Working Capital Loan
About Working Capital Loan INDIAN LOAN BAZAAR offers a customized working capital loan for small and medium enterprises to meet their working capital requirements. A working capital loan helps in running everyday operations. These loans usually cover recurring expenses such as accounts payable, wages, etc. Our working capital loans help offset your working expenses during a low sales/revenue period. A working capital loan can be used for : Benefits Of Working Capital Loan A working capital loan has several benefits that will work in your favor : When you apply for a working capital loan, you’re not required to pledge any type of asset as security. You can also get a sizeable loan amount sanctioned, going up to Rs.30 lakh. Now, the amount granted varies from bank to bank, and also depends on other eligibility criteria. One of the major benefits of a working capital loan is a convenient application and approval process. All you have to do is share basic information and submit minimal documentation to begin your application process. The lack of collateral also speeds up the approval process. Once your loan is approved, you can expect the sanctioned amount to be disbursed quickly. Considering that this is a short-term loan, you’re not required to give your lender any information about your expenditures. The lender also has no involvement in your business matters, since there is no ownership from their end or any exchange of shares. All you have to concern yourself with is the equated monthly installments and clearing those balances before the due date. Some businesses don’t have a structured budget or plan for their finances, especially when it comes to procuring new material or managing overhead costs. This is when a working capital loan comes in handy because you have the flexibility to spend as per your discretion. You’re not required to share a detailed plan of your company’s expenditures to acquire the loan. In fact, some banks also offer flexible working capital loans. Here, you only borrow how much you require and pay interest on the borrowed amount. You can also repay your dues when you have the finances, without worrying about the pre-payment charges. Some banks also give you the option of accessing pre-approved loans. Now, these offers make the application and approval process far easier. To get a hold of this offer, you may be asked to submit your basic information on the bank’s portal. If you’re eligible for the loan, the approval and disbursal should have a quick turnaround. Bank Of Baroda Working Capital Loan Bank of Baroda offers corporations, Working Capital Finance to meet their operating expenses, purchasing inventory, receivables financing, either by direct funding or by issuing a letter of credit. ICICI Bank Working Capital Loan ICICI Bank designed to meet Working Capital Needs by providing Get Export Credit, Overdraft facility, Bank Guarantees, and other products. HDFC Bank Working Capital Loan HDFC Bank provides loans to fund working capital from ₹ 10 lakhs with our two products: Valuedraw: Elitedraw: Which companies are eligible for Working Capital Loan ? You can get working capital finance as long as you are engaged in manufacturing, service, or trade and belong to any of the following segments: Who can get benefit from Working Capital Loan? What are different variants under the working capital loan? Depending on the business needs, a company can pick any one of these variants to meet their requirements Points to improve your chances of getting a Working Capital loan approval Follow the below-mentioned steps to get your Working Capital Loan loan application processed faster: Factors affect the Working Capital loan interest rate The below factors influence the rate of interest:
You can get the following loans/facilities from ICICI Bank to manage your Working Capital :
From ₹ 10 lakhs to ₹ 25 lakhs
₹ 25 lakhs onwardTypes of capital offered
You should maintain a good credit history and score. It will assist you in gaining the trust of the financial institutions about your creditworthiness, and help in getting the loan application approved on time.
Apply for a loan amount that is suitable as per your repayment capacity. Banks and NBFCs study your financial profile and business’s annual turnover before approving a loan amount. If the amount required exceeds your repayment capacity, the loan application can be rejected.
Provide all necessary documents such as your residence proof, ID proof, age proof with the company documents. The documents need to be uploaded online with the application form.
Comparison of Best working capital loan Offers from Top Banks / NBFCs
BANK/NBFC | INSTITUTION TYPE | MINIMUM LOAN AMOUNT | MAXIMUM LOAN AMOUNT | MINIMUM TENURE | MAXIMUM TENURE | INTEREST RATES | FEES & CHARGES |
---|---|---|---|---|---|---|---|
Axis Bank | Bank | ₹50000 | ₹50,00,000 | 1 Year | 15 Years | Custom | Up to 2% + GST as applicable |
Aditya Birla Finance Ltd. | NBFC | ₹50000 | ₹15,00,000 | 1 Year | 3 Years | 16.85% – 17.85% | Up to 2% + GST as applicable |
Arohan Financial Services Ltd. | NBFC | ₹500000 | ₹75,00,000 | 9 Months | 2 Years | 20.70% – 26.99% | 1% + GST as applicable |
Bajaj Finserv | NBFC | ₹100000 | ₹30,00,000 | 1 Month | 8 Years | 18% – 40% | Up to 3% + GST as applicable |
Capital First | NBFC | ₹1000000 | ₹75,00,000 | 1 Year | 5 Years | 16.00% – 24.00% | Up to 2% + GST as applicable |
Capital First | NBFC | ₹1000000 | ₹50,00,000 | 1 Year | 3 Years | 12% – 15% | Up to 2% + GST as applicable |
Deutsche Bank | Bank | ₹1000000 | ₹50,00,000 | 2 Years | 4 Years | 24% | Up to 3% + GST as applicable |
Edelweiss Financial Services Ltd. | NBFC | ₹350000 | ₹25,00,00,000 | 4 Year | 10 Years | 20.50% | 2% – 3.5% + GST as applicable |
Equitas Small Finance Bank | Bank | ₹500000 | ₹75,00,000 | 1 Year | 5 Years | 18% | 2% + GST as applicable |
Fortune Financial Services – Kapital Tech | NBFC | ₹200000 | ₹150,00,000 | 3 Months | 2 Years | 15% – 24% | 1.5% – 2% + GST as applicable |
Fullerton | NBFC | ₹1000000 | ₹50,00,000 | 1 Year | 4 Years | 13% – 16% | Up to 6.5% + GST as applicable |
HDB Financial Services Ltd. | NBFC | ₹100000 | ₹30,00,000 | 1 Year | 5 Years | 12% – 36% | 2% + GST as applicable |
HDFC Bank | Bank | ₹50000 | ₹50,00,000 | 1 Year | 4 Years | 15.65% to 21.20% | 2% + GST as applicable |
ICICI Bank | Bank | ₹100000 | ₹10,00,00,000 | 1 Year | 5 Years | 12.9% – 16.65% | Up to 2% + GST as applicable |
IDFC Bank | Bank | ₹100000 | ₹40,00,000 | 1 Year | 5 Years | 11.69% – 15% | 1.5% + GST as applicable |
India Infoline | NBFC | ₹100000 | ₹50,00,000 | 1 Year | 5 Years | 18% – 25% | Upto 3% + GST as applicable |
IndusInd Bank | Bank | ₹100000 | ₹15,00,000 | 1 Year | 5 Years | 10.6% -18% | 0.5% + GST as applicable |
Kotak Mahindra Bank | Bank | ₹300000 | ₹2,00,00,000 | 1 Year | 3 Years | 16.00 % to 19.99% | Up to 3% + GST as applicable |
Lendingkart Finance Ltd. | NBFC | ₹50000 | ₹100,00,000 | 1 Month | 1 Year | 18% – 27%* | 2% + GST as applicable |
Magma FinCorp Ltd. | NBFC | ₹300000 | ₹2,00,00,000 | 1 Year | 4 Years | 17% – 21% | 2% + GST as applicable |
Neo Growth | NBFC | ₹200000 | ₹75,00,000 | 6 Months | 2 Years | 12% – 36% | 2% + GST as applicable |
RBL Bank Ltd. | Bank | ₹1000000 | ₹35,00,000 | 1 Year | 3 Years | 16.00% – 27.00% | 2% + GST as applicable |
Standard Chartered Bank | Bank | ₹1000000 | ₹75,00,000 | 1 Year | 5 Years | 13.5% – 20% | Up to 2% + GST as applicable |
Tribe Tech Private Limited | NBFC | ₹100000 | ₹20,00,000 | 1 Year | 3 Years | 12% – 36% | 2% + GST as applicable |
Yes Bank | Bank | ₹1000000 | ₹400,00,000 | 1 Year | 5 Years | 13.25% – 19.99% | Up to 2.5% + GST as applicable |
Common Eligibility Criteria for Working Capital Loan The criteria may vary from lender to lender. However, listed below are some basic requirements to be eligible for a working capital loan : You may be asked to provide additional information to verify your business as well.
