A new business owner is not eligible for an unsecured loan without adequate business vintage. However, to fund his/her daily business operations, they can opt for a working capital loan upon fulfilling certain eligibility criteria.
The main reason to consider this financial instrument is to meet fund requirements during lean business periods. Delayed payments or unplanned expenditures can result in a cash crunch situation. Therefore, it is necessary to get a working capital loan and fulfill short-term fund requirements.
Eligibility criteria for a working capital loan
The first step of successfully procuring this kind of loan is to get clarity on the eligibility requirements. Here are the factors one must consider before applying for this loan:
- Indian citizens aged between 24 to 70 years can opt for this financial option.
- They must be self-employed individuals with a business vintage of minimum of 3 years.
- Ones associated with partnerships, private limited companies, Limited Liability Partnerships (LLPs), and closely-held limited companies can apply for this loan.
Apart from this, other individuals are eligible for this instrument on a case-to-case basis based on their profiles.
Additionally, start-up business owners can opt for a working capital business loan to meet their daily expenses. Several financial institutions like Bajaj Finserv offer a high-value loan in addition to some pre-approved offers for a hassle-free loan application process.
Therefore, individuals can check their pre-approved offer by entering basic details like name and number.
Upon knowing the eligibility of this financial option, one can successfully proceed to its application procedure.
Steps to apply for a working capital loan
The application process of capital finance is simple and easy. Here are the steps to follow:
Step 1: One should fill up the online application form for a working capital loan.
Step 2: They need to submit the necessary documents for verification purposes.
Step 3: After successful verification, the loan amount will be disbursed, and they will receive the amount in their accounts in a short span.
Therefore, business owners can apply for a working capital loan in this manner and strengthen their business.
Apart from knowing about the eligibility and application of working capital loans, one must also know about its types.
Types of working capital finance
There are three kinds of working capital loans based on business type and needs. They are as follows:
- Short-term working capital loans: Borrowers procure this type of loan to finance urgent business expenses. These loans have a short loan tenor.
- Long-term working capital loans: Any big-ticket purchase related to a business requires a loan that comes with a longer repayment tenor. Owing to that, borrowers can opt for this financial option and reduce the financial burden.
- Secured working capital loans: Lenders provide this loan against an asset that acts as collateral for the loan.
Therefore, business owners can choose a working capital loan to fund business operations, after learning about the features and benefits of this financial instrument.
Features and benefits of a working capital loan
There may be several instances when a start-up owner’s business requires small working capital financing. This mode of financing will help a business owner manage sales fluctuation, prepare for bulk orders, stabilise cash flow, and enable to leverage business opportunities.
Moreover, there are some features of this financing mode that makes it a desirable option for every business owner. They are as follows:
- High-value loan amount: Business owners can avoid roadblocks and run business operations smoothly by opting for this loan as it comes with a high amount of up to Rs.45 lakh. In addition to this, a working capital loan does not require any collateral. Therefore, one can keep his assets safe by choosing this option.
- Fast loan approval: Upon fulfilling the already mentioned easy-to-meet eligibility, one can avail of working capital finance at the earliest.
- Easy withdrawal and repayment: Reputed financial institutions offer Flexi-loan facilities to manage working capital needs. With this facility, borrowers can secure a particular amount and withdraw multiple times from the limit. With this facility Moreover, they can repay the loan amount per their convenience and need not pay any prepayment charge.
- Online access: Due to the digitisation of the entire loan process, business owners can access their accounts online and get the necessary details of their working capital loan promptly.
Therefore, it is evident that working capital loans are a convenient credit facility for new business owners in need of funds.