Working Capital

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Working Capital Loan

A Working Capital Loan is one that is availed of to fund the day-to-day operations of a business, ranging from payment of employees’ wages to covering accounts payable. Not all businesses see regular sales or revenue throughout the year, and sometimes the need for capital to keep the operations going may arise.

This is usually the case with companies that have seasonal business cycles or cyclical sales, while some other may require such a loan during festive seasons or periods of reduced business activity. Such loans may be secured or unsecured, that is, you may or may not be required to pledge a collateral to avail of the loan, depending on the loan amount and the business’ financial health. A company’s working capital is also a reflection of its financial health and liquidity position.


Features of a Working Capital Loan

Loan Amount

The loan amount offered via a Working Capital Loan depends on the business requirements, business experience and tenure. It varies and is customized to meet the particular financial needs of the business

Interest Rate

The Working Capital Loan's interest rate varies from bank to bank and is curated as per the borrower's needs.


Working Capital Loans can be either secured or unsecured, i.e., you may or may not be required to pledge a collateral to avail of the loan. The options of collateral range from property, securities, gold, investments or the business itself. The bank curates the Working Capital Loan as per the collateral capability of the borrower. While in case of unsecured Working Capital Loans, lenders take a look at your personal financial statements, credit score and tax returns, to determine your eligibility.


The loan repayment schedule is designed to match the business's cash flow.

Age Criteria

Another factor is the age criteria to apply for a loan. The borrower should be above the age of 21 years and below the age of 65 years.

Processing Fee

When applying for a Working Capital Loan, banks charge a processing fee. This fee amount differs with every bank.

Loan Applicability

You can apply for a Working Capital Loan if you are an entrepreneur, private or public company, partnership firm, sole proprietor, MSME, self-employed professional or non-professional.

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