Working Capital Loan

A working capital loan is designed for short-term operational needs such as inventory, payroll, or accounts receivable, with tenures typically up to 3 years. In contrast, term loans are used for long-term investments like equipment, expansion, or infrastructure, with longer repayment periods (5-10 years). Working capital facilities often offer more flexibility in drawdown and repayment, while term loans usually provide a lump sum with a fixed repayment schedule.

The amount of working capital financing depends on several factors, including your business turnover, cash flow cycle, profitability, and credit profile. Typically, businesses can access working capital finance ranging from 10-30% of their annual turnover, up to a maximum of ₹2 crore. For cash credit or overdraft facilities, the limit is usually determined based on your working capital cycle and monthly cash flow requirements. The exact amount will be assessed during the application evaluation process.

Collateral requirements depend on the type and amount of working capital facility:

Unsecured facilities: Available for amounts up to ₹25-50 lakhs (depending on your business profile) without collateral.
Cash Credit/Overdraft: Typically secured against stock, book debts, or fixed assets.
Invoice Discounting: The invoices themselves serve as primary security.
Higher amounts: For facilities above ₹50 lakhs, some form of collateral (property, fixed deposits, etc.) is usually required.

The specific requirements will be determined during the application assessment based on your business strength and credit profile.

The approval timeline for working capital financing typically ranges from 3 to 10 business days, depending on the facility type, amount, and complexity of your business structure. For smaller unsecured loans, approvals can be as quick as 3-5 business days. For secured facilities like cash credit or larger amounts, it may take 7-10 business days. Once approved, disbursement usually occurs within 1-3 business days. To expedite the process, ensure you submit all required documentation completely and accurately at the time of application.

Interest rates for working capital facilities typically range from 11% to 16% per annum, depending on your business profile, facility type, and whether collateral is provided. Secured facilities generally offer lower rates compared to unsecured ones. Additional charges may include:

Processing Fee: 1-2% of the loan/facility amount
Documentation Charges: ₹2,000 to ₹10,000 (varies with loan amount)
Annual Renewal Fee: 0.5-1% for Cash Credit/Overdraft facilities
Commitment Fee: May apply on unutilized portions of certain facilities

The exact rates and fees applicable to your business will be detailed in your loan offer.

Yes, seasonal businesses can qualify for working capital financing. In fact, working capital loans are particularly well-suited for businesses with seasonal fluctuations in cash flow. We offer specialized programs for seasonal businesses that include:

Flexible Repayment Structures: Higher repayments during peak seasons and lower during off-seasons
Short-Term Loans: Aligned with your specific seasonal needs
Revolving Credit Facilities: Draw funds as needed during preparation for peak seasons

During the assessment, we'll consider your business's seasonal patterns and structure the facility accordingly. We typically review at least two complete seasonal cycles to understand your business rhythm.