Are you looking to secure a loan for your small business? If so, you should know that there are several different types of loans that you can apply for. For instance, you can choose to apply for a loan through your bank or a private lender. While both of these options can be quite beneficial, the option of applying for a working capital loan will often prove superior. This is because working capital loans are provided to businesses through their payment processors rather than through a traditional lender. Consequently, working capital loans are able to offer small business owners several benefits that other loan products cannot provide. You can learn more about some of these benefits below.

Loan Approval Based On Sales Rather Than Credit History

Many small businesses do not have a substantial business credit history. As a result, qualifying for some types of traditional business loans can be difficult unless the business owner is able and willing to use their own personal credit to obtain financing for their business. This is not an issue with working capital loans because the way your creditworthiness is determined is much different when applying for this type of financing. Rather than using your credit score to determine whether or not you qualify for a loan, your eligibility for a working capital loan will be based on your sales history with the payment processor that will be issuing the loan. If you are concerned about your ability to qualify for a small business loan, the approval process used for working capital loans can help to put your mind at ease. 

No Traditional Interest Charges 

The interest rates that are attached to traditional business loans can greatly increase how much you pay to borrow the money that you need. While there are still fees associated with obtaining a working capital loan, the way these fees are assessed is much different. Rather than charging you interest on the balance of your loan, working capital loans will come with a one-time flat fee. In many cases, this fee will be far less than the interest charges on a traditional loan. The fact that this fee is charged upfront rather than applied overtime also helps business owners to get a much better sense of exactly how much they are going to spend in the long run in order to borrow money. This allows business owners to make the best financial decision possible both for themselves and for their business.

To learn more, contact a relevant loan company—such as G.E.C.U.—in your area today.