vary, it’s common to see repayment terms from 6 to 24 months with 8-15 months being the “sweet spot” for most lenders. Short term solutions can be beneficial if capital needs are somewhat cyclical (retail, manufacturing, construction, etc.) as most of these solutions are renewable half way through the selected repayment term.

With these types of solutions, longer terms offer a lower payment and better time value on the money (lower cost per month) but higher overall repayment (cost). Shorter term options have a higher payment but lower overall cost. Our consultants take time to understand what is most important to your business when reviewing these options. At the end of the day, the decision is yours. You’ll have all the information you need to make an educated decision for your business.

Whether or not these solutions make sense financially is completely dependent on the use of funds. A $100k working capital loan over 12 months generally carries a total repayment of $120k to $140k. While this may look expensive on the surface, the cost of capital is comparable to a 3-5 year term loan through your local bank. These programs simply have a shorter repayment period. If $100k into the business can generate more than 2% to 4% monthly, this can make plenty of sense for the borrower. Increase the funding amount to $500k or $1MM and the same numbers apply.  Cost of capital on these programs is generally tax deductible (check with your CPA) so the actual cost of capital is quite low in that regard.

One of the greatest benefits of these solutions is the speed at which a business can be funded. Though we have helped businesses obtain funding in as little as 3 hours, most businesses funds in 1-3 business days. Despite what that pushy salesman that keeps calling you says, working capital approvals are generally available for up to 30 days, so there’s no rush to move forward if the timing isn’t quite right for your business.

Arise BFS is focused on long term relationships with our clients. We will work very hard to find a solution that works best for YOU and YOUR BUSINESS.