Do you want to apply for working capital loans in India? Here in this article, we have covered the process involved to get WC loans from financial institutions.
A Working Capital loan is a loan for Micro, Small, and Medium Enterprises to cover the Working Capital cycle as well as meet the daily operational costs.
In general, working capital loans are taken by small business owners for a variety of reasons. Some of them are mentioned below:
- Purchase inventory
- Procuring raw materials
- Paying for overhead costs in running the business on a daily to daily basis.
- Payment to suppliers
- Cash liquidity
What are the Benefits of a Working Capital Loan?
A wide variety of facilities is offered in working capital loans. It provides Flexible collateral options to loan receivers. In addition, the process of availing of this kind of business loan is quick and requires easy documentation
Interest Rates of Working Capital Loans in India
The interest rate for a working capital loan often ranges between 12%-16%.
A working capital loan is usually reviewed annually by banks.
Working Capital Loan Eligibility Criteria
To be eligible for a working capital loan, an applicant must represent a business that has been operating for a certain number of years and/or earning a certain annual turnover. These criteria vary between the type of business you represent and the bank receiving the application
The following entities are eligible for a working capital loan:
-
- Sole Proprietorship
- Partnerships
- Private Limited Companies
- Public Limited Companies
Working Capital Loans Document Checklist
| Document | Entity | ||
| Sole Proprietorship | Private/Public Limited | Partnership | |
| CMA Report if turnover > Rs. 5 crores | √ | √ | √ |
| Business continuity Proof – 3 years of income tax return & Income statement | √ | √ | √ |
| Last 2-year audit report and audited Financials (debtors & creditors List a must) | √ | √ | √ |
| Last 12 months’ bank statements | √ | √ | √ |
| In case of transfer of loan: Last 12 months of loans statement along with sanction letter of the previous bank | √ | √ | √ |
| Any other loan statements on books of companies along with sanction letters | √ | √ | √ |
| Last 12 months’ loans statement with sanction letter of any other existing loans | √ | √ | √ |
| Business incorporation date proof – PAN Card | √ | ||
| MOA(Memorandum of Association ) and AOA (Articles of Association) | √ | ||
| Latest shareholding pattern on company letterhead | √ | ||
| List of Current Directors on company letterhead | √ | ||
| Certificate of Incorporation | √ | ||
| Partnership deed | √ | ||
| Certificate of Registration | √ | ||
Best Places to Get Working Capital Loans in India
In the present day, there are many legitimate online platforms where you can apply for a working capital loan. Some of them are listed below:
- Visit official websites of public and private sector banks
- Loan aggregate sites like Paisabazaar
- Alternative Loan Lenders
- P2P lending sites
In addition, you can also apply through Personal Loan Apps.
Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.