Eligibility Criteria by Federal Bank How to Check CIBIL Score? SMEs/MSMEs, businesswomen, traders, manufacturers or service enterprises can check their CIBIL score before applying for a Working Capital Loan. To check your CIBIL score online, you can visit www.cibil.com and receive your credit report. As per RBI guidelines, every individual is entitled to receive a free credit rating check once a year. After you submit the request, you would be needed to provide the required identification and address proof documents and make a payment to CIBIL for the credit report, if you have already availed a free check in the year. To know your score offline, you can visit the bureau or apply for a credit report through the post. While applying via post, you may have to furnish your documents. Once these are verified and authenticated, your credit report is sent to you by mail. With a good CIBIL score and easy-to-meet eligibility criteria, qualifying for a customized Business Loan becomes very simple. You increase your chances of getting a better interest rate, higher loan amount, longer tenor and quicker approval. Bajaj Finserv offers all these benefits with easy, quick and hassle-free Working Capital Loans. Eligibility Criteria by Bajaj Finserv Bajaj Finserv offers Working Capital Loans with eligibility criteria that are easy-to-meet. If you fulfill the following working capital loan requirements, your loan will be easily approved: Eligibility Criteria by Kotak Mahindra Bank For Channel Finance : Primary Security in the form of hypothecation of goods purchased under the program. Collateral Security would be as acceptable to the bank For Agri SME Business : Our range of products and services are geared to deliver to the needs of every type of agribusiness across even non-metro locations over the country. For Facility Against Credit Card Receivables :
Common Documents Required for Working Capital Loan For availing a working capital loan one should require minimum documents, below are listed some documents which you need to keep handy IDFC first Bank working capital loan Documents Sole Proprietorship: Partnership Firm: Limited Liability Partnership: Public Limited: *KYC – Bandhan Bank Working Capital loan Documents Bajaj Finserv Working Capital loan Documents You only need to submit the following documents to complete your application: ICICI bank working capital Loan Documents
Documents Individual Entity KYC* For all Partner(s) Yes Last 3 years audited balance sheet & auditors report Yes Last 3 years ITR Yes Last 12 months Bank Statement Yes
Documents Individual Entity KYC* For all Partner(s) Yes Last 3 years audited balance sheet & auditors report Yes Last 3 years ITR Yes Last 12 months Bank Statement Yes
Documents Individual Entity KYC* For all Partner(s) Yes Last 3 years audited balance sheet & auditors report Yes Last 3 years ITR Yes Last 12 months Bank Statement Yes
Documents Individual Entity KYC* For all Partner(s) Yes Last 3 years audited balance sheet & auditors report Yes Last 3 years ITR Yes Last 12 months Bank Statement Yes
Standard KYC documents in line with Bank’s norms.
Availing a working capital loan from Bajaj Finserv is easy and hassle-free.
Document Name Details Application Form All fields should be duly filled in and acknowledgement given to the customer Self-attested copy of KYC Documents Entity proof – Partnership deed/Certificate of Incorporation/Shops and Establishment certificate
Copy of PAN Card of Entity, Proprietors/Partners/Directors, Security providers and guarantors
Address Proof of Entity, Proprietors/Partners/Directors, Security providers and guarantors Financials Last 3 years Audited/Provisional Financials (Audited financials to include Balance Sheet, Profit and Loss Account along with schedules and Notes to Accounts, Tax audit reports, Statutory Audit report). In case of Provisional financials, VAT returns are also required
Current year performance and projected turnover on letterhead of the entity
Last 1 year Income Tax returns of the borrowing entity (along with Computation of Income and copy of acknowledgement), if filed online, acknowledgement number is required Bank Statements (not more than 45 days old) Latest Bank Statements for last 6 months (in case of First Time Borrower) and 12 months (in case of Takeover proposals). In case of multiple banking, statements covering minimum 75% of banking turnover is to be provided
Are all working capital loans unsecured? Ans: No. Certain banks will require an asset as security to acquire a working capital loan. For instance, some banks may accept residential, commercial, and industrial properties as collateral. You can also submit shares, stocks, gold, and book-debts.
What are the charges for a working capital loan? Ans: Besides the interest rate on the sanctioned loan amount, you will have to pay the processing fee and documentation charges. There are other fees like cheque or EMI bounce charges and penal interest rates, in case of missed payments.
What types of companies are eligible for a working capital loan? Ans: This requirement differs from lender to lender. However, listed below are some of the types of companies that can apply for a working capital loan: ● Private limited company ● Sole proprietorship firm ● Partnership firm The type of industry your business is established in also matters. It’s always good to check the specific requirements with your lender to avoid rejection of your application.
What are the lending rates for this type of loan? Ans: Usually, these loans are offered with a floating interest rate. If you need further clarification, you can check with your potential lender. You can also view the interest rates on their official website.
What are the tenures offered for a working capital loan? Ans: Usually, banks and financial institutions will offer a one-year tenure, considering it is a short-term loan.
How do I approach Indian Loan Bazaar for a working capital loan? Ans: The application process is completely online. You have to just fill the Application form for applying for a working capital loan.
