Working Capital Loan

A working capital loan is a short-term credit facility designed to help businesses cover daily operational expenses and maintain steady cash flow. It is especially useful for SMEs, MSMEs, seasonal businesses, and manufacturers dealing with cash flow gaps or irregular income cycles. This loan can be used to:

• Purchase raw materials and inventory

• Make advance payments to suppliers

• Cover overheads like salaries, rent, and utility bills

• Manage delayed payments from debtors

Businesses often rely on short-term and long-term credit facilities to manage cash flow, fund operations, or support trade. Below are common credit facilities available in India:

• Overdraft Facility

An overdraft allows individuals or businesses to withdraw funds even when their current account has insufficient balance. It acts as a flexible credit line with interest charged on the overdrawn amount.

• Cash Credit Facility

Cash credit is a working capital loan provided against pledged stock or receivables. It helps businesses maintain liquidity for routine operations.

• Term Loan

A term loan is disbursed as a lump sum and repaid in fixed instalments over a specified period. These loans are typically used for capital expenditure or expansion projects.

• Bank Guarantee

A bank guarantee is a financial assurance provided by a bank on behalf of a customer to a third party. It ensures the bank will fulfil payment obligations if the customer defaults.

• Packing Credit

Packing credit, or pre-shipment finance, supports exporters in sourcing, processing, and packing goods before shipment. It enables smooth handling of export orders.

• Letter of Credit

A letter of credit is commonly used in international trade to guarantee payment from the buyer’s bank to the seller. It reduces the risk of non-payment and builds trust between trading partners.

• Invoice Financing

Invoice financing allows businesses to borrow money using unpaid invoices as collateral. It improves cash flow by unlocking funds tied up in receivables.

• Post-shipment Finance

This facility is provided to exporters after goods have been dispatched but before payment is received from the importer. It helps cover working capital needs during this interim period.

• Bill Discounting

In bill discounting, businesses sell invoices to a lender at a discount for immediate cash. They continue to manage customer payments and repay the lender once received.

• Bill Purchase

Bill purchase is similar to discounting, but the bank or lender takes charge of collecting payments from the customer. It reduces the burden of recovery from the business.

While the exact criteria depend on the lender, there are some common requirements, such as:

• The applicant should be at least 21 years old

• The business vintage should be at least 3 years

• You must have a credit score of 685 or above 

• You should have business ownership proof and other required financial documents 

• You must have no history of defaults

You may need to provide additional information for business verification purposes, such as audited P/L reports or Income Tax Returns. So, be sure to check the requirements before applying for a seamless experience. 

Checking this list can help you ensure that you have everything you need. Here are some documents required for a working capital loan by most lenders:

• PAN card or Form 60 

• Passport-size photographs

• KYC documents

• Relevant financial documents/P&L statements

• Proof of business operations and vintage

• Latest bank account statements going back at least one year

Remember, the lender may ask for additional documents before or after you submit the application. Ensure you submit all of them to get the funding you need. On Bajaj Markets, you can get a working capital loan without submitting collateral. This allows you to meet your operational needs affordably. 

The interest rate levied on a working capital loan is determined by several factors, such as: 

• Type of business

• Business vintage

• Business revenue

• Credit score

On Bajaj Markets, you can get an interest rate starting at 14% p.a. Use the free EMI calculator to decide on the loan terms based on your eligibility and repayment comfort. The following table provides the lenders and the maximum loan amount, interest rate, and tenure offered by each lender.

Disclaimer: The above-mentioned information is subject to change as per changes in the lenders’ policies.

Let us assume that you have a working capital loan of ₹5 Lakhs at 9.75% p.a. for a tenure of 3 years (36 months).  

Use the EMI Calculation Formula:

EMI = [P x R x (1+R)^N] / [(1+R)^N-1],

Where:

• P is the principal amount

• R is the monthly interest rate

• N is the number of monthly instalments

You will end up paying a total of ₹5,78,699 to the lender. Of this, ₹78,699 (13.6% of the total amount) will be the total interest paid.

You can apply for a working capital loan online by following these steps:

1. Click on ‘Apply For Loan’ on this page

2. Fill in the application form by choosing your profession, mobile number and pincode

3. Enter the OTP sent on your registered mobile number for verification

4. Accept the terms and conditions after reading and click on ‘CHECK YOUR OFFER’

5. The representative will get in touch with you for further steps

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.