A Smart Business Strategy to Working Capital Is Not Complicated

Working capital required for growth can reduce your profits if you don’t plan ahead


Your customer base is expanding. You need to purchase more inventory or hire more staff, or both. You definitely need working capital. 

The easiest, fastest way to access  working capital is to use your credit card, if you have available credit.  Nothing could be easier – but  – it could prove to be a very costly method of financing  the growth of your business.

When you look at your financial statements the following  quarter, you may find that your profit margins have diminished because of an interest expense,  and your credit score has dropped because you may have maxed out on your line of credit. At that point you do not have the credit to make additional purchases or continue with the additional payroll expense.

The path of progress is halted and now you have to seek options that can be both expensive and time consuming. You have taken the wrong path.

There are much better options than using credit cards for the growth of your business. . However, they require planning. 

My advice is simple – Do not wait until you need funds to request working capital from lenders, Ask for funding before you need it. 

A line of credit for a growing business is readily available from your bank if:

1.) Your personal credit score is 680 or higher,

2.) You can provide  the bank the documentation they need to support the loan request, including tax returns for two years for the business and,

3.) Your company’s profit and loss statement  has adequate profits to support  the loan request.

The  cost of  working capital from a bank will be substantially less than credit card debt, and, you will only pay for the dollars that you draw down for the period they are outstanding. 

Next page- Credit cards, credit score and banks

Marj Weber
Marj Weber
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 20 years: combining financial literacy workshops with one-on-one mentoring. Marj is currently President of Primed 2 Grow Inc. a company that provides access to capital for both existing and start up enterprises. She has provided term loans and working capital to hundreds of small business in South Florida. She was Chair of SCORE Miami Dade from 2010 to 2014 and served as a financial advisor for SBDC/FIU from 2014 to 2017. She also served as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and several local banks. She commenced her career as a real estate investment banker in New York.

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