A working capital loan is a debt which will help the business to meet its short term needs and to carry its everyday operations with ease. The working capital loan will provide short term liquidity and adequate cash inflow to the business. It will help the business to come out from the cash crunch kind of circumstances.
Quick Approval and Disbursal – Another significant characteristic of this loan is that it is easy to obtain as minimum documentation is required to process the application.
Collateral Free – The Working capital loan is an unsecured loan. There is no requirement to put any collateral to secure the loan. A business can avail unsecured working capital loan up-to 30 lacs.
Equity Sharing is not Required – Sharing the equity of the company is not required in the working capital loan. All the equity of the company and control will remain with the business.
Working capital loans are taken by a business to perform its day-to-day operations. Working capital loans helps the business to generate immediate cash for their everyday overheads.
Many businesses take the Working capital loan to fulfil requirements mentioned below: –
Summary: –
Business owners require capital to perform various day to day operations to run the business with ease. Working capital loans are a good source of capital for the startups and SME’s as they provide liquidity and adequate cash inflows to meet the everyday overheads.
| Pros | Cons |
|---|---|
| Working capital loans provide liquidity and adequate cash inflow to finance the everyday operation of the business | Working capital loans can’t be used to finance a new business project or for business operations |
| Quick approval and disbursal | Higher interest rate in case of poor business credit ratings |
| Collateral free method of debt financing | . |
| Equity sharing is not required | . |
Please note that eligibility criteria for working capital loan differ from provider to provider however there are some common eligibility requirements mentioned below: –
| Age of the applicant | Minimum 25 years |
| Business vintage | Minimum 3 years |
| Financial information | Income tax return for minimum 1 year |
Please note that the documents required for working capital loan differ from provider to provider however there are some common documents required mentioned below: –
Interest rate and tenure of the working capital loan depends and varies from provider to provider however below is generic information to give you a basic idea.
| Interest Rate | 18% and above |
| Loan term | 1 year to 5 years |
| Amount | Up to 50lacs |
We can assist you to get the working capital loan with ease as we are partnered with few business loan providers. Please follow the below steps to apply for a working capital loan: –
