Working Capital Loans for Small Business

Working capital is the operating liquidity of a business, any entity, any government entity, or an organization. Working capital is part of the total capital of the business along with the fixed assets of the business, like plat, machinery, equipment, etc. The gross working capital of the company is the current assets. Working capital is equal to current liabilities subtracted from current assets. If current assets are less than the current liabilities, the business has a working capital deficiency. If the current assets of the business are more than the current liabilities then the company has deficit working capital or the company is at loss.

Working capital loan refers to a credit or a loan that is taken by a company to finance its daily expenses and operations. These loans taken by the business are not used for buying long-term assets or used for making any big investments. The working capital loan taken is used only for financing short-term expenses of the company and for the daily expenses of the business.

Working capital Loan for Small Business

Small businesses require working capital not just for their daily expenses and operations but also to focus on their growth plans and the improvement of the company. A short-term small business working capital loan is provided for the small businesses who aspire to grow and improve. When a business owner takes a short-term working capital loan for his small business, the loan is provided for a short period, for a fixed time, which is usually less than a year. The repayment of a loan is fixed and equal.

Features of Working Capital Loan

The interest of a working capital loan depends on the applicant’s profile, who’s withdrawing the loan. It is different for different banks. The age criteria to apply for a working capital loan is a minimum of 18 years and a maximum of 65 years old. The loan amount depends on the requirements of the business. The tenure for repayment of the loan is around 12 months to 74 months. The processing fee of the working capital loan is up to 3% of the total loan amount, applied for. No such collateral is allowed for processing the loan. A working capital loan is offered to any private, limited companies, to individual entrepreneurs, to partnership firms, to sole proprietors, and Self-Employed Professionals. The type of interest rest is usually the floating rate of interest. The tenure of the business applying for the working capital loan should be of at least three years, with profit.

Various money lenders provide working capital loans for small businesses. Some of the best working capital loans for small businesses are: