Working capital needs arise when the company’s current assets fall short of offsetting the current liabilities. Current assets comprise inventory, short term liabilities, payments from clients and cash. Your bills, loan EMIs and salaries are part of your current liabilities. There are several circumstances that can cause imbalance of the current asset to current liability ratio. Some of these are:
- Payments not yet received
- Default of payments
- Increase in utility bills
- Increase in floating rates of borrowed loans
- Payment to be made to suppliers
- Losses or business cycle recession
- Machine upgrades or repair
- Sudden increase in business that requires more funds
Let’s see how Flexi loan is the ideal way to meet your working capital needs.
Flexi business loans
Flexi business loans work on the lines of a facility where you get a certain loan limit for a tenor. You can borrow as you need and repay when you can. It is recommended to take a Flexi loan facility as various credit bureaus favour 30% to 50% credit utilisation. Bajaj Finserv offers Flexi business loans for amounts as high as up to Rs. 45 lakh.
Flexi Loans give you flexibility to withdraw funds when required for business needs. The limit may drop along the tenor (dropline) or remain constant throughout the tenor. This provides you maximum availability of funds throughout the tenor.
- You are charged interest only on the amount borrowed, rather than the whole loan limit. For example, if the loan limit is Rs. 20 lakh and a company borrows Rs. 8 lakh, it must pay interest only on Rs. 8 lakh.
- The monthly instalment for Flexi loans can consist of just the interest amount, and not the principal component, if you choose this option. The principal amount of the loan can be repaid at the end of the tenor of the facility.
Illustration: If Flexi loan of Rs. 8 lakh is borrowed for 4 years at 15%, then monthly payout would come to Rs. 10,000 for 4 years. Rs. 8 lakh can be repaid after 4 years.
In regular business term loans, you would have to pay interest on the whole of Rs. 20 lakh. EMIs would feature both the interest and the principal component (Monthly payment for Rs. 20 lakh, borrowed for 4 years at 15% would have been approximately Rs. 66,000).
Additional read: Flexi business loans: the easy way to manage your business finances
Collateral-free Flexi loans
Bajaj Finserv Flexi Loans are unsecured loans, and you can borrow without pledging collateral. This reduces voluminous documentation, and hastens the loan application process time. Our loans can be approved within a day.
Existing and loyal customers are given pre-approved offers from us. These offers may include a top-up loan or reduction of business loan interest rates.
You can apply and check for the eligibility criteria and the required documents online. You can manage your account online through the customer portal, My Account. You can plan and buy insurance online, and make payment for EMIs, part payment and foreclosure on My Account.
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