• Wayne Wood

Why Should You Consider a Working Capital Loan for Your Business Even Though the Interest is High?

Because Everything is Relative.

Whoa! Unsecured Working Capital Loans are the most expensive loan you can take! Why? Because they are the highest risk form of loan to the lender. It is very difficult to collect if the borrower defaults. You can literally just close your business bank account and open a different one and as there is no security or collateral on the loan, there is little the lender can do to recover their losses and most of the time they are unable to do so.

So because of that, you can expect to pay back anywhere from 1.25 to 1.5 times whatever you borrowed on this type of loan unless you pay off early in which case you can save 25 to 50 percent of that interest. Still, if you for example borrowed $50,000 you would owe back somewhere between $62.5k and $75k back or in other words between $12,500 and $25,000 in interest. OUCH!

You may be wondering, "Why would anyone ever take a loan like this?"

And yet, we have closed thousands of these loans. Why? How? Simple....because everything is Relative.

Sometimes you need to look at the bigger picture. If you can double your production for example because you have the money, cash in your business account whenever you need it, to cover payroll, workman's comp, materials, and other expenses, and you are making money and profits you otherwise could not make if you did not have that working capital, then the interest you are paying kind of becomes a moot point right?

A contractor for example will pay $40,000 for a truck or other piece of equipment that his business requires and not bat an eye because that piece of equipment increases the earning power of his/her business. So it makes total sense to them to bite the bullet and spend the money. That truck or piece of equipment is a necessary tool to make money for the business. In the same way, sometimes the "tool" you need for your business to make money is money!

And yet, I have clients get approved and turn down the loan because of the "high" interest. They cannot get the funding at all elsewhere. So instead they choose to have a less profitable business, they choose not to scale and grow because they cannot get their mind past the interest they would pay for the funding! And yet in reality it is far more expensive for them not to take the funding!

And not just in immediate profits that they cannot make. Think about it. What happens when you as a contractor or business owner are able to do a job efficiently, pay all of your expenses on time, thus building a healthy relationship with your vendors, suppliers, employees and subs, and generate a happy client? Your reputation improves! That client will likely refer you to others. Every time you repeat this your reputation grows. Your business credit grows. The earning power of your business grows exponentially!

Yes, I do agree, there absolutely are many situations in which it would be very unwise to take an unsecured working capital loan. But there are also many situations where it would be very unwise not to take it, even if the interest is as high as paying back one and a half times what you borrowed, although that would be the extreme and unlikely for you.

How much profits are being lost now due to the fact that your production and growth is restricted by the lack of funds? In order to scale and grow most service businesses, it takes more employees, more teams, more materials, more tools etc... to increase production, increase sales, and increase profits, all of which require money right? So if you are satisfied with your current level of business and have no desire to take on more work and grow and provide more jobs and earn more profits then you definitely should not use this kind of funding.

However if you are not satisfied with your current level of sales, production and growth and you would like to progress towards an income double, triple or more what you are currently bringing in, then perhaps you should schedule a free zero stress consultation today to see if having our working capital in your back pocket and at your disposal whenever your business needs it might be a good option for you.

And besides that, sure maybe you do have to use high interest money in the beginning, but with growth comes access to cheaper and cheaper credit. And if you like the idea and understand the concept of using other people's money to make money then there are ways you can use this strategy to work for you and your business.

Also, again, we cannot forget the long term or bigger picture. As mentioned before, completing jobs efficiently, paying your employees and/or subs on time, and paying your suppliers on time increases exponentially your company's reputation and credibility which in turn generates future business and growth. This is worth so much in potential future profits and more that it is very difficult to place a number on it! And yet all of that may very well be completely unachievable, ever, if the business lacks a source of working capital whenever it needs it. Lack of capital slows growth, whereas access to capital speeds up and increases growth.

We Can Be That Source!. 90% of our clients come back to us for 5 more working capital loans or more after their first one, despite the expense of this type of funding. That should tell you something. Would they use us over and over again so happily if it were not working for them? If we were not helping their business to profit and grow?

But that is only the beginning! In addition to working capital loans we can also finance any new (or new to you) equipment for your business, including trucks, vans, other vehicles, heavy equipment, trailers, computer equipment, and the list goes on, and do it in a way that builds your business credit! Terms can go up to 6 years.

Are you a builder who does fix-n-flips, fix-n-holds or spec homes? Need construction lending for residential or commercial projects? Want to have the best connection in the country you could possibly have for this kind of lending, a connection that not only keeps the money flowing painlessly for your projects but can also help make sure they are profitable? A lender who can help you find distressed properties and then also help you move them once they are ready to go on the market?

Once again you need to Call/Text or Contact Rodney in whatever way is most convenient and comfortable for you.

Thanks for reading and all the best in success for you and your business!


Rodney W Wood

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