Are your operational expenses piling up with your sold stocks unable to cover them? Perhaps your business needs working capital finance. Working capital is the current assets of a business less the current liabilities. In certain cases, the cash generated from the current assets like stocks is not enough to meet the short term debts or operational expenses. In such a case, a business is bound to search for an alternate source of finance in the form of loans. Today, you can get financing easily with Working Capital Loans terms that suit your repayment ability and rates that are more affordable than before.
Important Facts About Working Capital
In case you are planning to finance your businesses working capital needs with a loan, there are certain facts about these loans you ought to know. These facts can enable you to make a better decision and make the most efficient use of the loan. Here are some features of working capital loans:
- Low Interest Rates:Since these loans are borrowed on a large scale by businesses, the interest rates for these loans are usually low. This makes borrowing the loan much more affordable to small organisations that have tight budgets.
- Shorter and Flexible Tenors:Working capital is mostly a short term need of a business. It consists of financial needs like paying off short term debts, inventory costs and operational costs. Hence, most of the times the tenors for these loans are flexible.
- May be Securedor Unsecured: Whether the loan is secured or unsecured depends solely on the lender. Certain lenders take security against the loan like valuable assets or property, while certain lenders do not. Secured loans however, in many cases may be processed faster and even have easier eligibility requirements. Unsecured loans would have difficult eligibility and even higher interest rates as compared to secured loans, but would relieve you from the pressure of attaching as asset as security.
- May Feature Line of Credit:A line of credit is a facility that lets small and medium enterprise owners to have flexibility of borrowing without overspending. It allows you a certain credit for a chosen tenor and you can borrow as much as you want and pay only the interest on the availed amount as your EMI. You are free to repay and re-borrow as per your needs, and only pay the principal at the end of the tenor. Thus, it is ideal for businesses that have varying and irregular patterns of working capital needs.
- Simple Eligibility: These loans do not have extensively difficult or tedious eligibility requirements. To apply for this loan all you would need is your KYC documents, business proof and bank account statements. You need to attach these documents with your application form at the time of submission.
- May be Subject to Additional Charges:As with every other loan, these loans too may or may not have certain additional charges like a processing fee, foreclosure charges, EMI bounce charges, penal interest, secure fees, loan statement charges, etc.
- Fast Approval:Since working capital needs are urgent for most businesses, some lenders may approve your online loan application in less than 24 hours! This is a huge advantage for a small business.
Looking for the best working capital loan to fuel your business? Get nominal interest rates, easy online application, quick processing and the flexible line of credit facility on Bajaj Finserv’s Working Capital Loan.
Here we have some important things which you should know about working capital.