Working Capital Financing & its Benefits

Working Capital Financing & its Benefits

When a business needs money to cover expenses such as day-to-day operations, Purchase of raw materials, wages, electricity bill payment, payroll, etc., rather than the purchase of equipment or machinery, such financing is known as Working capital financing. This is a very common type of financing for the business which does not have a consistent cash flow and also for the companies that are in a growing stage and are taking up larger projects than usual.

Generally working capital comes into the picture whenever there is a gap between debtors and creditors cycle. For e.g. You’re the manufacturer of the X component which is used for 2-wheeler assembly. In order to manufacture this X component you need to purchase the raw material, and probably you need to pay upfront to purchase the raw material. However, the conversion of that raw material to cash may take the time of 45 days. In this case, you need the working capital to bridge the gap between the purchase of raw materials and the sale of the finished products.

It is a simple solution business that helps in keeping up with the work cycle. Working Capital is the difference between the company’s current assets and its current liability. It is one of the very flexible options to opt for as it proceeds with minimum documents and in a short span of time. One can opt for working capital finance in both secured and unsecured ways depending upon the availability of collateral.



Cycle for working capital finance

Working Capital Cycle refers to the time period required to convert the net assets and liabilities into cash. The working capital cycle always shall be short, easier it is for companies to free their blocked cash. If the turnaround time of conversion into cash is higher, the requirement for working capital will be higher.

Types of Working capital Financing

There are various types of working capital loans available from which a business can select as per their requirement. Most banks offer similar types of Working Capital Loans. These are:

Overdraft Facility or Cash Credit


Bank Guarantee


Bill Discounting


Letter of Credit


Invoice Factoring


Benefits of Working Capital Financing



Working Capital financing can help businesses to boost their day-to-day activities and meet the short-term requirement of the business.


The businesses can eliminate the collateral and opt for an unsecured working capital loan as it is not always justified to put your assets at risk. This will eliminate the requirement of collateral and the business will be able to flourish in its operations.


The procedure of getting a working capital loan is very flexible and you can easily apply at Terkar Capital to get the best solutions for the funding. As a result, the process will get easier and funds will be disbursed faster.


Working capital finance helps you to maintain a good cash flow of the business which in turn results in strengthening the financials and gaining stability in the business whenever there is an unexpected requirement.


Working capital financing offers a very flexible and easy repayment option. It also fulfills cash requirements in an emergency period. So working capital finance gives much-needed leverage to the business to take up the risks.



Why Terkar Capital?


Working capital is one of our services where we have expertise. At Terkar Capital we offer a wide range of services to clients. We will always be ready to serve you with all your requirements in the best possible ways. Terkar Capital has expertise in market strategies that provide the working capital facilities at ease. So whenever it is funding, Terkar Capital is ready to serve you at best!

FAQs on Working Capital Finance

FAQs on Working Capital Finance

The businesses face a cash crunch frequently, the major requirements for funding are from Micro, Small, and Medium Enterprises (MSMEs). The need for funds can be for paying dues, purchasing assets, running the business, expansion, etc. To overcome such issues, working capital can be the perfect solution. This type of finance helps in short-term operations and allows them to run their operations smoothly and efficiently.

1. What is the tenure in working capital finance?

Working capital finance is a short-term loan that is majorly used for managing the operational expenses of a business. Normally, the loans are offered for a period of 12 months. The criteria depend upon the lender as well as the requirement of the borrower.

2. What are the benefits of working capital finance?

The major benefit for borrowers is that it smooths the fluctuations in the cash flows of business operations and processes funding quickly. The working capital instruments have flexible repayment facilities, which gives an advantage to the borrower.

3. What do lenders look for in a potential working capital borrower?

The major potential required from the borrower in the case of secured funding is the collateral, whereas, in the case of unsecured funding, it depends upon the creditworthiness of banks and the track record of the borrower.

4. How much is the interest charged on the working capital instrument?

The interest depends upon the amount of the funds, the credibility of the borrower, and the repayment history of the borrower. Hence, the interest differs from case to case and lender to lender.

5. Which working capital instruments do we offer?

Terkar Capital arranges a variety of products in debt funding and assists the clients in choosing the best suitable one.

Below is the list of our instruments of working capital finance:

• Cash Credit Facility

• Bill Discounting

• Factoring

• Letter of Credit Discounting

• Overdraft Facility

• Bank Guarantee

6. How is the repayment criteria in working capital finance?

The repayment criteria depend upon the mutually agreed terms and conditions between the buyer and the lender, it can be through EMIs or as and when the borrower gets cash.

7. Is collateral compulsory for working capital funding?

The type of funding, whether secured or unsecured, totally depends upon the availability of collateral. Also, if available, the amount of the fund and the value of collateral should be matched. The only difference between both fundings is the rate of interest. Secured funding will fetch low ROI as compared to unsecured due to the presence of collateral. Terkar Capital will help you with a reasonable cost of borrowing from their clients.

8. Who provides a working capital finance facility?

The working capital facility is provided by banks, NBFCs, and financial institutions. The eligibility, repayment terms and documentation varies according to the respective lenders. We help to bridge the gap between eligible borrowers and capable lenders.

