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A working capital loan offers credit to business organisations, whether small, medium, or large, to fund their day-to-day operations. 


Depending on the urgency of need and everyday demands of the business, there are several ways a working capital term loan can be used. Some of these are: 


  • Purchasing raw materials

  • Making advance payments to suppliers

  • Buying inventory

  • Funding accounts receivables if payments from debtors are delayed

  • Meeting overhead expenses such as salaries, utility bills, and rent

Features and Benefits of Working Capital Loan

A Working Capital Loan has a host of benefits that will work in the favour of your business.


1. Unsecured loans

An unsecured working capital loan means you need not pledge any asset as security. This becomes especially beneficial when you do not have sufficient asset value for collateral but need high-value funding. On Bajaj Markets, you can get up to ₹50 Lakhs without any collateral.

2. Quick application and approval process

A key benefit of such a loan is the convenient application and subsequent approval process. All you need to do is share your basic information and submit a few documents to begin the application process. Upon approval, you will get the funds within a few hours or days. 


3. No interference

Lenders offering working capital loans for a small business generally do not require the borrower to provide expenditure-related information about the funds sanctioned. All you have to focus on is the EMI amount and making those funds available before the due date.


4. Flexible withdrawals

Some businesses may not maintain a fixed budget or a formal financial plan. This may be due to the nature of the business that demands funds readily available to cover any unexpected or overhead cost. 


This is when having a working capital term loan is a good option, as you can use the funds at your discretion. You can also repay their dues when they have the necessary finances. Moreover, some lenders only charge interest on the actual loan amount withdrawn. All of this helps you utilise the funding efficiently and repay it without any stress.


5. Pre-approved loan offers

Some banks and financial product aggregator websites, such as Bajaj Markets, also give their borrowers a host of pre-approved working capital loan offers. These offers make the application and approval process much easier and quicker. 


The process here is comparatively quicker because the lender has already assessed your creditworthiness. To grab the offers, you may only need to submit basic information and documentation. 

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How Do Working Capital Loans Work?

For a business, working capital loans are an excellent option when there is an immediate requirement of funds to cover essential expenses. At times, a company may fall short of the necessary finances for everyday expenses. This could translate to a sizable dip in business activity, catastrophic fluctuations in sales cycles or unstable cash flows, among others. 

In order to handle current liabilities and assets and ensure smooth operations, a company may consider a business loan for working capital. It can be classified into:


  • Term loan

  • Post shipment finance

  • Bank guarantee

  • Letter of Credit (LC)

  • Cash credit/overdraft

  • Packing credit

  • Bill discounting

  • Line of credit


Depending on the needs of the business, a company can pick any type of working capital term loan to meet its requirements. Once you apply for this loan and get the funding, you can use the funds as you like. 


Keep in mind that given the nature of the expenses, the tenure for such loans is generally shorter. The repayment is similar to other types of loans – in instalments. However, depending on your loan type and the lender, the terms may vary. 


For example, the lender may request bi-monthly payments or only charge you for the amount you use. In both cases, your borrowing costs and repayment instalments will be different. So, make sure you compare all the options before applying.

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Eligibility for Working Capital Loan

The working capital loan eligibility criteria essentially depend on the lender. However, there are some common requirements, such as:


  • The applicant should be at least 25 years old

  • The business vintage should be at least three years

  • Income Tax Returns and other related information

  • Should not be a blacklisted entity 

  • Trusts, NGOs, and MSMEs cannot apply


You may need to provide additional information for business verification purposes. So, be sure to check the requirements before applying. This will help you have a seamless process.

Documents Required for Working Capital Loan

While the required documents are kept to a minimum, checking the list can help you ensure that you have everything you need. Generally requested documents are:

  • Passport-size photographs

  • KYC documents

  • Relevant financial documents/statements

  • Proof of Business Operations and Vintage

  • Latest bank account statements going back at least one year


Remember, the lender may ask for additional before or after you submit the application. Ensure you submit all of them to get the funding you need. 


