Here’s How to Maximize Your Working Capital Loan Funds

This blog was last updated on November 3, 2020.

In order to strengthen your business and move it forward, you may have either applied for and received a working capital loan (from any lending partner and not just Mulligan Funding), or you’re considering a working capital loan to meet your business financing needs.

First off: you’re in good company! Many businesses across the country utilize a working capital loan. And contrary to popular belief, many of these borrowers are not folks who have been turned down by their bank and are instead turning to alternative funding.

Rather, they like the flexibility and control they have with a working capital loan and might prefer a loan solution where the value of collateral is not considered. Unlike other lending options, working capital loans that do not require collateral allow business owners to be relieved of worrying about the collateral’s value when seeking funding.

With that being said, let’s get back to your current – or imminent – working capital loan funds. Obviously, you have plans for this cash, which may include purchasing new technology, hiring new staff, expanding into a new location, buying inventory, and so on.

However, regardless of your specific plans and unique goals, you should consider how to maximize your funds – and essentially get the “most bang for your buck”. To help you achieve this goal and make your working capital loan funds work even harder than you do (which is saying a lot!), here are 3 tips to keep in mind:

1. Keep track of all spending.

Don’t worry: you don’t have to take a course in bookkeeping (although it’s never a bad idea!) or show up to work with a ledger and a box of impressively sharpened #10 pencils.

These days, there are a variety of software options to help you track all of your spending so that you can clearly see where your money is going. What’s more, you can create customized business rules to send you updates when there’s a change in your account. It’s a simple, fast, and efficient way for you to ensure that the ONLY surprise you experience is that your money is lasting longer and going further than you imagined possible.

2. You don’t necessarily have to spend it just because you have it

Let’s say you applied for and received a working capital loan worth $100,000, which you plan to use to hire 2 new staff members, upgrade your IT infrastructure, and invest in some marketing and advertising. All of these are certainly valid spending decisions.

Now, let’s say that a few weeks after receiving your loan, you realize that you don’t need to hire 2 new staff members – instead, you can hire 1 new staff member without facing major capacity issues. What should you do?

You can re-allocate the funds elsewhere – so long as they’re used for business purposes only¹. For example, you can launch a larger marketing campaign or purchase more IT equipment. However, less obviously, you do not need to spend the money. That is, if your working capital loan is through Mulligan Funding, then you can – if you wish – pay your loan back early, and therefore save interest costs.

Naturally, the choice is yours, and if you have a profitable use for the unexpectedly available loan funds, then by all means: go for it! But the message here is that you have a CHOICE. And the right choice is, quite simply, the one that is best for you.

3. Don’t stretch your dollars so that they break.

Let’s return to the scenario above, but instead of having extra funds on hand because you’ll hire 1 new staff member instead of 2, you discover that you actually need 3. What happens now?

Well, if you try and hire 3 staff members with a budget for hiring 2 staff members, there’s virtually no way you can make it happen. Even if the labor market supply in your part of the country is tilted towards employers, the compensation package you offer will likely pale in comparison to your competitors. So while you MIGHT get lucky and “get 3 for the price of 2”, it’s not a situation that you should expect to last for the long term. Sooner or later, at least 1 of those people – if not all of them – will head to greener pastures.

The good news is that if your working capital loan is through Mulligan Funding, you can apply for a second loan, even if your first one is still active².

All of this translates into: if you’re approved for a second loan, you’ll get 100% of the funds, which you can use to hire the additional staff member. Because while it’s wise to stretch your dollars as far as possible, you don’t want them to break. In this scenario, a second working capital loan may help you achieve your goals, and that’s precisely why we offer it to our clients.

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At Mulligan Funding, we are invested – not just figuratively, but LITERALLY – in our clients’ success. We are not a broker and we won’t shop your working capital loan to multiple funders across the country**. We provide access to the funder and are the direct servicer of your loan. And that’s why we want our clients to maximize their funds, and get the most bang for their buck. When they win, we win. It’s as simple as that.

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.