{"id":6479,"date":"2020-10-13T07:31:17","date_gmt":"2020-10-13T07:31:17","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=6479"},"modified":"2023-10-26T05:52:21","modified_gmt":"2023-10-26T05:52:21","slug":"planning-to-avail-a-working-capital-loan-best-thing-for-your-business","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/planning-to-avail-a-working-capital-loan-best-thing-for-your-business\/","title":{"rendered":"Planning To Avail A Working Capital Loan?Best Thing for Your Business"},"content":{"rendered":"

There\u2019s a reason why working capital is widely regarded as the indicator of a company\u2019s success. At the risk of stating the obvious, every company, small and large, needs adequate working capital to survive and scale.\u00a0<\/span><\/p>\n

Several small businesses have shut down, and large companies have fallen out of competition due to lack of sufficient short-term funds. All those long-term objectives of expansion and growth to dizzying heights seldom bear fruit if a company\u2019s cash inflows and outflows are out of balance.\u00a0<\/span><\/p>\n

Apart from fuelling daily operations, working capital is a necessary component in facilitating the growth of a business. And as your company gaits toward expansion, additional funds become a necessity; <\/span>but where will that influx come from?<\/span><\/i> That\u2019s where a <\/span>working capital loan<\/b><\/a> steps in.\u00a0<\/span><\/p>\n

With a working capital loan in place, you can offset any cash crunch that accompanies expansion and paves a smooth path to grow your business.\u00a0<\/span><\/p>\n

What Is The Difference Between A Traditional Loan And Working Capital Loan?<\/b><\/h2>\n

You might wonder <\/span>how a working capital loan is any different from a simple business term loan<\/span><\/i>. To set aside your confusion, here are a few pointers in the following table that demonstrates the distinction.\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
Parameters<\/b><\/td>\n\n

Working Capital Loan<\/b><\/h3>\n<\/td>\n

\n

Business Term Loan<\/b><\/h3>\n<\/td>\n<\/tr>\n

Amount<\/b><\/td>\nThe amount is tailored to a company\u2019s individual needs, and, therefore varies.\u00a0<\/span><\/td>\nFinancial institutions usually set a fixed range for the loan amount in this case.\u00a0<\/span><\/td>\n<\/tr>\n
Tenure<\/b><\/td>\nIt is a short-term credit facility with tenure ranging up to 4 months.<\/span><\/td>\nIt is a mid-term loan with repayment term in the range of 1 \u2013 5 years.\u00a0<\/span><\/td>\n<\/tr>\n
Purpose<\/b><\/td>\nBusinesses avail a working capital loan to address short-term cash shortages or finance operations.<\/span><\/td>\nIt\u2019s borrowed to meet high-end expenditures like buying new machinery, purchasing land, etc.\u00a0<\/span><\/td>\n<\/tr>\n
Eligibility<\/b><\/td>\nIt\u2019s usually less stringent and, thus, easier to avail.<\/span><\/td>\nTerm loans involve stricter criteria and extended processes.\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

How Is A Working Capital Loan The Best Thing For Your Business?<\/b><\/h2>\n