Working Capital Loans
Maintain healthy cash flow and manage day-to-day operations with our flexible working capital financing solutions. Keep your business running smoothly without financial stress.
₹2L - ₹10Cr
Loan Amount
10% - 16%
Interest Rate
10-20 Days
Processing Time
What are Working Capital Loans?
Working capital loans are short-term financing solutions designed to help businesses manage their day-to-day operational expenses, maintain cash flow, and bridge the gap between accounts receivable and accounts payable.
These loans are essential for businesses that experience seasonal fluctuations, have long payment cycles, or need immediate funds to purchase inventory, pay suppliers, or cover operational costs. Working capital ensures your business operations continue smoothly without interruption.
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Why Businesses Need Working Capital Loans
Understanding the critical role of working capital in business operations and growth
Cash Flow Management
Bridge the gap between receivables and payables. Maintain smooth operations even when customers delay payments or during seasonal fluctuations.
Inventory Management
Purchase inventory in bulk to get better rates, stock up for peak seasons, or maintain adequate stock levels to meet customer demand.
Supplier Payments
Pay suppliers on time to maintain good relationships, negotiate better terms, and avoid supply chain disruptions that could affect business.
Employee Salaries
Ensure timely salary payments to maintain employee morale and productivity, especially during cash flow crunches or business expansion phases.
Seasonal Fluctuations
Handle seasonal business cycles, prepare for peak seasons, or maintain operations during lean periods without compromising on quality or service.
Growth Opportunities
Seize immediate business opportunities, take on larger orders, or expand operations without waiting for internal cash generation.
Types of Working Capital Loans
Diverse financing options to meet various operational and cash flow requirements
Cash Credit (CC)
Revolving credit facility
A revolving credit facility where you can withdraw funds as needed up to a sanctioned limit and pay interest only on the amount utilized.
Key Features:
- Credit Limit: ₹5 lakhs - ₹10 crores
- Interest Rate: 10% - 15% p.a.
- Tenure: 12 months (renewable)
- Interest on utilized amount only
Best Used For:
- • Day-to-day operational expenses
- • Inventory purchases
- • Supplier payments
- • Salary and overhead costs
Overdraft Facility
Bank account overdraft
Withdraw more money than available in your current account up to a pre-approved limit, providing instant access to funds.
Key Features:
- Overdraft Limit: ₹1 lakh - ₹5 crores
- Interest Rate: 12% - 18% p.a.
- Tenure: 12 months (renewable)
- Instant fund access
Best Used For:
- • Emergency cash requirements
- • Short-term cash flow gaps
- • Immediate payment obligations
- • Temporary working capital needs
Trade Finance
Import/Export financing
Specialized financing for businesses involved in domestic and international trade, including letters of credit and bill discounting.
Key Features:
- Finance Amount: ₹10 lakhs - ₹50 crores
- Interest Rate: 9% - 14% p.a.
- Tenure: 30-180 days
- LC and guarantee facilities
Best Used For:
- • Import/Export transactions
- • Letter of Credit requirements
- • Bill discounting
- • Trade-related working capital
Invoice Discounting
Receivables financing
Convert your outstanding invoices into immediate cash by selling them to lenders at a discount, improving cash flow instantly.
Key Features:
- Funding: Up to 80% of invoice value
- Interest Rate: 12% - 20% p.a.
- Tenure: 30-120 days
- Quick processing
Best Used For:
- • Immediate cash from receivables
- • Bridge financing
- • Supplier payments
- • Operational cash flow
Benefits of Working Capital Loans
Advantages that make working capital financing essential for business success
Improved Cash Flow
Maintain steady cash flow to meet operational expenses, pay suppliers on time, and avoid business disruptions due to fund shortages.
Business Growth
Take advantage of growth opportunities, accept larger orders, and expand operations without being constrained by cash flow limitations.
Financial Stability
Build financial resilience to handle unexpected expenses, market fluctuations, or seasonal variations in business income.
Better Supplier Relations
Pay suppliers promptly to negotiate better terms, secure discounts, and maintain strong business relationships for long-term success.
Quick Access to Funds
Get immediate access to funds through revolving credit facilities, ensuring you never miss business opportunities due to cash constraints.
Cost-Effective Financing
Pay interest only on the amount utilized with revolving facilities, making it a cost-effective solution for managing cash flow.
