What is a Working Capital Term Loan?
A Working Capital Term Loan is designed to fund the permanent or core working capital requirement of a business — the portion of working capital that does not fluctuate with seasonal cycles and needs a stable, long-term source of funding rather than a revolving limit. It is repaid over a fixed tenure through structured installments, unlike a Cash Credit or Overdraft account which is repayable on demand.
This facility is especially useful for businesses that have grown their operations and need a stable capital base to support increased turnover, without stretching their short-term credit lines.
How WCTL Benefits Your Business
- Provides a stable, long-term source for core working capital needs
- Reduces pressure on short-term revolving credit lines
- Structured EMIs aid predictable cash flow planning
- Can be sanctioned alongside CC/OD limits for a complete working capital solution
- Suitable for businesses undergoing growth in scale of operations
Basic Eligibility for Working Capital Term Loans
- Minimum 3 years of business operations with demonstrated turnover growth
- Positive operating cash flow supporting installment repayment
- Satisfactory banking and credit history
- Adequate collateral / security as per lender norms
- Clear justification of the working capital gap being funded
Loan Details
| Parameter | Details |
|---|---|
| Rate of Interest | 10% to 16% per annum |
| Professional Segment | 9% to 13% per annum |
| Minimum & Maximum Loan Amount | ₹10 lakhs to ₹25 crores+ |
| Minimum Business Vintage | Minimum 3 years |
| Age Limit | Min 25 years – Max 65 years |
Documents Generally Required
- KYC of business and promoters
- Last 3 years' financial statements
- Bank statements (last 12 months)
- Working capital assessment / justification
- Collateral / security documents