The business market environment is highly competitive and businesses should maintain their efficiency in areas including operations, supply chain, deliveries, and others to lead the competitors. Working capital is required by all businesses so that they can meet their different short term liabilities and ensure that their business operations are running smoothly. Working capital can be used for expenses including wages, utility bill, rent, and others. The expenditures are essential and when a firm is short on working capital, it impacts the operations and productivity negatively. Fortunately, some of the best non-banking financial companies in India including Bajaj Finserv have for you a working capital loan that ensures that your operations are working optimally at all the time.

A working capital loan its advantages and disadvantages

It is important to know the pros and cons of working capital loan so that you can make a proper selection. As may be evident, working capital loans are not used for purchasing assets or for investment. They are used for meeting short-term expenditures and obligations. Here are some of the advantages of these working capital loans that are highly popular for businesses in India and abroad.

Shorter repayment tenure- Working capital loans are not excessively large and therefore their repayment tenure may not extend beyond 5 years.

Quick approval- If a business produces all the requisite documents and has a proper standing, a working capital loan may be disbursed to it in as less as 24 hours.

Apart from these advantages, working capital loans require the least documentation and may procure for you a fund of up to rupees 30 lakh almost instantly. Also, any business that is existing for at least 3 years can apply for the loan.

Disadvantages of Working Capital Loans

A working capital loan has also got certain disadvantages of their own. Good credit/CIBIL score is required for the loan. You may be required to have at least the credit score of 750 or above to get the loan. The loan may also require a low FOIR (Fixed Obligation To Income Ratio). This means that you are not paying any other or least EMIs and other loan repayments.

If your financial history is good and you do not excess of financial debt/burden, you will be able to get a working capital loan quite easily.
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