Over 90% of the over 98,000 businesses that are launched in India every year end up as a failure. That’s quite normal by global standards, but the main reason for a large number of these failures is working capital. To be specific, a major reason for failure is the lack of working capital for business. The good news is that the Government of India knows about this, and is taking active steps to help new small businesses and startups get access to working capital. There are many different government loan schemes that you can apply for as a small business in India. But the two main ones that can be used for working capital are the Standup India scheme and Mudra Loan Yojana.
1. Stand up India
Stand up India, part of the Startup India initiative, aims to provide working capital for business for scheduled caste and backward tribes.
It also aims at promoting employment and entrepreneurship opportunities among women. The Stand Up India Scheme provides collateral-free loans to applicants and is actually known as Credit Guarantee Scheme Stand Up India (CGSSI).
The working capital for business available under Stand up India is between Rs. 10 lakh to Rs. 1 crore, and can cover up to 75% of the project cost. The loan is repayable in up to 7 years, with a moratorium of up to 18 months. The rate of interest would be the lowest applicable rate of the bank for that category. A RuPay debit card will be issued to borrowers for the withdrawal of capital for operations. This initiative is supported by Google, LIC, and SBI.
Eligibility for Stand Up India Loan
- Applicant must be SC, ST, OBC, Women
- The application must be for the commercialization of products
- The company can an individual entity, partnership, or registered LLP
- The company must be less than 5 years old and must have a turnover of no more than Rs. 25 crores per year.
- DIPP certification is required
HOW TO APPLY FOR A STANDUP INDIA LOAN
You can apply for a loan under the Standup India scheme directly at any branch of Scheduled Commercial Banks in India. You can also apply online on the Standup India portal at www.standupmitra.in.
STAND UP INDIA LOAN DOCUMENTS REQUIRED
Have this list of documents ready before you apply;
Proof of Identity:
Voter’s ID Card / Passport / Driving License / PAN Card / Signature identification from present bankers of the proprietor, partner of the director ( if a company)
Proof of residence:
Recent telephone bills, electricity bill, property tax receipt /Passport/voter’s ID Card of Proprietor, partner of Director (if a company)
- Proof of Business Address
- The applicant should not be a defaulter in any Bank/F.I.
- Memorandum and articles of association of the Company / Partnership Deed of partners etc.
- Assets and liabilities statements of promoters and guarantors along with the latest income tax returns.
- Rent Agreement (if business premises on rent) and clearance from pollution control board if applicable.
- SSI / MSME registration if applicable.
- Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan
- Photocopies of lease deeds/ title deeds of all the properties being offered as primary and collateral securities.
- Documents to establish whether the applicant belongs to SC/ST Category, wherever applicable.
- Certificate of incorporation from ROC to establish whether majority stakeholding in the company is in the hands of a person who belongs to the SC/ST/Woman category.
For Cases With Exposure above ₹ 25 Lakhs
- Profile of the unit (includes names of promoters, other directors in the company, the activity being undertaken addresses of all offices and plants, shareholding pattern, etc.
- Last three years balance sheets of the Associate / Group Companies (if any).
- Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like the capacity of machines, the capacity of utilization assumed, production, sales, projected profit and loss and balance sheets for the tenor of the loan, the details of labor, staff to be hired, basis of the assumption of such financial details, etc.
- Manufacturing process if applicable, the major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major-competitors, and the company’s strengths and weaknesses as compared to their competitors, etc.
(The checklist is only indicative and not exhaustive and depending upon the local requirements at different places addition could be made as per (necessity).
2.Mudra Loan Yojana
Mudra stands for the Micro Units Development & Refinance Agency Ltd (MUDRA). The Pradhan Mantri Mudra Yojana is for the small and micro scale industries, to help people who do not have financial stability and sizeable assets to start a business. Mudra Bank Loan Yojana will provide loans up to Rs. 10 lakh through Mudra cards so that it can be used in the business.
SLABS OF MUDRA LOAN
The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur as also provide a reference point for the next phase of graduation/growth for the entrepreneur to aspire for.
SHISHU:
Targeted towards start-ups and covering loans up to Rs 50,000. If a loan is applied under this scheme, the interest rate is 10% to 12%.
KISHOR:
For existing businesses that lack exposure, covering loans above Rs 50,000 and up to Rs. 5 lakh. For this category, the interest rate is 14% to 17%.
TARUN:
For businesses that have grown to a certain stage and have enough exposure, but need to reach another level. It covers loans above Rs 5 lakh and up to Rs. 10 lakh & has high-interest rates starting from 16% onwards, varying based on the bank to which you apply.
MUDRA LOAN APPLICATION FORM
The Mudra Loan application form is available for download from your bank’s website. You can apply for the loan by contacting any branch of the bank you prefer.
Apply Here
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