5paisa Loans Blog

Have working Capital requirement? Get loan in 5 minutes

By Anurag Srivastva | 16 Mar 2020

If you have turned entrepreneur and are trying to get a foothold in the business, one of the biggest challenges you will face is the availability of timely finance. New businesses do not have the asset backing or the credit history to get working capital loans for the business. With the rise of peer-to-peer lending platforms, such working capital needs can also be addressed. This is like a personal loan for self employed and there are unique models for lending against working capital, future receivables, GST record, POS history etc.

How can small businesses qualify for a working capital loan?

Even to quality for a small business loan, there are basic pre-requisites.

• The business must have a proper structure; private limited, public limited, LLP, sole proprietorship etc. KYC documents are mandatory.
• The business must have a history and track record of at least one year.
• Normally, there are requirements in terms of turnover and the bare minimum is Rs.20 lakhs per year. The more you have in POS sales, the better.
• Valid certificate of registration and a current bank account history of at least one year is required.
• Income Tax record is an added advantage and GST registration and GST payment history can make it easier to get a business loan

Benefits of raising working capital finance

There are quite a few distinct advantages in this approach.

• The decision is normally conveyed within an hour and the actual disbursal is done into the bank account in less than 3 days. That makes it very efficient.
• Working capital loans structured as personal finance are extremely flexible in terms of rates and tenure. You can get 3 months to 12 months loans based on needs.
• There is no collateral required, unlike normal bank working capital loans where you must offer a lien on current assets.
• Since these P2P lending platforms bring lenders and borrowers together, the platform acts as an objective and transparent intermediary.

The only thing you need to remember is that the processing fee. You need to factor that in. It still remains an invaluable resource for small businesses.