Ways to Manage Different Types of Working Capital with Business Loan


Working capital is defined as a firm’s financial capability to meet its short-term goals. In other words, the working capital of an enterprise is the liquid cash available to them at any given point to run their daily operations smoothly.
It is crucial to maintain a healthy working capital balance to ensure that the regular working of the enterprise is not compromised due to the shortage of funds. A business may face a working capital shortage for a variety of reasons, not all of which might be under its control.
One of the most practical ways to see your enterprise through such situations is to avail a working capital loan from financial institutions like Bajaj Finserv. A working capital loan is one of the primary types of business loanswhich can help a company get back to its feet.
However, it’s prudent to understand the types of working capital first to analyse its implications on a business.
Types of working capital explained
There are 4 primary types of working capital:
  1. Gross working capital: Total amount pledged to all assets of the company including available cash and net receivables.
  2. Net working capital: Difference between current assets and liabilities. It can be either positive or negative.
  3. Permanent working capital: Lowest limit of net working capital for a financial year. It refers to the minimum amount you have to invest to keep the company operational.
  4. Temporary working capital: Difference between net working capital and permanent capital.
There are kinds of working capital, such as reserve working capital and special working capital.
How capital loans are ideal to manage working capital
An enterprise may fall short on any of the categories mentioned above. It can be mitigated with the help of a working capital loan, one of the most prevalent types of business loans in India. These loans are easy to avail because of the relaxed eligibility criteria and can help you overcome difficult financial crises.
Here are a few reasons why working capital loans are ideal to address working capital shortages.
     Immediate cash injection
Your business may need a fast cash injection to meet immediate expenses like procuring raw materials or paying off creditors. A working capital loan may well prove to be the only way out in such circumstances. NBFCs like Bajaj Finserv disburse these types of business loans within 24 hours of approval. The amount will be credited directly into your bank account so that you can meet your immediate expenses without any hassle.
     Easy to meet repayment
These types of business loans come with long tenors and easy repayment terms. The interest rates are also nominal, which makes the repayment affordable.
     Pre-approved offers
NBFCs like Bajaj Finserv brings you pre-approved offers on business loans (including working capital loans), personal loans, home loans, and many other financial products. These offers simplify the process of availing your loan and help you save on time. All you have to do is share a few simple details and check your pre-approved offer.
     Enjoy unrestricted usage
A working capital loan can be used in any manner you see fit for your business. These types of business loans providers typically do not put any restrictions on how you can use the amount. You may use it to pay staff or creditors, buy equipment or raw materials or any other requirement of your enterprise.

Skilful working capital cycle or management is a prerequisite for the financial success of any business. In times of emergency, working capital loans may provide the impetus for the growth of your organisation.
Ways to Manage Different Types of Working Capital with Business Loan Ways to Manage Different Types of Working Capital with Business Loan Reviewed by Durgesh Thakur on March 25, 2019 Rating: 5

No comments:

Powered by Blogger.