Working Capital is a term that refers to the amount of excess cash available within a company. It is calculated by subtracting current liabilities from current assets. Working capital plays an important role in corporate strategy and is closely tied to key financial ratios such as short-term solvency, efficiency and liquidity.
What is a Working Capital Loan?
A Working Capital Loan is a loan to support the day-to-day operations, ranging from payment of employees’ wages to covering accounts payable. The loan is usually provided on an unsecured basis with flexible repayment options that ensure access to funds in accordance with business requirements.
The working capital loan is just what it sounds like: a loan that pays for itself by helping you cover your day-to-day expenses before payments are due. Banks and other Non-Banking Financial Institutions offer working capital loans to help offset your working expenses during such a low sales/revenue period. Companies having seasonal business cycles or cyclical sales or during periods of reduced business activity require such a loan is needed.
Uses of Working Capital loan
If your business is looking to replace machinery or expand its operation, you may want to try a Working Capital Loan. A Working Capital Loan is meant to fund your short-term liabilities or financial obligations, such as payroll and rent.
A working capital loan is designed to help you meet your short-term working capital needs over a period of one year or less. It can be used to pay for day-to-day expenses such as electricity, rent, salaries and operating costs. Or it can be used to buy stocks or raw materials, finance blocked payments from debtors and maintain a healthy cash level.
Who Needs a Working Capital Loan?
Working capital loans are suitable for small and medium enterprises (SMEs) who have limited funds for their operations and need capital to ensure that all business operations run smoothly. They are also suitable for companies with cyclical sales or seasonal business cycles or even during periods of reduced business activity to sustain operations through the rest of the year.
Who Can Apply for a Working Capital loan?
If you are an entrepreneur, private or public company, partnership firm, sole proprietor, MSME, self-employed professional or non-professional, you can apply for a Working Capital loan from our online platform. You must be over 21 years of age and below 65 years of age to apply for this loan.
Types of Working Capital Loan
If you are in need of working capital, a banker can help you. They can offer an overdraft facility or short-term loan to cover your temporary needs. With this loan you can pay off your creditors and look more attractive to new customers.
Features of a Working Capital LoanÂ
Working capital loans are available for businesses and organizations of all sizes. The loan amount can be used to finance business expansion, inventory, assets and equipment purchases or to repay outstanding debts. The repayment cash flow is designed to match the business’s liquidity requirements. Many business owners use this loan to provide working capital when they are facing financial challenges because of seasonal factors or lack of immediate sales growth. The business world has changed, and so must your payment solutions. Demand faster processing, lower fees, and greater flexibility. We provide digital payment solutions that help you take advantage of today’s retail opportunities while reducing your risk. We are driven to empower you — with tools that help keep your bottom line in check while providing more time to focus on growing your business.
The working capital loan is a type of business finance that helps to manage sales fluctuations, maintain a cash reserve, help take bulk orders and equip to leverage trade opportunities.
