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Financial solutions designed to meet immediate business needs

Working capital loans are loans taken by business organizations for financing their routine, day-to-day operations. These loans are usually taken to cover costs such as employees’ wages or cover accounts payable. Working capital loans are usually taken by organizations which have extremes in their sales cycles and require funds during times of reduced business activity. Working capital loans may be secured or unsecured.
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 Eligibility Criteria for Working Capital Loan

  • The criteria vary from lender to lender. However, listed below are some basic requirements to be eligible for a working capital loan.

  • Minimum age requirement of the applicant is 25 years

  • Business vintage of at least 3 years

  • The latest Income Tax returns information

  • Business should not be blacklisted

  • The location of your business should not be in a negative location list

  • Trust, small businesses, and NGOs are not eligible

  • You may be asked to provide additional information to verify your business as well.

Documents Required for Working Capital Loan

  • Passport-sized photographs

  • KYC documents

  • Relevant financial documents

  • Business proof

  • The latest bank account statements

  • Bank statements for the past 1 year

FAQs on Working Capital Loan

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  1. Are all working capital loans unsecured?

    No. Certain banks will require an asset as security to acquire a working capital loan. For instance, some banks may accept residential, commercial, and industrial properties as collateral. You can also submit shares, stocks, gold, and book-debts.

  2. What are the charges for a working capital loan?

    Besides the interest rate on the sanctioned loan amount, you will have to pay the processing fee and documentation charges. There are other fees like cheque or EMI bounce charges and penal interest rates, in case of missed payments.

  3. What types of companies are eligible for a working capital loan?

    This requirement differs from lender to lender. However, listed below are some of the types of companies that can apply for a working capital loan:

    • Private limited company

    • Sole proprietorship firm

    • Partnership firm

    The type of industry your business is established in also matters. It's always good to check the specific requirements with your lender to avoid rejection of your application.

  4. What are the lending rates for this type of loan?

    Usually, these loans are offered with a floating interest rate. If you need further clarification, you can check with your potential lender. You can also view the interest rates on their official website.

  5. What are the tenures offered for a working capital loan?

    Usually, banks and financial institutions will offer a one-year tenure, considering it is a short-term loan.

  6. What is the processing fee charged?

    The processing fee charged will vary from lender to lender and hence you must check with the bank before availing a working capital loan. Generally, the processing fee my range between 2%-3% of the loan amount.

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