Essentially, with invoice financing , you borrow against unpaid invoices. Once the invoices are paid, you pay back your loan with interest. Another option is invoice factoring, which involves selling those unpaid invoices to a lender, who will then be responsible for collecting the payments.

SBA Loans

If you have good credit-both business and personal-you might be able to qualify for a low-interest rate SBA loan to help you with your working capital needs. Because the loans are guaranteed by the Small Business Administration , they tend to pose less risk to lenders. SBA small business loans are one of the most affordable ways to secure business financing.

However, there are two big catches when it comes to SBA loans. First, you’ll need to qualify for the loan, and the process of doing so isn’t exactly easy. In addition to strict business and personal credit score requirements, you’ll need to satisfy a host of other lender criteria as well. Additionally, if you need access to funding in a hurry, an SBA loan might not be the right choice. The tedious application process on these loans often takes 60-90 days.

But, if you’re not in a huge rush and you believe you may be able to satisfy SBA loan requirements, there’s no doubt that an SBA loan is a great financial product. You can seek out SBA loans from any of the following:

• Traditional financial institutions like banks and credit unions
• SmartBiz

Interested in learning what it takes to actually qualify for a secured or unsecured loan from the SBA? This step-by-step guide may help.

Working Capital Loans for Startups

Startup companies in particular can be vulnerable to cash flow problems, in large part because it often takes a new business some time to start generating sufficient cash flow to cover expenses. Working capital business loans can be a great tool to help startups navigate this challenging time.

However, your funding choices as a startup (and most likely one with little to no credit history) can often be limited. Thankfully, limited doesn’t mean nonexistent. Here are a few financing sources that may help your new business’ cash flow during its beginning stages:

Once you’re ready to officially apply for a business working capital loan, it’s wise to first take a look at the condition of your credit reports. As a small business owner, this means you need to check both your business and personal credit reports. Depending upon the financing provider, both could matter.

Understanding your credit is an important (and often overlooked) part of setting your business up for success. Lenders usually have requirements for the credit scores you’ll need to qualify, as well as for how long you’ve been in business, so review those requirements prior to applying to make sure you qualify.

Working Capital Loan Interest Rates

The next step you should complete before you apply for a working capital loan-or any other type of financing-is to understand how much a company is going to charge you to borrow money. In most cases, your credit will factor into the interest rate you are offered. The final interest rates you are offered on a working capital loan can vary based on other factors too, from time in business to your credit scores, to what the lender is willing to offer.

Working Capital Loan Fees

The interest rate on a loan often isn’t the only cost associated with a loan. Fees are important to consider as well.

Make sure to calculate charges like the origination fee (a fixed amount the lender may add on) and any fees charged during the application process itself when you calculate the cost of financing. Nav’s business loan calculators can help make the process of figuring out how much a loan or cash advance will actually cost you a lot easier.