Working Capital 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

All About Working Capital Loans in India

Working capital refers to the liquidity status of a company. It covers the inventory, cash, and short-term debts of the company. You can calculate the working capital by subtracting liabilities from the current assets. Then, depending on whether the value is positive or negative, the company’s financial position and value can be judged. Thus, sound working capital financing can help you sail through times of financial difficulties the company faces. 

What is a Working Capital Loan?

A working capital loan comes under the category of short-term loans. These short-term loans are taken to cover impermanent or minuscule operation costs, including purchasing raw materials, etc. A working capital loan is one of the most popular sources of finance for many small businesses and enterprises. 

Why Should You Take a Working Capital Loan?

A working capital loan does not require any collateral and offers short loan tenure. A great advantage of this type of loan is that one cannot borrow more than the required amount. This required amount is determined based on existing orders and invoices. 

However, before applying for a loan, you must be clear about the reason for taking the loan and know your business loan requirements. 

The Top Three Advantages of a Working Capital Loan Are:

  • Flexible repayment term 
  • Flexible interest rates
  • Unsecured loan – no collateral required

Knowing the advantages of a working capital loan will help you understand the importance of a working capital loan and its significance in the day-to-day operations of a company.

Must Read: How Business Loans Take Your Business to a Higher Level?

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