Who Can Provide Working Capital Loans To Small Businesses?

Working capital is an indispensable component for any business, irrespective of its size or scale of operations. A company will fail to sustain its profitability if it does not have enough cash to run its operational activities. Consequently, firms need to emphasise on efficient working capital management

However, at times businesses struggle with inadequate working capital due to stagnation of inventory and accumulating accounts payable. Also, at other times there is a long gap before they can collect accounts receivable. 

Regardless, there are several ways through which entrepreneurs can bridge this ensuing working capital gap. Several financial institutions and fintech companies extend working capital loans to small businesses and help them optimise their operations successfully.

That being said, let’s find out how you can avail working capital credits for your business.

Working Capital Loan Providers:

These following pointers highlight the sources that extend a working capital loan to small businesses

  • Financial Institutions:

There are two types of financial institutions, namely – banking and non-banking financial institutions. Most such financial institutions in India extend a working capital loan to small businesses who meet the requisite eligibility criteria. Typically, they tailor this loan as per the applicant’s needs and requirements and generally offer a short-term repayment tenure. It is also mostly a collateral-free funding option, and the rate of interest depends on the prevailing rates and individuals’ creditworthiness. Notably, individuals have to go through these steps to avail such credits –

  • Application process 
  • Documentation 
  • Verification process 
  • Disbursal process 

Once the steps are completed, eligible applicants can access funds and meet their working capital requirements seamlessly. However, if you are looking to raise quick working capital by utilising your unpaid invoices, you can opt . , you can reach out to us and access funds by just uploading your unpaid invoices on KredX’s portal. 

  • Government Schemes:

The SME sector in India is responsible for generating employment for 106 million individuals, which constitutes at least 40% of the country’s workforce. Resultantly, the government has been active in launching credit schemes for small businesses to help them improve and expand their operations. 

Some of the most popular government-backed schemes that provide working capital loans to small businesses include – Stand Up India and MUDRA loans. It must be noted that to become a beneficiary of such policies, individuals are required to fulfil stringent eligibility criteria and complete several formalities. Alternatively, KredX extends funds against simple eligibility criteria and offers attractive terms of repayment, which makes the entire process less cumbersome. 

  • Fintech Companies:

Some private lenders, angel investors, fintech companies and modern digital lending platforms serve as a source of working capital loans. KredX helps businesses raise funds against their unpaid invoices and offer immediate access to funding within 24 - 72 hours* of applying.  Typically, the amount that can be raised against an invoice depends on its value along with the creditworthiness of the applicant. 

KredX operates in more than 120 cities across India and is regarded as a leading integrated cash flow service provider in India. Contact us now to know more about our invoice discounting services.

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