Thanks to American Express working capital, small businesses now have a convenient way to get inventory while maintaining cash flow. This financial product makes it easier to stay in the red. The working capital addresses one of the most common challenges among small businesses and startups. Read on to see if this financial product is the right fit for your business.
Working capital does exactly what then name implies, helps you keep operations going. Working capital is the newest small business loan. It has the goal of helping small businesses meet inventory needs without depleting their cash reserve. Similar to purchase order funding, the loan goes toward paying a client’s vendor. Creditworthy business owners still trying to build a reputation with suppliers will find the loan beneficial. That way when the invoice terms are short or payments are due upfront, you’ll always be ready.
The terms are more flexible than other American Express Business Loans. Qualifying applicants can get approved for amounts as small as $1,000. Currently, the max loan is $750,000. This works well as a short term loan with fees of .5% or 1.5% for a 30 or 90 days. The rates align with those of a traditional small business loans.
When you’re just starting out, most vendors require payment in advance. Very few of them accept credit cards as a form of payment. By having extra cash to pay invoices, businesses can keep more cash flow for a longer period. Though it comes with a small fee, using the loan money helps your cash stay in place for a while. That gives you time to makes sales, get payments from customers, and build your reserve. When it’s time to repay the american express working capital loan, you can do it with ease. The company withdraws the payment from your business account.
Builds business credit – Even though it’s a short term loan that seems like a cash advance, it still helps build business credit. That is if you make the payments on time. American Express reports good payment activity to the Small Business Financial Exchange. Your negative payment history will go on record at Dun & Bradstreet.
The Small Business Financial Exchange houses payment data for US small businesses. Unlike with personal credit reporting agencies, not just anyone can view your history. Only SBFE member can see your business information, with or without your permission. Major financial institutions like American Express are members of the SBFE. They will check your financial data before making a credit decision for your business.
Build and maintain a good reputation with vendors – At the start of the loan process, the small business will give AmEx information about the vendor. Payments to the vendor show as if they came directly from the business, not American Express. That way they don’t know you’re using a loan to make the payment. It shows you’re able to pay for your supplies. That helps build your relationship and creditworthiness with vendors.
Helps maintain the flow of business – You can’t afford for business to slow down or come to a halt. Clients have demands and you need cash in your bank account. The american express working capital is a flexible product that helps you service customers better. No more worrying about money going out faster than it comes in. The loan helps fill in any possible gaps between getting supplies from the vendor to your customers. Working capital keeps your products in stock and customers satisfied.
Keeps your financial solutions in one place – American Express extends their small business loan products to existing customers. That means you don’t have to go to an outside bank to ask for a loan. Their wide variety of products are multi-purposed. They have loans with higher limits and more extensive terms. For cases where you need quick cash, there are simpler solutions like american express working capital. You can continue building your portfolio under a trustworthy name.
American Express isn’t the first company to roll out a product of this type. Wells Fargo and Square were two of the first to launch their own version of working capital for small businesses. Though similar in goals, all are not created equal. For one thing, the American Express brand has been around for centuries. It’s a household name and leader in experience with personal and business financial products.
The terms of american express working capital seem to keep the client in mind. Square’s fee is more than triple that of American Express. Wells Fargo’s comparable short-term loan doesn’t quite measure up either. It doesn’t give as many options for loan amounts or terms. Their fees are also higher than AmEx.
Like with all their financial products, American Express is selective with who reaps the benefits of working capital. Not just anyone can submit an application. To start, you must be an American Express OPEN cardholder. The company selects from that pool of small businesses who use their credit card service. They continue doing case studies, getting feedback, and making tweaks. Hopefully, the work they put in means getting the program ready for a wider market. For now, if you don’t receive an invite, don’t expect to benefit from American Express Working Capital.
How do you know if american express working capital is right for you? By reviewing all the benefits and requirements. It’s a flexible loan with several benefits, but it does come with some expectations. You need to meet obligations of paying on time. They’ll review your history as a business credit card holder and expect the same pattern.
Financing doesn’t have to be complicated. Not all cash needs are long term, so not all loans should have to be either. When thinking about what route you should take, have the results you want in mind. From there, consider a financial solution that will satisfy those goals. This loan from american express meets a specific goal in the simplest way possible.
The first step to having a shot at american express working capital is getting the credit card in hand. You need to become an American Express OPEN cardholder. That’s where experienced small business owners and entrepreneurs can help. After starting off just like you, we created a portal of financial resources for entrepreneurs. Find lending options from creditors and apply for American Express Credit Cards on our website at Business Financing Hub.