Working Capital is the money you use to manage your day-to-day operations. Small businesses sometimes need loans to meet their daily operations needs until their earning assets are sufficient to cover their working capital needs. Sometimes short-term loan allow small businesses to get off the ground and grow. As the business grows and their own assets enable them to earn money, they can repay the working capital loan to the bank. During economic tough time, companies also taking business loan to increase their Working Capital. Working Capital loans may have higher factor rates than, for example, real estate loans, since it is considered riskier. 

While companies that are looking to expand often already have enough money to become larger, taking out a loan allows them to maintain their operating cash flow, making it easier for them to cover any unexpected expenses. Thus, they are able to make payments on their loan by using the new income gained from expanding their business. 

Business owners should keep in mind the many advantages a loan can present. Expanding a business in the current economic climate could mean achieving far greater success once we bounce back from the recession, and the sudden, increased liquidity can help a business suffering under sudden expenses pull through until it can stand on its own feet again.