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.