If starting a new business venture is hard, it is even harder to keep it going. You must take care of many key aspects, make crucial decisions, and arrange for the money. In most cases, you will have to sell goods on credit but might need to buy the material in cash. It is tough for even old enterprises to maintain this cycle with their cash. This can lead to issues with paying for day-to-day expenses as well.
If you also face a similar issue, you can opt for working capital finance from a bank or NBFC. With a working capital loan, you can pay your daily expenses until you get the money from your creditors. This loan is ideal for taking care of the urgent needs of your business.
Before taking on this loan, using a working capital loan EMI calculator is ideal. This will assist you in planning your finances and knowing if you can pay the EMIs on time. Read on to learn more about the key aspects of a working capital loan.
Key Aspects of a Working Capital Loan
A working capital loan can be very useful for you and your venture. It allows you to take care of the daily expenses of your business, such as salaries, utility bills, freight, repairs, and other costs. Before you apply for working capital finance, you must know about some key aspects of this loan.
- Type: It is a business loan, i.e., you can use the money for business-related costs only. If you use this loan for any private needs, the lender may cancel the loan.
- Security: You may or may not need to offer security for this loan. It will depend on the lender and the amount you need. Usually, for loans up to Rs 10 lakh, no security is asked for. If you want more money, you must offer security, like a fixed asset or bank deposit.
- Amount: There is no upper limit for this loan. The maximum amount you can get will depend on how well you can meet the lender’s rules. After a certain limit, you will need to offer security as asked by the lender.
- Lender: You can get working capital finance from a bank or an NBFC of your choice. The process will be easier if you have an existing account with the lender.
- Tenure: The loan tenure can vary per the lender’s rules. Most banks or NBFCs offer tenure of three to five years based on your business profile.
- Application: You can apply for a working capital loan online. But you must complete the paperwork as per the rules of the lender. You may send the papers by email or give printouts per your preferences.
- Process: A business loan can take two to three days after applying online. This period can also be reduced if you have an old account with the lender.
Eligibility for a Working Capital Loan
To get working capital finance, you must meet the lenders’ rules. Here are some key aspects of the eligibility criteria that you have to fulfil:
- Age: You must be more than 24 years old but less than 72 years old.
- Work: You must be a self-employed person with your venture. It can be a factory or shop.
- Credit Score: Your CIBIL must be 700+ for a working capital loan. Some lenders may ask for a lower score based on your profile.
- Nationality: You must be an Indian national with valid papers.
- Work-ex: Your venture must be at least three years old and should be making a profit.
- Docs: You will need to give some documents like
- IT returns for 2 years
- Bank statements for 12 months.
- Ownership Proof
- Business Registration
- Personal documents of all applicants
Using a working capital loan EMI calculator
Before you plan for working capital finance, you must know the EMIs you will have to pay. This will help you plan your finances in a better way. There is no need to do it manually, as you can use a working capital loan EMI calculator.
It is a free online tool that will do the entire loan math for you in a few seconds. There are no chances of errors with a working capital loan EMI calculator. You need to enter some basic details, and the tool will take care of the rest.
Here are the steps to using a working capital loan EMI calculator:
- Search for the term ‘working capital loan EMI calculator’ on Google and click on the link for your preferred lender.
- You may also download a free app from any lender on your phone for this process.
- Click on the link for business loans. Here, you will need to opt for working capital loans.
- On the next page, you will find the working capital loan EMI calculator link. Click on it.
- Now, on the next screen, you will need to enter details like loan amount, tenure, and interest rate.
- There is no need to enter any personal information.
- Once you click the “calculate” option, you will see the EMI amount on the screen. There will also be details like the total interest, principal, and amount to be paid.
- Some tools also allow you to download the repayment schedule for even more clarity.
Most business ventures need to opt for a loan at some point. It is not bad until you keep the loan amount within a limit and can pay the EMIs on time. If you need a working capital loan with the best features, then get in touch with Piramal Finance. They offer a vast range of business loan solutions that can take your venture to the next level. Get in touch with their experts for more details.