A working capital loan is one of the best options for small business owners looking to expand or grow their businesses or increase their cash flow. It allows you to make changes and improvements to any aspect of your operations, as long as the funds are used for business purposes. A working capital loan provides you with a variety of short-term repayment options in exchange for immediate cash availability.

As your company expands, so will its financial needs. While most businesses’ revenues may peak during the holiday season, they are also likely to suffer during lean periods. This can jeopardise the ability to maintain stable operations every month. In such cases, a working capital loan can be used to keep your business afloat and out of losses.

What Exactly is a Working Capital Loan? When a business’s current liabilities exceed its current assets, the concept of a working capital loan comes into play. In such a case, the company has no choice but to obtain a loan to cover current liabilities and ensure that business operations can continue. In other words, a working capital loan is a type

of business loan used for the company’s short-term financial goals to meet its operational needs. Thus, a working capital loan assists a business in meeting its short-term liabilities so that it can focus on and achieve its long-term goals.

Eligibility Criteria to Apply for a Working Capital Loan

You need to meet these simple eligibility criteria in order to attain a working capital loan:

• Business should be part of the manufacturing, trading or service sector.
• The pin code of the business should be where the chosen financial institution is already offering services.
• Total monthly turnover should be greater than Rs. 50,000 and less than Rs. 2 crores.
• The business should fall under the list of sectors and sub-sectors serviced by the chosen financial institution.

Advantages of a Working Capital Loan

1. Help Fulfill Short-term Needs: Working capital loans are simple to obtain and can assist you in meeting short-term needs. They also have flexible repayment terms to help you better plan your payments.
2. Maintains Cash Flow: Regardless of your requirements or monthly revenue, working capital financing assists your business in maintaining a positive cash flow. This means that your company gains financial stability and strength to meet urgent or unexpected needs.
3. Spending Flexibility: Working capital loans also give you the freedom to spend the money however you see fit. As long as the money is used to keep your business running, there are generally few restrictions on how it is spent.

Aids in Lean Periods: If your company has a seasonal turnover and makes money only during one season,      you may face difficulties in running your business efficiently. This could lead to a decrease in your annual revenue. A Working capital loan is an appropriate fit for balancing your operational expenses. This loan will assist

1. you in overcoming the financial revenue fluctuations that occur throughout the year. This is a critical benefit of the working capital loan.
2. Repayment: A working capital loan has repayment schedules that are tailored to your company’s cash flows and profits. NBFCs like Kinara Capital provide flexibility and design repayment plans that suit small businesses to ensure minimum hassle.

So, if your small business is going through a cash crunch, accessing a working capital loan is easier than you think. Check your eligibility for a working capital loan and move one step closer to receiving your loan. You can also check out websites of NBFCs like Kinara Capital that offer collateral-free working capital loans with doorstep customer service and flexible documentation procedures. You no longer need to delay your business expansion and can seize opportunities by availing of working capital loans in as soon as 24 hours. Whether it’s for stock purchase, product expansion, renovation or invoice financing, you could do it all with a working capital loan!