Buying A Business
Women & Minorities
types of loans
Conventional, Non-Guaranteed Loan
Loans for Working Capital
A business’ need for
working capital can come as a result of several reasons including:
• Increasing sales
growth or seasonal growth.
• Customers paying slower.
to increase inventory to support sales growth and/or adding product
to take discounts on purchases from vendors.
operating losses have reduced your cash reserves.
expenses due to additional marketing efforts, new employees, office
It is important to identify whether this is a
short term situation that will correct itself in less than twelve
months or is it a permanent situation that will take time to rebuild
Short term needs: If your
working capital needs are short term, then you need a line of credit
from a bank. The line of credit is interest only payments with
flexibility to borrow, repay and borrow again as your cash needs
dictate. Accounts receivable and inventory are typically adequate
collateral for this bank line of credit.
Long term needs: If
your working capital needs are permanent, NYBDC may be able to
help. NYBDC’s loan sizes range from
$50,000 to $1,500,000. We are a complement to bank financing and
do not compete with our partner banks. Many loan structures include
NYBDC, a partner Bank and other subordinate lenders, which can
bring the total financing to exceed $5 million.
NYBDC would make
a long term working capital loan repayable over three to seven
years with monthly principal and interest payments (see Loan Payment
Estimator (LINK)). In most cases, we feel the company should also
have a line of credit from a bank in addition to our working capital
term loan. The bank would typically have the accounts receivable
and inventory as collateral for their line. NYBDC would need to
find other collateral in the business to secure its loan. This
collateral is typically machinery, equipment, furniture and/or
subordinate collateral mortgages on real estate.
solution to working capital needs is to refinance your existing
debt. If you have equity in fixed assets, NYBDC can refinance,
get new money and spread the payments over a longer term. See Refinancing