On Bajaj Markets, you can choose from leading lenders to get a business loan for working capital and meet your operational needs affordably. 

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Working Capital Loan Interest Rate

The interest rate levied on a working capital loan is determined by several factors such as the type of business, business vintage, business revenue, and more. You can avail a working capital loan for your business from any of Bajaj Markets lending partners at interest rates starting from 12% p.a. The application process for the loan is simple and hassle-free and requires minimal documentation.

How to Apply for Working Capital Loan

You can apply for a working capital loan offline or online. To apply for a working capital loan digitally, you can follow these steps.

  • Step 1

    Go to the lenders’ website and select the ‘Business Loans’ option

  • Step 2

    Click on ‘Apply Now’

  • Step 3

    Fill in the digital form with your business details and proceed further

  • Step 4

    Enter the loan amount and select a suitable tenure

  • Step 5

    Submit KYC documents, such as Aadhaar card, PAN card, voter’s ID etc.

  • Step 6

    Submit the required business and individual documents.

Working Capital Loan

To apply offline, you can visit the nearest bank branch and submit an application form and the required documents. Before applying, you must ensure that you meet all the eligibility requirements and have all the documents ready. 

How to Calculate Interest on Working Capital Loan?

The total amount paid as interest on a working capital loan can be calculated by subtracting the principal amount from the sum of all EMIs paid. For example, if you avail a working capital loan of ₹5 Lakhs at 17% p.a. for a tenure of 3 years (36 months), you will end up paying a total of ₹6,41,749 to the lender, of which ₹1,49,749 (22% of the total amount) will be the total interest paid.

Principal Borrowed


Interest Rate

17% p.a.

Loan tenure

3 years (36 months)



Total Amount Paid


Total Interest Paid

₹1,41,749 (22% of the total amount)

Calculating the interest manually can be tiring, and you might even end up miscalculating due to an inadvertent error. Therefore, it is advisable to use the business loan EMI calculator on Bajaj MARKETS to calculate your working capital loan EMIs and the total amount that you would be paying as interest to your lender. The calculator is easy-to-use and has an intuitive interface.

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FAQs on Working Capital Loan

How much working capital finance can one avail? On what basis is the quantum decided?

You can get up to ₹50 Lakhs as a working capital loan on Bajaj Markets. The quantum of the maximum available loan amount is decided based on the health of the business, revenues and relationship with the lending partners.

What is an example of a working capital loan?

Acquiring financing for letter of credit, cash credit, overdraft facility, and invoice financing are some examples of a working capital loan. You can opt for any of these types of loans as per your business requirements.

What is the reason for a working capital loan?

These loans allow you to cover everyday operations and business financial requirements without any hassles. You can take an SME working capital loan for urgent funds to pay bills, workspace rent, pay advance business payments, need an advance to get material, etc.

What is the limit for a working capital loan?

The limit is usually up to  ₹50 Lakhs. However, it also depends on the lender you choose and the working capital loan eligibility criteria set by them. Creditworthiness, business vintage, and finances are some factors affecting the maximum loan you can get.

How to calculate working capital?

To calculate your working capital, you need to subtract your current liabilities from the current asset value. So, working capital = current asset - current liabilities. 

Here, assets include the company stocks, advances in hand, and additional cash or assets that are liquid and can help meet business requirements. In contrast, liabilities include any short-term debts and expenses, such as paying creditors, interest, utility needs, and more.

What are the risks of working capital loans?

The risk of these loans depends on the type of loan you get. An unsecured working capital loan comes with a higher interest rate. As such, the borrowing costs are high. Moreover, any missed payments can hurt your creditworthiness and, thereby, your ability to borrow in future. 

On the other hand, a secured working capital loan puts your asset at risk. This is because if you default, the lender can seize the asset to recover the loan. You can avoid these risks by optimising your borrowings and ensuring that fits your current and future finances.

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