A Smart Business Strategy to Working Capital Is Not Complicated

small business working capital

.

 

Credit cards, credit score and banks

You can repay the loan, or a portion of it, and draw the funds down again at any time as long as the amount does not exceed the limit of the working capital  loan.

Some credit cards companies will provide an interest free period, but you have fewer options at the end of the free interest period.  Your credit score may be lower, below 680 and the banks may no longer have an interest.  Additionally banks do not like to repay third party debt, but they will require that the credit card debt is reduced when they consider a working capital loan.  You cannot have it both ways.

Here is the rub. 

So many accountants advise their clients to avoid  income taxes by increasing shareholder distribution. This may leave the company with little or no residual net income at year end. There are inadequate funds available to service debt . Therefore the bank has no interest in providing funding  for what may be a company ready for growth.

My advice to all entrepreneurs is, if you intend to seek a loan from a bank,  show a profit.  Discuss this with an advisor and your accountant.

Related articles:

  1. 9 Steps to Access Capital for Your Growing Small Business

  2. Four Basic Principles for Raising Capital

  3. Do’s and Don’ts of Credit Best Practices

RELATED POSTS

How to Get Newsletter Readers Hitting “Open” Every Time

How to Get Newsletter Readers Hitting “Open” Every Time

12 steps to the Art of the Irresistible Monthly Newsletter Let’s take a break from the “convert” talk for a second and focus on building genuine connections through monthly newsletters your readers look forward to every month. After all, happy readers are more...

How Will AI Affect the Role of the Salesperson in Business?

How Will AI Affect the Role of the Salesperson in Business?

 5 ways it could it have an impact on Hispanic culture As a salesperson in the mid 1980’s in the automobile business there was great fear first that Car and Driver, Motor Trend, and Consumer Reports were going to provide the consumers with  too much information, and...

Women & Men, Career, Life & Their Choices

Women & Men, Career, Life & Their Choices

Tips and Observations, Inspired By "Makers: Women Who Make America" Watching a recent PBS broadcast "Makers: Women Who Make America" was a moving experience for me. Whew, I didn't realize how much time had gone by. Many of the stories and events described in the...

Video Gallery

Polls

Sign Up for the Latin Biz Today Newsletter

PR Newswire

Featured Authors

Innovation & Strategy

Money

Talent/HR

Legal

Marketing

Culture

Fashion

Food

Music

Sports

Work & Life

Mindfulness

Health & Fitness

Travel & Destinations

Personal Blogs

Pin It on Pinterest