Working Capital Finance – Funding To Grow Your Small Business

Working Capital Finance – Funding To Grow Your Small Business

Your company requires funds to run its daily operations. These can be met by your current assets, especially payments received or yet to be received from your clients. Long payment periods by suppliers, and diligent inventory management helps to reduce costs and maintain a positive cash flow.

Generally, companies with high working capital also have a good cash flow. However, various uncertainties can create imbalance in the working capital. Working capital is calculated as the difference after subtracting the current liabilities from the current assets.

Your supplier might have reduced the payment duration from, let’s say, 40 days to 20. You might have skipped the customer’s monthly invoice deadline. Sudden hiring or marketing budget might have locked your cash. Working capital financing can support any fall or imbalance in your company’s working capital.

Features Of Flexi Working Capital Loans

Flexi Loan Facility

Several NBFCs such as Bajaj Finserv offer flexi loan facility to small businesses to support their day to day processes. This loan facility offers a flexi loan limit where you can utilise any amount till the limit is exhausted. Unlike traditional flexi loans, the interest will be applicable only on the borrowed amount and not the whole loan limit. This makes your EMIs lighter.

Interest-Only Loan

Bajaj Finserv offers three flexi loans – term loans, interest-only loans, and hybrid loans. The interest-only loans can further reduce your EMIs as you can pay the principal amount at the end of the loan tenor.

The table below will further explain how the flexi working capital loans lowers your EMIs.

  Business Term Loan Flexible Working Capital Loan (Term) Flexible Working Capital Loan (Interest only)
Amount in (Rs.) 10 lakh 10 lakh 10 lakh
Utilised Amount (Rs.) NA 6 lakh 6 lakh
Interest 15% 15% 15%
Years 1 1 1
EMI (Rs.) 95834 57500 7500*

*Principal is paid at the end of the loan tenor.

Flexible Repayment

It is not just the EMIs, there are other benefits of flexi loans as well. You might have excess revenues to pay-off the debt. Alternatively, due to a slump in business, you are unable to pay regular EMIs. In either case, working capital finance is the answer.

Bajaj Finserv gives you the option to repay your loan EMIs up to 6 times in a calendar year. You can repay at any interval as per your convenience without worrying about notices, collection agents or penalties.

For flexi loans there is no part pre-payment charge. If you have excess cash, you can make part pre-payment. The part pre-payment business loan calculator will tell you how much you saved on your EMIs after making the part pre-payment.

Bajaj Finserv offers unsecured working capital loans up to Rs. 30 lakh. They are available at nominal working capital loan interest rates. They are approved within 24 hours, and upon approval, you can access all loan-related information online. For part pre-payment, you need to repay 3 or more than 3 EMIs in advance before its due date. Paying 3 EMIs is mandatory, but there is no maximum limit set. Working capital finance can be used to fund the payrolls, utility bills, and inventory requirements. You can also upgrade your digital quotient or fund your marketing campaigns with these funds.

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