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Benefits of Working Capital Finance for Small & Medium Businesses

There are a number of ways in which a working capital finance can help the small and medium businesses and in fact, more and more lenders today are offering these loans to SMEs and MSMEs. The small businesses can be considered as the backbone of the economy as they are ones catering to the majority of the population at any given point of time. Helping them will mean improving the economical and financial scenario of the country, which will only prove to be fruitful for the banking sector in the long run. There are quite a few benefits of opting for Working Capital Finance.

First, as the name suggests, a working capital loan assists in the “working” or the day to day operations of the company. This loan is different from a long term business loan that is mostly applied for in bulk and repaid over a long tenure. Working capital loans will help mitigate any current financial problem that they business might be facing and this is what makes them so attractive to the clients. Especially, in the case of a small or medium businesses, there are so many parameters involved before the business finally takes off and there could be ups and down in the business, which would have a direct impact on the company’s finances. But whatever the impact might be, there are some costs that a business will always have to incur- like paying the rent for the premises, paying the electricity bills, paying the salary of the employees, building up the inventory and make it ready for the peak season and so much more.

These are aspects that always require some money, and on top of that there is general maintenance and upkeep of the business, and its security. Now it might happen, that the client is making a delay to clear the invoices and the time has come for the company to pay the bills. This is when the working capital loans come in handy. One can apply for such a loan from any leading bank or NBFC like Bajaj Finserv at low working capital loan interest rates for a short tenure. The money from the loan can be used to keep up the businesses as it is without faltering and the loan can be paid back as soon as the payments are cleared. This is a much better approach than constantly worrying about cash flow and the time and energy can be utilized for the betterment of the business instead.

Working capital loans are one of the reasons why many small and medium businesses go on to realize their dream of continuing with their businesses. Earlier, most SMEs went for self working capital financing and many businesses were shut down because of slow cash flow. Earlier, one had to ask friends and relatives for the money and when they refused, one often felt despondent as to how to carry on with the business. Today most banks and NBFCs like Bajaj Finserv have made the application process a lot easier. There is minimal documentation involved while applying for a working capital loan and the application itself can be made online from anywhere. There is a final verification before the loan disbursal and the entire process takes less than two days. This is because the lenders understand that a small or medium business will only come for a loan when they are in dire need of money and they in turn, try to make the loan approval process as fast and hassle free as possible.
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