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A Guide to Working Capital Loans for Your Business

guide to working capital loans

In this dynamic business scenario, we never know what will happen and when. There is no situation where things will move in a planned pattern. But, the emergencies, changes in the law, or even an immediate requirement from the client will keep you puzzled to arrange for funding. This is when a working capital loan will help- a collateral-free business loan that meets the short-term business need.  

So, now we would want to educate you on the detailed steps involved in applying for a working capital loan. This guide will allow you to take a loan and keep your business in action under any circumstances.

What is a working capital loan 

 

The loan amount given to maintain an adequate amount to keep the business running is called the working capital loan. Working capital is required to pay bills, credit salary to employees, maintain the office, purchase inventory, pay rents, file tax, etc. 

 

Why working capital loan is required

There are situations that you have expected will demand a working capital loan. Do not worry about only negative times where you will be in short of funds.  There are good times as well when you need funds. For example, when you got a new project, and you are short of resources, then you need money to arrange for supplies and accept business. This loan taken can be repaid quickly with the profit you will generate from the business. Is that not a good reason to get a loan today and earn big?

 

What are the types of working capital loans to choose from?

  • Secured working capital business loan 

Here you can get a loan by pledging your asset. It could be movable or immovable. The lender will have security in offering you a loan. You can ask for the loan amount based on the asset you pledge as security.  

 

  • Unsecured working capital business loan 

In case you don’t have an asset to pledge, then how will you seek a loan. That is when an unsecured loan comes into the picture. This is called a collateral-free loan, and there is no demand for any security. The loan amount is decided based on the risk of your business, loan amount, loan tenure, etc. 

 

  • Working capital demand loan 

A special kind of a loan, which can be obtained like a credit card, is called a working capital loan on demand. This is a line of credit loan in which up to some amount of money is credited in your account, and you can use it at the time of need. You can pay interest only for that amount utilized. 

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Who is eligible to apply for a working capital loan 

 

  • With a minimum business vintage of 1 year, you are eligible to apply for a working capital loan 
  • Your monthly turn over must be minimum of INR 2,00,000 
  • You must maintain a decent credit score. Yes, a credit score above 750 stands a chance for an unsecured working capital loan 
  • You must be an adult above age 21 and not more than 60. 
  • Regular payment of tax is mandatory, and minimum one-year papers will be verified 

How to apply and get the application processed 

 

At FlexiLoans, the process is simple. You need to access our site and apply for the working capital loan. Fill your details and upload essential documents like personal KYC, GST certificate, bank statement, business KYC, etc. We will immediately contact you, and we will process your loan status in no longer than 48 hours. 

 

Features of working capital loan from FlexiLoans 

 

  • EMI based loans – The loan can be repaid in installment, and you need not worry about loan burden. Yes, get a loan today but repay slowly so that it does not hamper your business plan. 
  • Tenure – Take time up to 2 years to repay the loan amount. It is a decent time-frame, and you can use the fund to generate profit from your business. 
  • Interest rate – The rates are not fixed and rigid. It is decided based on the business case. So do not feel daunted before talking to us. 
  • Repayment option – You can take time to repay and the time is flexible. Choose a fixed or floating repayment pattern. In a fixed option, you can pay on a stipulated date and for flexible pay as and when you have a fund with you. 
  • Collateral-free – Don’t bother to submit any guarantee. 
  • Online – We process online, and you can apply from anywhere in India to get working capital loans from us. 

What should you ask before applying for a working capital loan 

 

Having explained all the features, eligibility, and process to apply for a working capital loan, in this section, let us explain to you to ascertain a few things before applying for a loan. What must you ask or check before you apply for a loan? Here are some of the most commonly asked questions: 

 

  • Do you know why you want money? Even though the loan lender does not really trouble you for why you need money. But, it is a good practice for you to self-analyze the need for the loan. This will help you to plan for the funding and repaying capacity. 
  • Understand if you have explored all options before applying for a loan. Check if you have identified the right source to take money from.
  • Have you planned the right way to spend your money? Do you know how much returns you will get and when? This idea will give you confidence in repaying the loan. 
  • Will this money provide you a cushion? Are you over boarding or underestimating the situation? 
  • Did you know the interest rate, fees, and other charges? Is everything affordable? 

 

With these brainstorming questions and finding answers to them, you will be sure of getting a loan at the right place. Further, you can use them to your best and repay them on-time. 

 

Final Summary 

 

Working capital is the fundamental need for smoothly executing business. Every business must have a good cash flow to manage any emergency. Having said that, it is not always possible to have surplus funds, and then you can go for a working capital business loan. You can enjoy all the benefits of a loan when you approach us. Just check the eligibility criteria and reach us to take your business to the next level. 


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