Working Capital Loan

Working Capital is the amount required by any business to meet its daily expenses. It is required to pay supplier’s bills, utility bills, raw materials, salaries & wages and other day to day running expenses.

Working Capital Loan is the short term financing that helps the businesses to bridge the financial gap aroused due to difference in current assets and current liabilities. It solves the short term liquidity problem of the business. Before taking this working capital loan, business entity should first analyze the amount of funds actually required by referring the working capital cycle.

Cash ❯ Raw Material ❯ Work in Process ❯ Finished Goods ❯ Receivables ❯ Cash

Secured working capital loan is backed by collateral security. It is to secure the event of default from the side of borrower. Collateral may be of any type like real estate property, equipment, vehicle or any personal asset.

Why should one go for Working Capital Loan?

Where the business is based on the seasonal demand factor, high working capital is required at the time of getting prepared to supply in the season.

It provides a cushion to the business that generally do not keep cash reserves for contingencies.

This loan is very helpful, where the cash flow is not even and it take a long time to get sale invoices be paid.

Features of Working Capital Loan

Type of Working Capital Loans


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