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Keeping business finances running smoothly involves a lot more than managing income and expenses. Even cash-rich or well-financed businesses will sometimes seek a credit line to fund short-term financing needs or a business loan for capital expenditures.

The reasons you might opt for a short-term working capital solution are many and varied. Businesses that experience significant seasonal fluctuations in demand may need working capital to cover overheads in low-turnover months, or may need a cash boost to scale up inventory for their busiest time. Short-term funding may be necessary to cover a gap between receivables and payables, preserving your company’s credit rating and good standing with suppliers. Fortunately, there are several working capital solutions for businesses.

Working Capital Line of Credit

A working capital line of credit can help your keep your business running smoothly during predictable cash flow fluctuations. A line of credit provides your business with reliable access to funds particularly when business cash flow is lower You can also arrange to set up automated re-payments made to your line of credit from your business deposit account when excess cash is available.

Short-Term Business Loans

While a working capital line of credit can help a business manage recurring or predictable cash flow fluctuations, a short-term loan offers a financial solution to manage large purchases such as equipment or projects other than everyday operating expenses. Short-term loans also have the added benefit of flexible repayment options including monthly, interest-only, interest and principal, or pre-arranged bullet payments which is a lump sum payment made for the entirety of the outstanding loan amount.

Business Credit Cards

A business credit card allows for convenient payment of everyday business expenses both locally and abroad. Just like personal credit cards, online banking makes the tracking of your credit card expenses easier than before. Business credit cards can also be shared by several authorized holders, enabling one user to make important or unforeseen purchases without delay by another. For irregular business cash flow, a business credit card provides short-term access to cash.

Commercial Overdraft Protection

A commercial overdraft linked to your business deposit account provides your business with protection against cheques and other debit items returned for insufficient funds. Protect your credit rating against unanticipated cash flow issues and keep your business running smoothly.

Finding the right working capital solution for your business depends on a number of factors including the type of business and the nature of your cash flow. Be sure to work with a business banking specialist to determine a working capital solution that meets your needs and can help your business thrive.

This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.