Any suggestions/advice on raising additional working cap/Lines of Credit?

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December 06, 2019

by a searcher from The University of Auckland - The University of Auckland Business School in Los Angeles, CA, USA

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Reply by a searcher
from Northwestern University in Los Gatos, CA, USA
This has been a pain point for us as a self-funded group leveraging SBA financing. I wish we would have factored much more of our working capital need (at acquisition and thereafter) into our acquisition loan application. We didn't properly account for that and ended up having to self-fund a whole lot of net working capital growth with our own follow-on cash in the###-###-#### mo buildup following acquisition. Because our 7a loan is secured by a first lien on the entire business, we couldn't bring in any additional debt for the business except in the case of new financed assets (for example, commercial vehicle loans or equipment financing). For this reason, it can be very difficult to finance aggressive growth within SBA.
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Reply by an investor
from University of Notre Dame in Pittsburgh, PA, USA
Develop strong Bank relationship - working capital lines are pretty formulaic driven (X% AR, Y% Inventory) and a very low risk highly secured product for a bank/lender - plain vanilla product for any bank.. Unsecured line of credits are a whole different ballgame.. Its expensive but Factoring groups can be an option if you need more aggressive terms
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