Operational Captial Loan

By far one of the hardest loan requests we work on. Last month we closed a $400,000 line of credit for a local online retailer. When the terms and conditions are right these deals still get funded even in difficult economies. The line of credit was issued to support inventory and operation turns in the business.

The key risk lenders look for is permanent capital. It is easy for businesses to finance permanent capital which should be furnished out of profits. When a line of credit doesn’t revolve like expected, it is typically due to a permanent capital need due to growth.

Operational capital loans should be acquired for temporary needs. This means that the money will be borrowed and paid back in full within 12 months or less. If this can not be accomplished, a different loan request is more appropriate for your need. Good reasons to borrow operational money is to help with the seasonality in your business, take advantage of discounts for inventory purchases or supplies, and in some cases offer some flexibility in trade terms to your clients.

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