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Types of Working Capital Loan.
Working Capital Loan are of two types: unsecured & secured. Unsecured loans depends on the financial health of your business for approving the loan amount. However, Secured loans require an asset as a collateral for the funds loaned to your business. Here’s a list of most common types of working capital loans for SMEs.
These are one of the most popular sources of working capital finance for Indian SMEs. These are normal working capital loans, granted at a fixed interest rate with a short repayment period of up to one year. Generally, these are secured loans that may also have other policy requirement such as revenue/sales targets for you to follow.
Bank Overdraft / Credit Line:
This is a pre-approved withdrawal limit which a bank or financial institution gives you on your current account. Prerequisites include a long working relationship, good credit score, and a reasonable loan amount. Interest is only paid on the amount withdrawn, even if the sanctioned limit is higher. However, interest rates are generally 1 to 2 percent higher than the prime rate of the lending institution.
Factoring / Advances
Like an accounts receivable loan, this loan is given against future credit card receipts instead of confirmed sales. However, this type of debt is only suitable for a business that accepts credit card payments.
Equity funded working capital loans are acquired through personal resources or investors, such as investment from friends or family. These working capital loans are mostly taken by start-ups and businesses with a less than ideal credit score.
A trade creditor working capital loan is provided by a current or new supplier. This facility is generally offered on placing bulk orders. However, trade creditors usually have strict policy parameters to be followed by the borrower.
Loan on Accounts Receivables
Granted against confirmed sales order value, this kind of debt is ideal for your business if you have a reliable customer base as there is always a risk of invoice defaults. In lieu, financial institutions are also hesitant to provide these working capital loans to new businesses.
What are working capital loans?
Working capital loans are simply cash loans that are used by a company to meet its daily operations expenses.
A working capital loan is taken to finance a company's day to day operations. These loans are not used for investments or to buy assets, instead they are used to finance a company's short-term operational needs. These needs can be, such as rent, debt payments and payroll.
Working Capital Loan Eligibility
• Trusts, NGOs and Charitable institutions are not eligible for small business working capital loan.
• A minimum turnover of ₹90,000 in the 3 months preceding your loan application.
• A business that has been in operation for more than 3 months.
• The physical location of your enterprise should not be in the negative location list.
• The business should not fall under blacklisted / excluded list for SBA finance.
Benefits of Working Capital Loan by Mumbailoans.xyz
- Improve your credit score:
If your business was not approved a bank loan due to low cibio score, Mumbailoans.xyz helps you improve your cibil score.
- Preserving your ownership:
These loans help you avoid equity divestment by providing quick and easy access to credit without collateral.
- Quick processing:
You can get a working capital loan approved within 7 days by submitting all necessary documents.
- Regualtes your cash flow:
Top Features of a working capital loan by Mumbailoans.xyz
- No collateral security required
Unsecured working capital loan : so you don’t have to mortgage any of your assets or property.
Loan amount from 1 Lakh to 5 Crores.
Your requirement may be small or large,we cater to them all .
- Flexible Repayments
You can pay once in a month or twice in a month as per your choice.
- Low rate of interest.
Interest rates depending on your credit profile. And nature of your business and type of risk involved in it.
- Superfast processing
We process all loan applications within 24 hours. And disburse the loan amount within 7 working days.
- Processing fee
Only you have to pay One-time processing fee, no other hidden costs or charges.
- Maximum Loan tenure
We approve loans with a tenure varying between 3 months to 3 years, for easy repayment.
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