Working Capital Financing –
simply explained

Key facts at a glance:

• Enables the procurement of materials, goods and other short-term assets.

• Helps maintain ongoing business operations and avoid bottlenecks.

• Through targeted financing, companies can better manage their cash flow and increase their financial flexibility.

• Effective working capital financing demonstrates how well a company is able to manage its short-term liabilities.

What Is Working Capital Financing?

The term working capital financing refers to the financing of a company's short-term assets that are necessary for ongoing operations. These include materials, goods, inventories and other resources that must be regularly procured to maintain production and sales.

Why Can Working Capital Financing Be Important?

Working capital financing can be crucial for ensuring the ongoing operations of a company. It enables the timely procurement of materials and goods, the maintenance of production processes and the fulfilment of customer orders. Effective working capital financing thus contributes to the stability and efficiency of the company.

An Important Factor in Working Capital Financing: The Term

The term of a working capital financing arrangement is usually between 12 and 60 months, with 48 months being a common choice. These flexible terms enable companies to repay their financed funds on time while simultaneously securing their liquidity. Careful planning of the time frame is essential to ensure that financial resources are used efficiently and repaid on time without jeopardising the company's financial stability.

What Are the Risks of Working Capital Financing?

Like any form of financing, working capital financing involves risks. A key issue is that the repayment of the financing must be secured regardless of whether the company achieves the expected revenue. Furthermore, market conditions can change, which could affect the availability and cost of financing. Companies must therefore carry out careful planning and risk analyses before opting for working capital financing.

What Are Business Loans for Working Capital?

Working capital can be financed through a conventional business loan. With such a business loan — often also called a corporate loan — you receive debt capital for use in your company. In return, in addition to repaying the loan amount, you also make interest payments over the duration of your business loan. The lending can be tied to a specific purpose for the loan amount — many business loans are therefore purpose-bound.

Business loans are available for any time horizon you need — whether you only require short-term debt capital or need financing for a longer period. Under the name "business loan", a whole range of credit instruments and loans is understood — from simple overdraft facilities to working capital loans, commercial loans and corporate loans to long-term investment loans.

Especially the selection of the right type, form and conditions of a business loan is often underestimated. There are many different and often highly effective types of business loans that are not known to all companies.

When structuring your business loan for working capital, ask yourself three key questions:

• Can you commit to a specific purpose for your loan? Do you want a business loan with or without a purpose restriction?

• How long will you need the funds from a business loan? In other words, what term should your business loan have?

• What exactly do you want to use your business loan for? Which type or form of working capital financing is then right and important for your situation?

To advance and grow your medium-sized company, investments are almost always necessary. A company is not always in a position to make these investments from its own financial resources. The simplest way to obtain external capital for important acquisitions is and remains a business loan.

Why Working Capital Financing with Teylor?

We expand your financing portfolio with easily accessible and fast solutions. We primarily target companies with medium to good creditworthiness that are looking for short-term and unsecured financing solutions. Here, the unsecured loans from Teylor offer SMEs quick access to a more competitively priced financing option than the next best alternatives such as factoring or supplier credits.

How Does the Application for a Working Capital Loan Work?

Until a loan is disbursed by Teylor, a total of four phases are completed. Get an overview of the individual steps below:

1. Digital application – simple and fast in just a few minutes: The first step to applying for a loan begins on the Teylor website. After entering the contact details of the applicant and the company, including the required loan amount, the entire loan application takes only a few minutes and you receive an offer immediately. If you have any questions, our customer service is available by phone or email.

2. Free offer: We review your application automatically within milliseconds and immediately show you the possible conditions. No waiting times, no paperwork! Take your time to think about the offer. Once you have decided, accept the offer. If you have questions, you can call us at any time.

3. Upload documents: Finally, we need a few documents to verify your information, for example your annual financial statements and bank statements. You can conveniently upload everything on our website. Then you identify yourself via video verification (this is just a short video call) and sign the loan application digitally using SMS-TAN.

4. Disbursement: You are done, now it is our turn: we review your information, but this does not take long. If we have no further questions, you will receive the loan disbursed within one to two business days.

What Documents Do We Need?

You can upload the documents online or send them by email to info@teylor.com to your advisor:

• The annual financial statements of the last two financial years (i.e., if you apply in 2022, we need statements from 2021 and 2020)

• A current business management assessment with trial balance (no older than three months)

• Bank statements from the last three months (no older than 14 days)

  
  

Prerequisites for working capital financing with Teylor:

• The company headquarters are located in Germany

• The revenue in the last financial year was at least EUR 50,000

• The company has been operationally active for at least two years

Working Capital Financing – Seizing Opportunities

The realisation of a project stands or falls with the right financing. Thanks to evolving processes and technologies in the financial sector, old rules are breaking down and creating space for new approaches. Today, promising projects can be financed and realised with unsecured fintech loans — often without having to visit your house bank.