Working Capital For Canadian Businesses

Small businesses, especially startup small businesses, are often thought to have a very low probability of survival. Some attribute this to a lack of planning, greater likelihood of first-time business owners to take risks, bad marketing, or simply a lack of passion for the business.

The small business research and statistics section on Industry Canada’s website describes small business survival as the percentage of new firms that continue to operate when they reach a given age. According to icgc.ca, “…failure rates are high the first few years after start-up. This is even more true for micro-enterprises than for other small businesses.”

But the truth of the matter is having adequate working capital could increase a small business’ chances of survival. Sure, it won’t eliminate all of the other factors that can lead to the downfall of a small business, but it will definitely provide the funds that are needed to put back into a business, creating the cycle of funds that is needed to promote a flourishing business that can survive through the tests of time.

There are various ways for small business owners to increase working capital. A small business owner could sell unneeded equipment, decrease staff and/or expenses, and utilize all assets available to the business. But one sure way of acquiring working capital is through a working capital loan.

Business cash advances can supply business owners with the working capital that their businesses may lack. But unlike bank loans, business cash advances do not automatically herald extensive application processes, long waiting periods, and hard-to-meet requirements.

The business cash advance application process consists of answering a few questions regarding your existing business (which can usually be done fairly quickly online) and submitting documentation verifying your business’ monthly credit card sales, and your business lease.

Once your business cash advance has been approved (which can take as little as ten days), the repayment process is virtually effortless. When customers make credit card purchases, a small percentage form those sales is put toward your business cash advance repayment. This system is especially beneficial for business owners wanting to increase working capital.

Usually, when one borrows a loan, he/she is expected to repay that loan on fixed monthly terms. Meaning, a certain amount of money is decided upon, usually by the lender, and at least that amount must be paid every month, by a specific day. In the field of small business however, the amount of sales that a particular month will see is unpredictable and during slower months, fixed monthly payments could actually eat at a businesses working capital.

Since only a certain percentage of sales is taken as repayment for a business cash advance, if your sales happen to decrease, your payments do so accordingly, allowing the business owner to maximize his/her working capital.

Lots of new businesses begin in Canada each year, likewise, lots of businesses exit each year. Unfortunately, some of these businesses both enter and exit during the same year, and may have been able to be saved had they had access to working capital.

Whether your business is just starting out or has been operating for decades, working capital is a key component for a successful business and a business cash advance can help a business to reap the benefits that adequate working capital produces.