Unsecured Working Capital Loan

Working Capital Loan is a type of funding or credit required by several startups, enterprises or companies to manage their day-to-day business operations and to manage business cash flow. Working capital loans are short-term loans to fulfill instant business requirements and cannot be used to buy long-term assets or for investment purposes.

Documents Required for Working Capital Loan

PAN Card and a copy of valid identity proof is mandatory for an applicant who is an individual, firm or company ·

Accepted address proofs are Ration card, voter ID card, driving license, or Passport

Income documents include the latest Income Tax Return

with computation of income, profit and loss account and balance sheet of the last 2 years. These documents must carry requisite certification from a Chartered Accountant. Alternatively, any other valid proof of income will also suffice
  •         Bank statements of the last 6 months
  •         Accepted proof of business continuation include Sales Tax Certificate, ITR, Establishment or Trade license
  •         A few other proofs include certified true copy of Memorandum and Articles of Association certified by the Director of the company and the Board resolution, a certified copy of the Partnership Deed or Sole Proprietor Declaration, etc

Key Benefits

  •      Funded facilities, i.e. the bank provides funding and assistance to actually purchase business assets or to meet business expenses.
  •         Non-Funded facilities, i.e. the bank can issue letters of credit or can give a guarantee on behalf of the customer to the suppliers, Government Departments for the procurement of goods and services on credit.
  •         Available in both Indian as well as Foreign currency.

Eligibility Criteria for Working Capital Loan

  • Age Criteria: Min. 18 years & Max. 65 years
  • Business Vintage, Annual Turnover and work experience to be defined by lender
  • Good CIBIL score and repayment history
  • No previous loan default with any financial institution

Features of Working Capital Loan

Listed below are the key benefits and features of taking a working capital loan in India:

  •         Working capital loans interest rates range between 17% and 27%*. The applicable rate depends on several factors such as your net income, collateral, location, business stability, existing monthly obligations, and more
  •         We offer collateral-free business loans upto INR 30 lakhs*
  •         Flexible repayment tenure ranging between 12 to 36 months for working capital loan India
  •         The processing fee is up to 6.5%* of the loan amount

Types of Working Capital Loans

  1. Bank Overdraft Facility or Credit Line
  2.     Short-Term Loans
  3.     Equity Funding via Personal Resources or Investors
  4.     Accounts Receivable Loans
  5.     Factoring or Advances
  6.     Trade Creditor

Pros of Working Capital Loans

  1.     On-hand cash to deal with cash flow problems
  2.     Always in control of the company
  3.     May not need to place a collateral
  4.     Can borrow and repay promptly
  5.     No restrictions on how you spend the money

 Cons of Working Capital Loans

  1. Have to repay the capital and interest in full
  2. May need to put up collateral
  3. High rates of interest
  4. Defaulting on the loan can affect personal credit score

Main components of a Working Capital Loan

The following are the main components of a working capital loan:

  •         Accounts receivables
  •         Inventory
  •         Account payable