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Advantages of Working Capital Loans

Working capital is a necessity to run your business.

Advantages of Working Capital Loans

Wednesday December 13, 2017,

3 min Read

Working capital is a necessity to run your business. It is defined as the difference between your current assets and current liabilities. In simpler terms, it is the cash you have left over after you’ve paid off all your financial obligations, like debts to your vendor, your employees, etc. It also includes any money that you might have in the bank.

Working Capital Finance

Your working capital is the measure of your company’s health. A positive working capital indicates that your company is stable, and a negative working capital indicates otherwise.

However, it isn’t always possible to maintain a positive working capital. This is particularly true during lean times, when your sales are down, and less revenue is generated.

Such a situation is where working capital finance comes in useful. There are many banks and NBFCs like Bajaj Finserv that offer working capital loans to businesses. These loans come at affordable interest rates and can be used to meet any short-term goals or obligations your company has.

Other types of business loans are usually issued for specific purposes. Working capital loans differ from these other types of loans, in that they can be availed for any needs related to growing your business, from employing new people to relocating to a new office.

Advantages of Working Capital Loans

There are several advantages to availing a working capital loan for your company. Here are the top five:

1. Fuels Short-term Goals And Unexpected Requirements

Working capital loans are flexible with their repayment tenors and are great to meet short-term goals. They can also help pay for any unexpected or sudden requirements that may arise in your day-to-day expenses.

Moreover, since the loans can be repaid short-term. You don’t have to worry about planning a long-term repayment process for them.

2. Requires No Collateral

Working capital loans come in both secured and unsecured formats. You can avail a working capital loan with or without collateral. Unsecured working capital loans are those you can get without needing to provide anything as collateral.

However, the working capital loan interest rates for unsecured loans are usually higher when compared to their secured counterparts.

3. Easy and Quick Application Process

Working capital loans can be easily applied for. The documents and paperwork needed to apply for working capital loans are less, compared to traditional business loans. Moreover, the approval process is also pretty quick.

Additionally, having a good credit rating while applying for a working capital loan can further ease the approval process.

4. Use the Money to Your Discretion

Other types of business loans are availed and approved only for certain requirements. Working capital loans aren’t like that. They can be availed for any short-term requirement that you may have, provided it is related to your business.

Additionally, many working capital loans offer a line-of-credit facility. This means that you can take a loan anytime – like you would on personal credit cards. You’ll only have to repay it all at the end of your tenor.

5. Continued Ownership

When you apply for venture capital or equity shares, you lose a part of your decision-making ability. When other people invest in your business, they have a say in the decisions that you make.

When you go for working capital loans, however, you are only required to repay the loan. All the decisions and plans you make for the company remain your own.

Thus, a loan could be a great idea when you’re in dire need of working capital, but are unable to generate it internally. For example Working Capital Loans Bajaj Finserv, come at extremely affordable interest rates. Moreover you can now apply online as well!