The stability of your business depends upon its monthly revenue. If your daily operations run smoothly, you have a greater chance of increasing monthly revenues. This is ensured by working capital loans.
Consider the situation of Mr. Kartik Mehta. He runs a textile manufacturing business in Ahmedabad. Last year, during Diwali, he got a huge order for manufacturing from a well-known company. This was a dream come true for him as it would boost up the revenue of his company immensely. However, even with the required manpower, the thing stopping Mr. Mehta was working capital. He had money to start the project, but not enough to complete it. This is when he applied for a working capital loan. This loan helped him achieve the target within the allotted period without any obstacles.
Working capital loans are offered to you by various financial institutions to ensure that your business runs smoothly. They enable you to increase the revenue of your business, and are easy to acquire. The monthly revenue of your business might be unbalanced when there is instability in the market. This affects your sales and daily operations may get hampered. If you are into the manufacturing business of the textile and clothing industry, the work pressure during festive season increases tremendously. To ensure that you meet the needs of your client, you must have proper cash flow. Working capital loans come with the best benefits that will help you cut down any extra cost in your business and overcome all hindrances.
5 Major Benefits Of Working Capital Loans:
1. Collateral-free loans:
While taking a loan, you often come across a common problem—finding a guarantor or collateral. In some cases, someone you know, like one of your family members, offers to be your guarantor for the loan, while in most of the cases you have to pledge valuable assets like your property, car or even your business equipment. Working capital loans save you from this process as they provide Collateral Free Loans.
2. Flexibility of repayment:
Working capital loans are flexible when it comes to repayment options and offer good interest rates. Depending upon the fluctuations in your business, you can withdraw the required money for a smooth operation. It also has a flexible tenor of up to 60 months.
Unlike other financing options such as venture capitalists or partnership, working capital loans let you be the sole owner of your business. You don’t have to share your business profits, or the decisions you take, with anyone.
4. Line of Credit (LOC):
This is a unique feature offered by working capital loans wherein you pay only the interest amount as the monthly EMI. The principal amount is to be paid later at the end of your tenor period. This also facilitates you to pay the EMI only on the amount you utilise. There is no charge on the money that is unused.
5. Pre-approved offers:
There are many lenders who provide customers with pre-approved offers like a top-up loan. So, while doing your research, look for lenders who will grant you such benefits, as it will make the application process even faster.
When do you need working capital loans?
1. Unstable sales:
It is common to have fluctuations in your sales, but this directly affects your revenue. This is when working capital loans will help you to maintain a stable revenue of your business. It provides you with the necessary cash required to run daily operations of your business.
2. Not enough cash:
Imagine a situation where you get a huge order from the client, but don’t have enough cash in hand to start with the project. What will you do? Give up on the project? If you do so, it will lead to your loss. It’s better to take a working capital loan and achieve the target.
When it comes to bringing revenue into your business, you have to ensure every bit of work is up to the mark. However, when it comes to stability of cash flow, it becomes hard at times because of external factors like a flux in the market. But that shouldn’t stop you from reaching your target on time. Working capital loans are available for entrepreneurs like you. One such institution offering working capital loans is Bajaj Finserv. Bajaj Finserv’s Business Loans contain all the aforementioned benefits that you must look for in a loan.