How to Get Working Capital Loans in India

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 Working Capital Loan

Wide variety of facilities offered in working capital loans. It provides Flexible collateral options to loan receivers. In addition, the process of availing this kind of business loans 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:

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 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 are many legitimate online platforms where you can apply for a working capital loan. Some of them are listed below: