"Learn what a working capital loan is, its interest rates, eligibility, and documents required. Get insights on business working capital and capital loan options."
Published: 5 January 2023
Updated: 5 July 2024
A working capital loan is one which is taken to quench the financial thirst of day-to-activities in the office. An established business or a small shop has daily expenses which sometimes become a financial burden on the shoulders. Especially when the business is cyclic or seasonal, managing such expenses is burdensome. The working capital loan is the one-stop solution for all the financial stress of managing the expenditure.
The working capital loan can either be secured or unsecured, in the former the company’s asset shall be presented as the collateral. On the other hand, the unsecured working capital loan is the signature loan that is granted by the bank based on the applicant’s eligibility criteria and CIBIL Score. Hence, it is important to boost your CIBIL score if you are thinking of taking a working capital-secured or unsecured loan. Besides these two options, the applicant can apply for the demand loan which means that the lender is allowed to repay the full amount at any time during the tenure. The borrower can also ask for an overdraft facility for the working capital loan. It is advisable to check all the available options and opt for the best as per the requirement.
The applicant can avail of the My Mudra working capital loan with three easy steps. We are providing a paperless process for the disbursal of loans. Apply online with just a click and get your documentation and enjoy the quick disbursal of a working capital loan. My Mudra is offering different types of working capital loans, and the interest rate of the same starts from 10%p.a to 19% p.a.
The working capital loan for businesses has various types. The applicant should opt for the best among all the working capital loan types as per the requirements.
The unsecured working capital loan allows the borrower to take a loan up to Rs.50 lakh from the bank. An unsecured loan means that the loan is granted based on the eligibility criteria of the borrower. There is no collateral required for the loan, it can be disbursed based on the eligibility criteria and the CIBIL Score.
The secured loan on working capital is the one in which the borrower must keep the assets as collateral. The secured loan offers more security and also has a lower rate of interest as compared to the unsecured loan for working capital.
This is also available for the working capital loan, the borrower can withdraw funds from a fixed line of credit. The repayment of the OD working capital loan is also hassle-free.
Many people are opting for the working capital loan for business and working capital loan for small businesses, this will ensure the smooth working of the business. The loan applied for the working capital can be utilized in various tasks mentioned below:
To get a working capital loan, you need to meet certain criteria set by lenders. This ensures that you are capable of managing and repaying the loan. Here’s what you need to know:
Your business type affects eligibility. This includes individuals, proprietors, partnership firms, companies, retailers, traders, or any business owner in service, manufacturing, or trading that needs regular cash flow.
The required turnover amount depends on the lender. For example, HDFC Bank has different criteria for annual turnovers below and above Rs. 7.5 crore.
Your business should have been running for at least 2 years and should be profitable. Requirements may vary between banks.
You should have at least 2 years of experience in the same business at the current location.
Your business should have a stable, profitable financial history.
All earnings from your business, including business income or investment income, count as your income source.
For a company, the business CIBIL score should be 700 or above. For sole proprietors or self-employed professionals, your personal CIBIL score should be 700 or above.
Your business's financial health, including profit and loss statements, balance sheets, and income tax returns, shows your ability to repay the loan.
Neither you nor your business should have any past loan defaults.
Banks consider property ownership, such as a house, office, shop, or warehouse, as collateral.
These criteria help ensure that you and your business are qualified and capable of managing a working capital loan responsibly.
Interest rate on the working capital loan differs from bank to bank. The borrower should be well aware of the interest rates and opt for the lowest interest rate working capital loan.
|
Topic |
Charges and Interest Rate |
|
Interest rate |
15% p.a |
|
Processing fee |
Depends on the bank |
|
Other charges |
NIL |
Apply for the working capital loan hassle-free with My Mudra. We are offering a swift loan approval process. Get your working capital loan disbursed within a day with the three easy steps mentioned below.
Working capital loan means taking a loan to meet daily requirements of the office. The working capital loan from My Mudra will be beneficial for you as we are providing quick disbursal with minimal documentation to quench the financial thirst of your business. Get the working capital loan at an attractive interest rate within a day. It is always advisable to check monthly EMIs from a working capital loan interest rate calculator. A loan is the planned decision and not a burden if taken wisely.
Also read: Apply for a Working Capital Loan upto Rs. 50 Lakhs Online
