About Working Capital Loan

Working capital loans are extended by banks and financial institutions to help businesses meet their working capital needs. Also known as Cash Credit, here the amount of loan that can be availed of depends upon the creditors, debtors and stock that the business holds which also constitutes the working capital for the business.
Each lending institution has its own way of calculating the working capital limit. While the stock and debtors act as a security in the case of working capital loans, the lending institution may require the borrower to furnish collateral security as well.