Last Updated on January 19, 2024 by Ali Hamza
In India, the Micro, Small, and Medium Enterprises account for nearly one-fourth of the country’s total Rs.200 lakh crore economy. As a result, such businesses are largely dependent on working capital loan, to fulfill their requirements pertaining to operating costs and other recurring expenses.
In this sector, there are a good number of companies that conduct cyclical or seasonal businesses, without any sustained avenue of sales for the better part of a year.
In recent years, these advances have become much more accessible, making it easier for MSMEs to avail working capital to fund their businesses.
Financial institutions across the country have made high-value advances available to small business entrepreneurs, providing them with the much-needed headway to meet their short-term financial requirements.
Following is a look at what these loans entail and how they can be utilized to fund a company’s immediate requirements efficiently.
Table of Contents
What are working capital loans?
These are unsecured advances that can be utilized to fund businesses’ short-term financial liabilities and keep their operations running smoothly.
The credits disbursed under this advance have multi-faceted usage for a company’s financial requirements.
Starting with payment of staff salaries, to using it to purchase inventory, a working capital loan can easily fund these short-term needs, if a business’ revenue collection is delayed.
How can businesses utilize this loan?
There are different types of working capital that help a business operate efficiently. Companies can utilise high-value loan from leading financial institutions to fund the following short-term capital requirements of their businesses –
This loan can be utilised to bridge gaps in payroll and ensure that there are no delays in paying salaries to employees. It is one of the most crucial short-term credit requirements that can be fulfilled with this advance.
Making timely payments
In order to ensure that a business runs smoothly, it is important to make timely payments to suppliers, fulfil blocked payments from debtors, and ensure that overhead costs like utilities, electricity, etc. are taken care of. A high-value advance can help one to fund these costs on time without hassle.
Inventory costs, if not managed properly, can be a liability for businesses. Availing a working capital loan can help companies to arrange inventory that can successfully sustain their organization even when supplies run low.
Be it purchasing machinery, procuring raw materials or funding any number of other requirements, this loan is a one-stop solution that can ensure that a company operates effortlessly.
Enable smooth operation
This is one of the aspects of any business that requires substantial investment. Especially for companies that are new, this loan can be utilised for expenses related to marketing or advertisement.
These are some of the more popular short-term avenues which can be funded by using this advance. It is, thus, a financing option that can help you grow your business quickly.
This loan also offers borrowers several benefits, which makes it an extremely useful way to finance a company’s operations.
Benefits and features of Working capital loan –
There are several reasons why this business loan makes for the perfect option to finance a company’s capital requirements.
Few of its features include –
High-value loan amount in Working capital loan
Entrepreneurs can avail an amount of up to Rs.30 lakh to finance their company’s expenses. Further, it is an unsecured advance, which does not jeopardise the safety of one’s assets.
Easy approval and instant disbursal for Working capital loan
This advance offers the advantage of hassle-free application process with easy to meet eligibility criteria. Additionally, lenders like Bajaj Finserv also approve such loans within 24 hours of its application, enabling instant disbursal of the loan amount.
The NBFC also brings pre-approved offers which make availing loans faster and easier. These offers are available on a variety of financial products, including business loans, personal loans.
One can avail this advance from leading financial institutions by submitting only a few requisite documents, boosting its accessibility for all.
Availing a working capital loan, thus, is an extremely convenient way to fund a company’s short-term capital requirements. Nonetheless, one should take note of the eligibility criteria and documents required before applying for it to ensure that the process is hassle-free.