Sometimes new and small businesses need help to grow in the business world. But most of the time not having enough money becomes a hurdle in the way of success.
As a small and new start-up, you want to expand your business and to pay your employees, your everyday bills like electricity bill, water supply bill and the place where you started your business is on rent then the money to pay the rent and to purchase required equipment for your business.
Not having enough is already killing your business. Taking a loan which got a high-interest rate instead of solving all of your problems it drowns you into more debts. Which your business might never be able to come out of.
That’s where working capital loans come as a helping hand.
Under Micro, Small & Medium Enterprises (MSMEs) when you need money to cover-up your day-to-day expenses, you need to go for loans like working capital.
This way you can focus on the growth of your business and get a rise in your sales.
The majority of the working capital loans are unsecured. Loans with high risks need some guarantee.
Things You Should Know About Working Capital Loan
- The interest rate for a working capital loan generally ranges from 11% to 16% and may differ from one bank to another.
- The normal tenor of the working capital generally remains 6 to 12 months and comes with flexible collateral options.
Capital loans come really handy for retailers because in India most of the requirements are seasonal and getting a huge order during the off-season and to fulfil the requirement not having enough necessity and enough capital. It is really helpful for retailers to get a short term capital loan. Making the sale during the season and paying off your debts.
Benefits of Working Capital Loans
- You are going to have cash in your hands to deal with cash flow problems.
- You’re always going to have control over your business.
- You may not need to place collateral.
- You can borrow the money and pay it back soon.
- You can spend that money on your business however you like.
Types of Working Capital Loans That You Can Take
- Short-term Loan
- Trade Credit
- Equity Funding
- Bank Overdraft Facility
- Account Receivable
- Bank Guarantee
1. Short-term Loan
When you take a short-term loan it got fixed interest rate for a maximum term of 12 months. If you got a clear credit history and relation with the lander. You can take this loan for no collateral as well.
2. Trade Credit
Trade credit working capital is offered by your present or potential supplier. They are going to check your credit history before giving this type of loan.
3. Equity Funding From Investors or Personal Resources
This type of loan is really good for a new business that does not have a good credit history. Equity funding is mostly obtained from personal resources.
4. Bank Overdraft Facility
The overdraft facility works like an approved loan. Money can be withdrawn as and when required and the interest has to be paid only on the amount borrowed and only for the time it was borrowed.
Establishing an overdraft facility with a bank can help individuals or small businesses with short term cash flow issues, although the negative balance needs to be repaid within a month.
5. Account Receivables
Accounts receivable are legally enforceable claims for payment held by a business for goods services rendered that clients have ordered but not paid for. These are generally in the form of invoices raised by a business and delivered to the customer for payment within an agreed time frame.
6. Bank Guarantee
It is basically known as non-fund based working capital financing. Bank guarantee is acquired by a buyer or seller to reduce the risk of loss to the opposite party due to non-performance of the agreed task which may be repaying the money or providing some services.
Where To Get Working Capital Loans in India?
Few Websites You Can Get Working Capital Loans in India
1. Paisa Bazaar
At Paisabazaar, you can get the customized rate quotes on the working capital loans instantly without much effort. Known as the first neutral online marketplace for instant quotes on credit cards and loans, this website can show you a plethora of options from which you can choose one as per your choice. If you are looking for complete information about the working capital finance, then you must visit this website.
Started in the year 2007, Biz2Credit is a perfect marketplace that can help you in arranging the application for working capital loans. Having more than 1,30 0 lenders and credible credit agencies, this website has become a trusted source in the Indian financial industry. They use patented technology to offer the applicants lots of options from which they can choose one.
3. Capital Float
Capital Float is a trusted source for getting complete information regarding the process of how to get working capital loans. They offer working capital finance for purchasing the inventory and deal with the daily expenses. You can apply for a working capital loan in a very short span of time from the Capital Float.
Almost all the major banks like SBI, HDFC, ICICI, Kotak and others offer business loans to SMEs. You can contact these private or nationalized banks and check your eligibility. If you are an existing current account holder, things will become easier for you.
5. IIFL Finance
IIFL Finance is a diversified financial company that offers working capital loans that can be used to deal with daily expenses without any tension. Here, you can get all the information regarding eligibility for working capital loans and how to fulfil them. Just visit their website and they will help you in the most professional manner.
6. Loan Meet
Loan Meet is a popular marketplace that works on a peer to peer lending model. Through their website, you can connect with the best lenders regarding the working capital loan and tell them about your original requirements. You have to fill an online application that generally takes up to 24 hours for approval.
7. Capital First
Capital First Ltd is a leading Financial Institution in India focused on providing debt financing to MSMEs and Indian consumers. The company provides financing for various purposes like business expansion, loans for Plant and Machinery, Office furniture, display panels, office automation like PCs, laptops, and printers.
8. Lending Club
Lending Club is one of the best peers to peer lending platforms in India for the working capital loans in India. You can easily connect with lenders instantly offering loans at affordable rates on this website. They carry out the majority of their verification online and save borrowers time. They claim to provide loans in 18hrs.
9. Namaste Credit
Namaste Credit is a popular marketplace that connects borrowers with lenders using a secure and efficient lending platform. They will help you in choosing the right lender as per your needs for the working capital loan. The majority of the forums have positive reviews about the Namaste Credit on the internet.
Instakash is one of the best lending platforms in India when it comes to the working capital loan. If you have a small business and need money immediately, they offer working capital loans within a period of 72 hours. Along with fast service, the platform only affordable charges from the borrowers.
Innoviti is a perfect lending platform for a small business owner. They help them with cash flow by sanctioning small value unsecured loans. During the past year, they have disbursed more than 13,000 loans.
I-Lend is a wonderful peer to peer lending platform that connects the individual lenders and individual borrowers in India. availing a working capital loan from I-Lend will allow you to have a working capital loan he attractive rates. You can have easy and hassle-free loans from this platform.
Faircent is a well-known lending platform in India from where you can avail of the working capital loan at lower interest rates. They will help you in legalizing the transaction with the lender by signing a formal contract. They make all the necessary provisions for finalizing the deals without any need of meeting the lender.
Lendingkart is a famous lending platform among business owners due to instant documentation and flexible working capital loans in India. You can start your simple process with the bank statements and VAT returns. They have a quick application and a disa bursal process.
15. TAB Capital Limited
TAB Capital is one of the best digital lending platforms that avail working capital loans for helping small businesses and entrepreneurs. They offer unsecured business and personal loans to a niche market of budding industries, with tailor-made solutions for satisfying their financial requirements. They promise, fast processing for business loans, collateral-free loans, zero prepayment charges, flexible EMI, and long repayment tenure.