Waiting For Your Business Tax Refund: Online Lending For Working Capital

Often small businesses put off taxes until the last moment because they are busy running their business.  They don’t have extra time or staff to help them get everything organized. As onerous as taxes can be, the beginning of the year is the time to get all of your financials in order and in an ideal world, you already have all of your paperwork together from the year before. Kudos if this describes you!  Many other businesses will be scraping their numbers together in the months before April, so you’re ahead of the game.

If you’ve overpaid taxes during the year based on your withholdings or quarterly payments, you should be expecting a refund. If you need an influx of working capital while you are waiting, it might be helpful to look into alternative means of funding that could help your business until that refund check has been deposited.

It’s always a good idea to find a lender that understands your type of business.  As an option to going to your traditional bank for a loan, you could consider online funding as a way to get you access to that needed working capital. There are several online lenders but not all online lenders are the same.  Some provide lines of credit, some provide cash advances and some provide fixed term loans. Most online lenders usually look at cash flow, inventory and social media presence as well as customer reviews to help determine whether or not to approve a loan. This means that some of them depend less on business history and credit reports, but know that plenty of them still do take these into account as part of their equation.

Kabbage is a lender that specifically lends working capital in amounts from $2,000 to $100,000.   To qualify, you apply online and then you link accounts that you use for your business, like PayPal, eBay, Amazon, Etsy, Yahoo!, Square, and Intuit QuickBooks. Even your business checkbook can be linked.  Kabbage comes up with its own score for your business based on these linked accounts and, along with your credit history, decides whether or not to grant your loan request and determines your interest rate. This allows them to use traditional and non-traditional data to approve a loan for your business and often funds can be available the same day.  Fees can range from 1% to 13.5%. With Kabbage working capital loans, you can draw against your credit line as often as once a day and then you pay only for the amount that you use.

Other alternative lenders also include Community Development Financial Institutions (CDFIs).  One CDFI organization is Accion, which focuses on financial inclusion and also offers education and mentoring programs.  Alternative lending can be provided by matching lenders such as Fundwell, and there are organizations such as the Opportunity Finance Network (OFN) and Association for Enterprise Opportunity (AEO) that provide locators for local CDFIs or Micro Lenders in your area.

Any of these options could be useful to businesses who need access to capital while waiting for their tax refund.

Photo Credit: eFile989, Flickr