Working Capital Loans (C.C. / O.D)

Working Capital Loans


Working capital loans are provided for stocking inventory and/or providing credit to maintain a healthy working capital cycle of a business. Working capital loans can be divided into two major categories, fund based and non-fund based. Fund based credit facilities such as cash credit facilities can be used by a business like cash for purchasing or stocking inventory and other items needed for operating the business. Non-fund based limits on the other hand are guarantees given by the bank based on the credit-worthiness of the borrower. Non-fund based limits such as Letter of Credit allows the borrower to purchase or stock inventory on credit terms from the supplier.

Adroit Corporation can help your business apply and obtain sanction of working capital loans from banks. Working capital loans can be availed for new as well as existing businesses. Once we obtain an understanding or your business or proposed business, our Financial Experts will then advice you suitably on the proposed quantum of working capital loan, type of facilities and schemes available. Adroit Corporation can also help you prepare a project report, apply to banks and obtain sanction of working capital loans for your business.

 

FAQ


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What is working capital?
Working Capital of a business is the total current assets of the business minus the total current liabilities of the business. A good amount of working capital ensures the business functions smoothly and meets its current liabilities on time.
What is working capital loan syndication?
Working Capital Loan Syndication is the process of formulating a credit request, preparing a detailed project report along with the necessary documents, submitting the requests to banks or financial institutions and obtaining sanction & disbursement of working capital facilities like cash credit, letter of credit (LC) or bank guarantee
What is tenure of working capital loan?
Working capital loans do not have tenure. Working capital loans can be renewed each year based on the performance of the entity
Can I get working capital loan for buying a land or building or machinery?
No, working capital loans are sanctioned only for utilization towards the operation of the business and can be used only for acquiring short-term assets like inventory.
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What is Cash credit Limit?
Cash credit limit allows a business to utilize bank funds for acquiring stock or other assets required for running a business and/or for liquidating current liabilities of a business as it becomes due. Cash credit limit is similar to a credit card for individuals, wherein the bank allows the business to use a certain amount of funds in credit for working capital purposes. The amount of cash credit limit sanctioned is based on the business profile and credit worthiness of the borrower.
What is letter of credit Limit?
A Letter of Credit facility allows the borrower to obtain current assets on credit from a supplier. The letter of credit gives the supplier assurance that the payment for the goods provided on credit will be repaid either by the customer or the bank
What are the some of main factor that determine loan eligibility?
Some of the main factors that determine the credit eligibility of a business are Promoters background, business model, operational performance, infrastructure, location, collateral security offered, present financial Performance, future financial performance, credit repayment track record, external credit rating, etc., The credit decision is based on a composite of the above factors
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