Why working capital finance is necessary for small businesses

2. Gets you funds without any collateral: While working capital loans come in two options – secured and unsecured, typically lenders offer unsecured working capital loans. Small businesses with a good credit history and timely past prepayment record along with a business vintage of 3 years or more qualify for collateral-free loans. With no additional assets to be pledged, working capital finance is the ideal way of funding day-to-day expenses.

3.Gives you the freedom to use the money as required: Some loans may come with a restriction specifying how you can spend the money; however, working capital finance comes with few, if any, restrictions. You have the freedom to use the funds as you see best based on the immediate needs of your business. This way, you can take maximum advantage of the funds.

4. Ensures you get the money quickly and with flexibility: Working capital loans are easy to get as they require that you match basic eligibility criteria. These include the applicant’s age to be between 25 and 58 years, a business vintage of 3 years, income tax returns for last 2 years and last year’s turnover audited by a CA. Since this loan is made for SMEs, some lenders offer pre-approved working capital loans based on your credit rating to further hasten the process of applying and getting funds.

Since working capital needs are often unpredictable, this gives your business a chance to tackle these needs on time and without overpaying interest. Working capital is essential for small businesses, where any ups and down in revenue have the potential to cause daily operations to stumble. To help relieve your business of this strain, working capital finance can help you to focus on growth.