Working capital loan is a short term debt financing available to a business, through which a business can meet their day to day operations such as rent payments, payroll and inventory purchases. It can be either secured or unsecured.
Working capital loan can be in the form of letter of credit, bank overdraft, invoice discounting and it can also be in any other form as well. Generally working capital loans come for a shorter period and with repayment flexibility.
Ways in which working capital loan can work for your business :
If a business is able to fulfill its obligations with its current assets then a business is having sound liquidity. Working capital loans provide liquidity to a business and also an opportunity to generate cash from its current assets. A business with a sound management can generate higher revenues and higher operating profit with the help of working capital.
Helps in improving cash flow levels
Generally when a business is new it is tough for them to maintain steady cash flows. Working capital loan acts as a saviour for new business as it saves it from cash crunch and with this a business manages its operation efficiently.
Working capital loan works as a miracle for seasonal businesses because during a particular time their demands are so high that they are not able to meet market demands. So in this case a business opts for a working capital loan to buy raw materials , hire labourers to fulfill market demands.
With working capital loans a business can grab available growth and expansion opportunities in the market. A business can run marketing campaigns with the loan amount to boost its sales.
Businesses can expand their offline or online presence with the loan amount. Also a business enjoys higher savings by buying raw materials in bulk.
Safeguards your business from unseen circumstances
Suppose if a business is hit by some unseen external factors which are beyond its control such as fire , flood etc. During those situations a business can opt for a working capital loan to run its operations smoothly.
Quick approval and collateral free
With the evolution of technology, financial services have totally changed. Today a business need not visit bank branches for a working capital loan. Now, Businesses can avail working capital loan at a single click and without any hassle fund is directly credited to their account within 24 – 48 hours.
Also they can avail benefits of collateral free working loan , this also helps businesses in building their credit worthiness.
Shorter period with repayment flexibility
Nowadays working capital loans are crafted according to the personalised need of the business.
A business can select the period on their own for which they want to avail the loan and also according to their repayment ability they can choose repayment schedule which can be daily, weekly or monthly.
Spending flexibility without giving away equity ownership
It is of utmost importance that a working capital loan does not dilute a firm’s equity because by going for other funding options a business has to give away a portion of its equity ownership.
With a working capital loan a business does not have any pressure to spend on a particular product or business line. Here a business enjoys the right to spend according to their needs.
Hylobiz is a business centric platform which helps a business in automating its receivables and payables journey.
Hylobiz offers integration with top built ERPs on its platform and with its API marketplace it provides invoicing, business loans , invoice discounting along with connected banking services.
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