Working Capital loans are beautiful loan products that are structured as per individual customer requirements. However, it is not very easy to get a Working Capital loan since banks carry out lot more due diligence when compared to a Normal Unsecured Business Loan or Mortgage loan.
Working Capital loans are basically given to fulfill the funding gap in the working cycle of a business. Working Cycle mainly involves buying of raw materials, converting to finished goods, shipping/logistics & receipt of payments. This cycle can vary from one week to 6 months or beyond
Various products that come under Working Capital are as follows
- Term Loans
- OD/CC Facility
- Bill Discounting
- Letter of Credit/LC discounting
- Shipping Credit
- Foreign Currency Loans
- External Commercial borrowings
- Bank Guarantees
Advantages of availing a Working Capital loan is that the loan be structured as multiple products and the customer can avail of varied interest rates on different products. Working Capital also enables to get better pricing with your suppliers/vendors & also get faster funds from your customers’ thereby increasing profitability & increased cash flows.
Bank Guarantee enables you to successfully bid for projects since it gives comfort to the other party.
In order to avail Working Capital loan, banks will always insist on good collateral & you need to fulfill all credit norms as prescribed by the lending bank. The biggest advantage is that banks will normally lend you up to 200% of collateral value, whereas funding will be limited to 70 %( Maximum) in case of Mortgage loans- loan against property.
Want to assess your working capital requirements, get in touch with us.