What Is a Working Capital Loan? A working capital loan is a loan that is taken to finance a company’s everyday operations. These loans are not used to buy long-term assets or investments and are, instead, used to provide the working capital that covers a company’s short-term operational needs.
Besides, how do you avail a working capital loan?
The process to apply for the loan is simple:
- Fill up the online application form of working capital loan to apply.
- Submit all the relevant documents to complete the process.
- Get money in bank within 24 hours*.
Hereof, how much working capital loan can I get?
When you apply for a working capital loan, you’re not required to pledge any type of asset as security. You can also get a sizeable loan amount sanctioned, going up to Rs. 30 lakh. Now, the amount granted varies from bank to bank, and also depends on other eligibility criteria.
Is a working capital loan taxable?
Recognize what qualifies as working capital.
Even a personal loan that’s used to cover business expenses can be tax deductible. That also goes for business loans where personal property is used as collateral. You must be the party legally responsible for the repayment of that debt for it to qualify.
Collateral: Working Capital Loans can be either secured or unsecured, i.e., you may or may not be required to pledge a collateral to avail of the loan. The options of collateral range from property, securities, gold, investments or the business itself.
Option C) Working Capital: Working capital refers to the raw materials and cash on hand that are used in the manufacturing of goods. The current capital is another name for it.
In respect of borrowers enjoying fund-based working capital credit limits of Rs. 5 crore and more from the banking system, the banks are required to ensure that the book-debt finance does not exceed 75 per cent of the limits sanctioned to borrowers for financing inland credit sales.
Working capital loans are often used to fund everyday business expenses like payroll, rent and operational costs and manage cash flow gaps during a business’s slow season.
An equated monthly instalment (EMI) is a set monthly payment provided by a borrower to a creditor on a set day, each month. EMIs apply to both interest and principal each month, and the loan is paid off in full over some years.
Loan Capital refers to that amount of capital which is required to manage the operations of the business raised from the external sources of the company such as financial institutions, by issuing debentures, etc.
Comparison of best cash credit loans in 2020
|Banks/Lender||Interest Rate||Maximum Loan Tenure|
|ICICI Bank||10.4% to 11.5% p.a.||As per the discretion of the bank|
|HDFC Bank||Contact the bank for details||Contact the bank for details|
|IDBI Bank||Contact the bank for details||Contact the bank for details|
|Bajaj Finserv||18% p.a. onwards||96 months|
Get Export Credit, Overdraft facility, Bank Guarantees and other products from ICICI Bank designed to meet your Working Capital Needs. Quick processing, multiple collateral options and competitive interest rates ensure that this is the best option for your business.