Why working capital finance is necessary for small businesses

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Why working capital finance is necessary for small businesses

  • Highlights

  • SMEs require robust working capital to run smoothly

  • Working capital funds immediate business requirements

  • Choose an unsecured and unrestrictive working capital loan

    • Ramp up flexibility and affordability with Flexi Loans

To push your business forward, you need capital that supports daily operations. With sufficient working capital finance, you can cover your business’ salaries and wages, power bills, incidental expenses, rent and general inventory. Thus, working capital helps you run your business without a misstep, and puts the focus on growth. When your working capital is enough to cover daily expenses, you can free up other capital for business-generating expenses such as marketing or purchasing additional machinery.

Since every business witnesses slumps as well as upsurges in demand and revenue, shortlisting an affordable loan customized for this purpose is important. Working capital loans give you needed finance quickly and help you cover immediate costs to keeping your SME going strong.

Here is how the right working capital finance can help your small business grow.
1. Helps you to handle immediate and unplanned requirements: Every small business needs to pay its monthly bills. When your business is growing, there is bound to be a scramble for money as every department will want capital to pursue their objectives. In such situations, untimely expenses may arise such as machinery maintenance. You will need to fund this additional expense without which your production may take a hit or stop completely.

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.

Benefits of Working Capital Finance for your Business

Eligibility Criteria for a Bajaj Finserv Business Loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises, such as a Flexi loan facility that lets you borrow when you need, and prepay when you can. They require only a minimum of documentation to apply for, and come with easy eligibility criteria, which you can view below.

When you borrow a Working Capital Loan from Bajaj Finserv, you can also access the Flexi Loan facility. Under you, you are given a sanction of a particular amount for a certain tenor. You can then borrow funds within this limit multiple times, as and when you need funds for daily operations. The advantage here is that there is no additional documentation required every time you withdraw money from your loan account. Furthermore, it makes finance more affordable as you are only charged interest on the amount withdrawn rather than the total amount sanctioned.

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.

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