A working capital loan is a type of advance that helps a business fund its day-to-day or short-term operations. A working capital business loan can be used for various purposes.
Usually, working capital finance is not used for long term investments but it can be used to cover the daily expenses of a business. A working capital loan is a perfect financial solution for companies with high seasonality or cyclical sales as they can use the required funds during the period when the business activities are less.
Uses of working capital loan
- Procure raw materials
- Purchase inventory
- Pay for overhead costs like electricity, rent, salaries and other utilities
- Finance blocked payments from debtors
- Pay suppliers in advance
- Maintain a healthy level of cash