Working Capital Loan Eligibility
Check if your business qualifies for our working capital financing solutions
Applicant Eligibility
- Age: 21-65 years for individual applicants
- Citizenship: Indian citizen or NRI
- Experience: Minimum 2-3 years business experience
- Credit Score: Minimum 650 (preferred 700+)
- Financial Health: Stable income and cash flow
Business Eligibility
- Business Vintage: Minimum 2-3 years of operations
- Annual Turnover: Minimum ₹50 lakhs per annum
- Profitability: Profitable for last 2 years
- Banking: Minimum 12 months banking relationship
- Cash Flow: Positive operating cash flow
Working Capital Calculation Method
Current Assets Include:
- • Cash and bank balances
- • Accounts receivable
- • Inventory/Stock
- • Short-term investments
- • Prepaid expenses
Current Liabilities Include:
- • Accounts payable
- • Short-term loans
- • Outstanding expenses
- • Tax liabilities
- • Accrued expenses
Lenders typically finance 70-80% of the calculated working capital requirement
Documentation Required for Working Capital Loans
Comprehensive list of documents needed for working capital loan processing
Personal Documents
- PAN Card of applicant/partners/directors
- Aadhaar Card or Passport
- Passport size photographs
- Residence proof (utility bills/rent agreement)
- Educational qualifications (if required)
Business Documents
- Business registration certificate
- Partnership deed/MOA & AOA
- GST registration certificate
- Trade license/Shop establishment
- Business PAN card
- Office address proof
Financial Documents
- Bank statements (12-18 months)
- ITR for last 3 years
- Audited financial statements
- GST returns (last 12 months)
- Cash flow statements
- Working capital assessment
Working Capital Specific Documents
- Inventory statements and stock reports
- Accounts receivable aging report
- Accounts payable statements
- Sales contracts and purchase orders
- Supplier agreements and credit terms
- Customer payment history
- Existing loan statements
- Security documents (if applicable)
Document requirements may vary based on loan type, amount, and lender policies. Our experts will provide a customized checklist.
Working Capital Loan Application Process
Streamlined process to get your working capital financing approved and disbursed
Working Capital Assessment
Evaluate your working capital requirements and cash flow patterns
Initial Consultation
Free consultation to understand your business needs and financing options
Document Collection
Gather financial documents and working capital statements
Lender Selection
Compare working capital facilities from multiple banks
Application Submission
Submit complete application with all required documents
Facility Activation
Credit facility activation and fund access setup
Working Capital Processing Timeline
10-20 Days
Total Processing Time
3-5 Days
Document Verification
1-2 Days
Facility Activation
Working Capital Specific Requirements:
- Detailed cash flow projections
- Inventory turnover analysis
- Customer payment cycle details
- Supplier credit terms analysis
Working Capital Interest Rates & Charges
Transparent pricing for different working capital financing options
| Facility Type | Interest Rate (p.a.) | Processing Fee | Annual Charges | Tenure |
|---|---|---|---|---|
| Cash Credit (CC) | 10% - 15% | 0.5% - 2% | 0.5% - 1% of limit | 12 months (renewable) |
| Overdraft Facility | 12% - 18% | 0.5% - 1.5% | 0.25% - 0.75% of limit | 12 months (renewable) |
| Trade Finance | 9% - 14% | 0.25% - 1% | Transaction based | 30-180 days |
| Invoice Discounting | 12% - 20% | 0.5% - 1.5% | Transaction based | 30-120 days |
| Working Capital Term Loan | 11% - 16% | 1% - 2.5% | Nil | 1-3 years |
Factors Affecting Working Capital Interest Rates
- Cash Flow Stability: Consistent cash flow = Better rates
- Business Vintage: Established businesses get preferential rates
- Inventory Turnover: Higher turnover = Lower risk
- Security/Collateral: Secured facilities have lower rates
- Customer Quality: Blue-chip customers reduce risk
- Industry Risk: Low-risk sectors get better pricing
Cost Comparison: Working Capital vs Other Financing
| Financing Option | Interest Rate | Processing Time | Flexibility | Best For |
|---|---|---|---|---|
| Working Capital Loan | 10-16% | 10-20 days | High | Operational needs |
| Term Loan | 9-15% | 15-30 days | Low | Capital expenditure |
| Trade Credit | 0-2% | Immediate | Medium | Supplier payments |
| Factoring | 15-25% | 3-7 days | Medium | Immediate cash from receivables |
Interest rates are subject to change based on RBI guidelines, market conditions, and individual business assessment. Final rates determined after evaluation.
