Hey guys Sean Mory here with another session of LenCred Credit Geeks Q&A.
Joined by Tom Gazaway our founder and CEO, as well as Dustin Weitzell one of our Advisors. Today’s question comes from Andrea in Vermont. This one is probably one of my favorites that I think I have seen so far Tom. It is a two part question; Firstly is how to get working capital for a small business? More importantly, much working capital should I get?
Two different questions. How to go about it and how much do I need? You know and I think we know this that, it is really hard to project sometimes what you need and in life things always take longer and cost more, so there are some rules of thumb that normally you are going to end up needing more then you project originally. So therefore having that additional working capital on top of the seed funding you know you need is usually wise.
I see a lot of clients that are just confused because the SBA says they typically need three times what they are asking for. But clients are also scared to ask for what they think they need, because they would rather get approved for a little bit then get denied because they are asking for too much. That is probably a struggle a lot people have out there as well.
You never want to get more money, you do not want to borrow more then you need, especially in a loan product. Because if you have a loan, then you have a monthly payment, and now your paying money that you are not using so wisdom sometimes say get what you need. But then can you have your extra lines of credit or access to that other capital for the surprises and the things that are ultimately going to happen that are going to cost more as you grow your business? Stuff that you can not predict.
That goes back to the last one as well with the revolving lines. You are only going to pay for what you actually use, not what you have available to you. So there is not that much risk there.Great point.
It all comes down planning and making access to capital a priority as you grow your business. It is really important. Well that is a fantastic answer, Andrea I hope that helped answering your question. We love them, keep them coming. Guys I wanted to thank you once again for joining us for another session of LenCred Q&A. Please feel free to reach out to us at www.lencred.com and we will do what ever we can to help. Thanks.