Working capital loan (OD, CC) –
A working capital loan is a type of short – term loan offered by the bank or alternative lender, to finance a company’s day to day operations.
The goal of working capital loans is provide working capital for short- terms capital expenditure, such as wage, rent, and debt service, payment or
finance activities such as sales and marketing or research and development.
A working capital loan seeks to supplement temporary shortfalls in working capital with outside funding
Working capital loans used for verity of purpose, and tactical positioning of the organization.
Summary
- Working capital loans are a form of debt financing meant to cover short-term financial needs, such as capital expenditures.
- A working capital loan can be an effective way to remain agile as an organization and respond to unforeseen opportunities by securing additional financing.
- Cyclical or seasonal business models need working capital loans, for boost there business during low-revenue periods for managing operational expenses.
What is Working Capital?
Before understanding working capital loans we must first understand working capital. Working capital at its core can be thought of as money on hand.
If an organization’s assets outweigh its liabilities, that organization has working capital.
Mobilizing working capital however can be more complex than simply having assets on hand, due to relative illiquidity of some assets, such as land or
intangible assets, such as intellectual property.
Two types of working capital in banking terms secured working & unsecured working capital.
Secured Working Capital
Secured Working Capital provided on collateral base like residential, Commercial, Industrial property & stock.
Unsecured Working Capital
Unsecured Working Capital provided only on financial & business stability base there are no collateral required in this type of transaction.
We can fund to Doctors (BAMS, BHMS, BDS, MDS, MBBS, DIPLOMA, MD, MS, DNB, DM, MCH) degree holder,
CA & CS, CMS only on their registration certificate.