Frequently Asked Questions
Common questions about working capital loans answered by our experts
Working capital requirement is calculated using the following methods:
1. Balance Sheet Method:
- Working Capital = Current Assets - Current Liabilities
- Current Assets include: Cash, inventory, receivables, short-term investments
- Current Liabilities include: Payables, short-term loans, accrued expenses
2. Turnover Method:
- Based on percentage of annual turnover (typically 15-25%)
- Varies by industry and business model
- Considers inventory holding period and collection cycle
3. Cash Flow Method:
- Analyzes monthly cash inflows and outflows
- Identifies peak funding requirements
- Most accurate for businesses with seasonal variations
| Aspect | Cash Credit (CC) | Overdraft (OD) |
|---|---|---|
| Purpose | Working capital financing | Short-term cash flow gaps |
| Security | Usually secured by inventory/receivables | Can be secured or unsecured |
| Limit | Higher limits (₹5L - ₹10Cr) | Lower limits (₹1L - ₹5Cr) |
| Interest Rate | 10% - 15% p.a. | 12% - 18% p.a. |
| Documentation | More extensive | Simpler documentation |
| Best For | Manufacturing, trading businesses | Service businesses, professionals |
Working capital facilities typically need annual renewal:
Annual Renewal Process:
- Timing: 2-3 months before expiry date
- Documentation: Updated financial statements, stock statements
- Review: Bank reviews business performance and credit behavior
- Enhancement: Opportunity to increase limits based on growth
Factors Affecting Renewal:
- Timely interest payments and compliance
- Business growth and profitability
- Proper utilization of existing limits
- Updated financial documentation
- No adverse credit history
Benefits of Timely Renewal:
- Uninterrupted access to funds
- Potential rate reductions
- Limit enhancements
- Better terms and conditions
Yes, unsecured working capital options are available:
Unsecured Options:
- Overdraft Facilities: Up to ₹50 lakhs based on cash flow
- Business Credit Cards: Revolving credit up to ₹25 lakhs
- Invoice Discounting: Against receivables without additional security
- CGTMSE Loans: Government guaranteed working capital up to ₹2 crores
Eligibility for Unsecured Facilities:
- Strong credit score (700+)
- Stable business cash flow
- Good banking relationship
- Profitable business operations
- Low existing debt burden
Secured vs Unsecured Comparison:
- Secured: Lower rates, higher limits, longer tenure
- Unsecured: Faster processing, no asset risk, higher rates
Non-utilization of working capital limits has several implications:
Charges and Fees:
- Commitment Charges: 0.25% - 0.75% p.a. on unutilized portion
- Annual Charges: Fixed charges regardless of utilization
- Minimum Interest: Some banks charge minimum quarterly interest
Impact on Future Renewals:
- Banks may reduce limits during renewal
- Questions about actual requirement
- Potential increase in pricing
- Need to justify the sanctioned limit
Best Practices:
- Apply for realistic limits based on actual needs
- Utilize at least 50-60% of sanctioned limit
- Maintain regular drawing and repayment cycle
- Request limit reduction if not required
- Use facility for genuine business purposes
Effective working capital management strategies:
Accounts Receivable Management:
- Implement strict credit policies
- Offer early payment discounts
- Regular follow-up on overdue accounts
- Use invoice factoring for immediate cash
Inventory Management:
- Implement just-in-time inventory
- Regular inventory turnover analysis
- Eliminate slow-moving stock
- Negotiate better supplier terms
Accounts Payable Optimization:
- Negotiate extended payment terms
- Take advantage of early payment discounts
- Prioritize payments based on importance
- Maintain good supplier relationships
Cash Flow Forecasting:
- Prepare monthly cash flow projections
- Monitor actual vs projected cash flows
- Plan for seasonal variations
- Maintain adequate cash reserves
Working Capital Requirement Calculator
Calculate your working capital needs and financing requirements
Working Capital Success Stories
Real stories from businesses that improved their cash flow with our working capital solutions
Mohan Kumar
Textile Trading Business"LoanAssure helped me get a ₹75 lakh cash credit facility. Now I can purchase inventory in bulk and get better rates from suppliers. My profit margins have improved by 15%."
CC Limit
Interest Rate
Sunita Sharma
Food Processing Unit"Seasonal business requires good working capital management. The overdraft facility from LoanAssure helps me manage cash flow during lean months and stock up for peak season."
OD Limit
Processing
Rajesh Gupta
Export Business"Export business has long payment cycles. Invoice discounting facility helped me convert receivables to cash immediately. Now I can take more export orders without cash flow worries."
Invoice Limit
Funding Ratio
Ready to Optimize Your Cash Flow?
Don't let cash flow constraints limit your business growth. Get flexible working capital solutions tailored to your business needs. Our experts will help you choose the right facility and manage your working capital efficiently.