WORKING CAPITAL LOAN
- Any businessman who is in the service/manufacturing business or retail/wholesale trading, imports/exports can make use of this facility.
- This facility is generally opted for when there is a liquidity crunch in the business due to irregular cash flow and funds are required for meeting the day-to-day operational expenses of the business or when there is a sudden increase in the volume of the business.
- The loan limit depends on the project for which the finance is required. The assessment is based on the vision of the business through the projected financial statements for years up to which the repayment is fixed, the profile of the promoters, expected cash flow from the business, and other factors.
- While the stock and debtors act as a security in the case of working capital loans, the lending institution may require the borrower to furnish collateral security as well
- The rate of interest varies from lender to lender., depending on the loan quantum, the project for which the finance is sought, line of activity, the business sector, and the customer's profile.
- The agricultural property will not be accepted unless the finance is for agricultural and allied activities.
- The working capital finance is short-term finance provided for a period of 6 to 12 months, which will be renewed on an annual review.
- Rate of interest is mainly based on the credit appraisal of the business
- This facility will be a revolving credit and can be used as and when required.
- The biggest advantage in this type of finance is that interest is levied only to the extent of the amount utilised and for the period utilised.