Business Loan > Working Capital Loan

A working capital loan is a business loan that offers credit cash to corporations to fund their day-to-day operations like payrolls, rent, vendor payments, etc.

Businesses must, especially during low sales and revenue, have a healthy flow of capital that ensures that operations run smoothly. That is why working capital loans are incredibly crucial to businesses.

Working capital management monitors accounts receivables, payables, stock management, and loan management to maintain liquidity. It helps the business have enough liquid cash on hand to pay operational costs and short-term debts.

The difference between the value of a company’s current assets and current liabilities for a period of time is a business’ working capital. Working capital is the number of current assets left after subtracting current liabilities. It’s what can quickly be converted to cash to pay short-term debts. Working capital can be a barometer for a company’s short-term liquidity.

A positive amount of working capital indicates good short-term health.

The types of working capital loans that are available to businesses in India are

  • Working Capital Term Loan
  • Bank Guarantee
  • Bill Discounting
  • Letter of Credit or LC
  • Invoice Factoring
  • Trade Credit or Line of Credit
  • Cash Credit & Overdraft

A business overdraft or revolving credit facility are also types of working capital finance and have some similarities such as interest being charged on the amount that has been withdrawn when it is still outstanding. Overdraft is a facility where you can withdraw money from your bank account even if your balance is zero. These facilities should only be for short-term borrowings or emergencies. A working capital loan is used for everyday tasks of a business such as advertising, marketing, sales, and many other functions.

ABV Debt offers an array of commercial loans like working capital loans without any hassles of heavy documentation. The fastest turn-around time and payment flexibilities make it ideal for generating commercial funds.

Cash Credit / Overdraft

Export Loan – Preshipment and Postshipment

Import Loan – Buyers Credit & Suppliers Credit

Dealer Financing

Supplier Financing

Letter of Credit

Bank Guarantee

Structured Trade Finance

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