Loans

How to Get Working Capital Loans in India?

Working capital loans are zero collateral loans available for businesses to maintain their cash flow and continue operations. The loan is designed for companies to avail quick finances to keep their business running. Hence the approvals are speedy, and repayment options are flexible. These loans are available for short term and long-term commitments.

How to get working capital loans?

It is easier to get a working capital loan if applied online as it involves zero paperwork and just a few clicks. To apply for a loan, you need to check if you meet the lender’s eligibility criteria, which will help avoid later loan rejections. 

The eligibility criteria for these loans are:

  • Individuals eligible should be proprietors/private limited companies/self-employed individuals. Partnership firms working in services, manufacturing or trading
  • The enterprise must show a record of profits for the last two years
  • Companies must have a minimum turnover of 10 lakhs
  • The enterprise must have a minimum annual income (ITR) of 2 lakhs every year
  • Two years business experience in current business and a total of 5 years business experience

What are the documents required?

The documents that you need to furnish for the business loan requirements are:

  • Pan Card
  • Photo ID Proof
  • Address Proof
  • IT Returns, Balance Sheet
  • Bank Statement
  • Proof of Business
  • Certified copies of partnership deeds, sole proprietor declaration etc.

How to apply?

  • Visit the lender website and click “Apply now”
  • Choose working capital loans
  • Fill in the basic details 
  • Upload scanned copies of the above documents
  • Click Submit

A customer care representative will contact you to take the process further.

The lowest interest rates for working capital loans are between 17 to 27%* depending on your eligibility. You can avail of collateral-free loans up to 30 lakhs with working capital loans and repay them at a flexible tenure up to 36 months.

Must Read: 6 Important Factors To Consider When Applying For A Business Loan

MSMEs – All You Need To Know

MSME stands for Micro, Small, and Medium Enterprises, and they are the backbone of India’s economy. Contributing nearly 8 percent of the total GDP of the nation, these enterprises account for up to 40 percent of the Indian exports. Therefore, the Government of India introduced the MSMED Act of 2006 to help develop them further and contribute to their welfare. 

MSMEs mostly engage in the production and manufacture of products and goods. Applicants can apply for MSME loans to help their business grow. Many NBFCs offer exclusive interest rates and help people grow their businesses. 

What are the General Advantages of MSMEs?

  • They provide for employment and the growth of artisans and workers.
  • MSMEs help by promoting entrepreneurship abilities.
  • They support the advancement of technology.
  • They help provide solid support to the export markets.

With minimum documentation required and a low MSME loan interest rate, you can apply for an MSME loan in a hassle-free manner. 

How do MSMEs aid the economy?

  • MSMEs manufacture goods that are required for the domestic and international markets.
  • MSMEs have helped promote the development and growth of several small-scale industries, including khadi and coir.
  • They have helped increase the socio-economic development of the rural areas.
  • They help workers get acquainted with the latest technologies, thus increasing their area of interest and upgrading their skillset.

Fullerton India provides loans to both small and medium-sized enterprises. You can easily apply for the MSME loan services in India at Fullerton, and avail of the loan at a low MSME loan interest rate. However, you must be aware of the eligibility criteria before applying for the loan at Fullerton India.

Must Read: Top 5 Challenges of MSME Loans That You Should Know

How to Apply for Working Capital Loans in India?

You can get a working capital loan to fund your everyday business operations. You can avail of it for various purposes like paying your employee’s wages, covering the accounts payable and other expenses during the off-season. These loans are short term and designed for corporate debt borrowing. Hence the loans are unsecured, aka You don’t have to pledge any securities to avail this loan. 

Top Reasons to Avail of the Working Capital Loan

Seasonal Sales Drop

Sales aren’t steady throughout the year. It rises during a particular season and falls during the offseason. Availing of a working capital loan will boost your cash flow when in need at lesser interest rates.

For Capitalizing on New Business Opportunities

Opportunity knocks on the door only once. Losing a significant opportunity due to a cash crunch will deter your growth. Grabbing the chance when it arises without worrying about funds will help you well in the long run. 

No Collateral

You don’t have to pledge collateral to avail of working capital loans. Hence these loans are swifter to the process of applying online. Just make sure to research lower business loan interest rates.

It Prepares You for Unforeseen Circumstances

Unforeseen circumstances are hard to project, and the pandemic’s effect on business in the initial days is an example of this. Working capital loans are instant and provide you with ready funds to tide through unforeseen circumstances.

Taking a loan can provide you with that cushion without disrupting the smooth flow of work. Be it debts, repayments, payroll, equipment buying, or working capital loans are customized for this purpose.

Must Read: Simple Ways On How To Get Business Loan In Delhi

MSME Loans – Application Process, Eligibility and Registration

Micro, Small and Medium enterprises are fundamental to the growth of India. They contribute almost 30% of India’s GDP, are responsible for 40% India’s exports and employ almost 11 crore people across the country. Recognizing the need and importance of MSME to the country, a slew of reforms and benefits have been announced by the government for MSME companies, including loans at a reduced rate.

For availing an MSME loan (https://www.fullertonindia.com/sme-msme-loan.aspx), the enterprise must be registered and hold Udyam registration or Aadhar Udhyog registration as it was known as previously. The registration can be obtained using the Aadhar of the promoter and the number is linked to other registration such as GST and Income Tax automatically.

Interest Rates and Process

Business loan interest rates for MSMEs are generally lower and provided at a much-subsidized rate in order to promote their growth and development. MSMEs can approach any financial institution in order to acquire such a loan and they may be granted the loan based on the eligibility criteria.

Documents Required

Whereas the finer details may vary, the following details are required to obtain an MSME loan:

  1. Udyam or Udhyog Aadhar Registration
  2. Balance Sheet audited by a Chartered Accountant
  3. Income Tax Return
  4. Bank Statements of the past six months
  5. Financial Institutions might require MSME to be in operation for a certain period

Apart from obtaining loans at a cheaper interest rate, MSMEs get various advantages in government tenders and other spheres of business activities as well. An MSME registration might just be the step you need to boost your business.

Must Read: Loans and Advances Comparison- Which is a Better Choice?

FAQS:

For what purpose is the MSME being used?

What are the eligibility criteria for MSME loan?

Few Tips to Manage Your Loans in the Right Way

The world is full of distractions, and with loans available to almost everybody at the drop of a hat, it has become widespread to see people default on them. Financial planning has become the need of the hour, and every young individual must be aware of it. Always use a Personal Loan EMI Calculator or a Personal Loan Interest Calculator to tally your calculations against that of the lender.

For those who have made mistakes regarding their financial situations here a few things that they can do to

  1. Avalanche

In this method, you make a list of your debts in the decreasing order of their interest rates. Then you sort out the loan, which has the most significant principal and the highest tax. You concentrate on paying off this loan first while others are on schedule too. This way, you don’t default on the big loans; it can accrue the most significant interests on the principal.

Keep doing this till you are debt-free.

  1. EMI and Salary Hikes

Another great way of paying off your debt early is to bump your EMI every time you get a raise. This shaves off months or even years.

  1. Debt Repayment a Priority

If you get an unexpected bonus or a return on investment, then it is your best interest to repay your loan with that first.

  1. Make Timely Payments

Debts are a great way to get a good credit score going for you. Make sure you pay on time.

Must Read: 5 Easy Ways To Choose the Best Personal Loan