Working Capital Loan for What is it? The Type of Company Financing
A turnover loan for companies
is a very interesting solution, which is based on financing the currently operating company. The loan amount may be allocated for the purchase of goods, materials or the payment of non-fixed obligations, i.e. for any purpose related to the operation of the enterprise. In most cases, it is a short-term loan, and its amount depends on the amount and frequency of turnover of a given company, its condition. The more stable the position of our company on the market, the less risk the bank faces. The interest on the working capital loan usually fluctuates in the amount of 10%. In fact, the interest rate on a given loan depends on the creditworthiness, duration of the loan, the form of working capital loan and the amount of borrowed cash. Entrepreneurs have three options for a working loan to choose from:
- revolving working credit – the loan is granted on a separate account, and after repayment it is necessary to submit an appropriate application for making the loan amount available. Then it will not be necessary to go through the verification procedure again,
- overdraft – the possibility of an additional debit which will be on the company account. This is one of the most popular forms of working credit,
- revolving non-revolving loan – a form of credit granted on terms similar to a traditional loan for companies, including a one-off payment to a person’s credit account
Working capital loan for companies
A working capital loan for companies is a very good alternative for companies struggling with temporary financial difficulties, especially when the interest rate is extremely attractive. Such a form of credit may allow the company to regain financial liquidity in a relatively short time, and also to create some kind of security against potential problems. So what other benefits does turnover credit have for companies?
The basis is the possibility of obtaining help in financing current operations. Thanks to it, unexpected expenses or regulation of existing obligations will not pose a problem for us. We can allocate entrepreneur’s funds to any expenses that ensure financial liquidity of the company. Another advantage is the time to repay the working capital loan. The maximum period can be up to 3 years, and the borrower can repay it many times and re-start it up if necessary. The money goes to the borrower once or in tranches – it all depends on the person applying for the loan. In addition, the entire procedure does not take much time.
A revolving loan is a good solution for active companies that can take loans not only in zlotys but also in popular foreign currencies, such as the US dollar, Swiss franc, British pound or the euro.