9. How does Terkar Capital help you in Working Capital Finance?

Terkar Capital is one of the top financial firms and provides quality services to its customers. We help you with arranging loans in Pune and across India. We understand the customers' needs and tend to provide the perfect financial solutions accordingly. Here the executives are highly trained and work enthusiastically for providing services with ease. Our timely and confidentiality in service makes us different and unique from others. Working capital is one of our services in which we have expertise. So whenever it is funding, Terkar Capital is ready to serve you at best!

Understanding Corporate Finance in India

Corporate Finance

All the corporates in India are in constant need of funds for operating their businesses. Corporate finance is the area of finance that deals with raising the finances of companies and assists in capital creation and development of the corporation. Corporate finance manages financial decisions that affect operations like Capital Budgeting, Capital Raising, Investment Decisions, etc.

The finance of the company can be raised in two ways, i.e., Debt and Equity finance. Equity funding is generated by selling shares of the company and reinvesting the same amount. Whereas, Funding through debt happens when a company borrows money and agrees to pay it back to the lender at a later date. The debt capital is further divided into 2 major parts i.e., Unsecured funding and Secured funding.

If you are looking for a corporate funding solution, Terkar Capital can be the appropriate platform for raising finances from both debt and equity funding. We provide secured as well as unsecured funding options to our customers and suggest the best suit according to the financials. Below is the list of a few of our solutions:

Secured Funding

Secured funding is a type of loan where the borrower has to keep collateral of assets or security against the loan. The borrower here does not have personal liability for the loan. The period of the loan offered in secured is high with a low rate of interest. In case of default, the lender has the right to put the asset or security pledged on auction and recover the amount from it.

1. Loan against Property(LAP): 

As the name suggests, a loan against property is the most secure type of loan for lending institutions and the most easily available one for borrowers in normal circumstances. It is generally a long-term loan that needs collateral security against loans.

2. Working capital Finance: 

Working capital is the difference between the company’s current assets and its current liability. One can avail a loan against working capital which helps in short-term operations like paying dues or expenses, utility bills, etc. Hence, Working Capital Loan allows one to run their operations smoothly and efficiently. Working capital is available in both secured and unsecured ways.

3. Machinery loan: 

All manufacturing companies require machinery to manufacture the products which may have huge costs. In such a case, a machinery loan is something that acts as a savior for your business. The machinery loan is available in both secured and unsecured ways which are taken for purchasing new machinery.

4. Builder Finance: 

It is a loan to the builders or developers for constructing or developing residential or commercial property. Being long-term finance, builder finance comes under secured funding. The collateral of such a loan will be the land against the property being acquired or developed. Generally, lenders prefer those builders who have been in this construction field for many years and have a good CIBIL rating.

5. Lease Rental Discounting(LRD): 

LRD is a loan that is offered against rental receipts of the borrower which are derived from lease rent contracts from the clients. The loan is provided to the lesser based on the discounted value of the rentals and the value of the property.

6. Debt Syndications: 

It occurs when a borrower requires an amount that is too large for a single lender to provide, hence there is a group of lenders. The lenders in debt syndication share the risk only exposed to their portion of the loan.

7. Foreign Currency Funding: 

It is when the borrower wants to fund across the borders, i.e., a foreign country, and hence the borrower as well as the lender deals in foreign currency only.

8. Sugar Pledge Loan: 

The time gap between production and sales of sugar is high and hence, they can face a crunch in working capital and sugar industries can get loans against them.

9. Project Finance: 

Project finance means a loan obtained for fulfilling the finances of the new project, the new project can be used for expansion, reconstruction, etc. Here, the project itself is kept as collateral and the loan amount has to be paid after the completion of the project and once the borrower starts generating revenue.

Unsecured Funding

As the name suggests, unsecured loans are loans where the collateral security is absent, and the loan is provided based on the CIBIL score. This type of loan is taken by businessmen to overcome their short-term inconsistencies in the business such as payment to suppliers, shortage of working capital, unsettled invoices, and many more. The Rate of Interest is comparatively high because of the absence of collateral.

1. CGTMSE: 

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is an unsecured loan for micro and small enterprises to help small businesses grow in a competitive market and assist entrepreneurs to build their businesses and avail of collateral-free loans easily and conveniently.

2. Trade Finance: 

Trade finance makes it possible and easier for importers and exporters to transact business through trade. Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. This is one of the suitable financial instruments we can use while dealing with an international customer for minimizing financial risk.

3. Bill Discounting: 

Discounting of the bill can be defined as the advance selling of a bill or invoice to an intermediary before it is due to be paid about certain criteria. A major aspect of bill discounting is that it will help in resolving the crunch of working capital.

4.  Factoring: 

It is the financial instrument or debtor finance in which the seller sells its accounts receivable to a third party called ‘factor’ at a discount. There are three parties involved in such a transaction: a seller, a buyer, and a factoring company. In simple words, it is selling unpaid invoices for the requirement of instant cash.

5. LC Discounting: 

Letter of Credit/Line of Credit is the guarantee by the bank to purchase the bills of the exporter and in return make him the payment. LC Discounting is the facility provided by banks, NBFCs, or Financial Institutions.

Importance of Corporate Finance:

1. Raising Capital: 

Corporate finance means raising the finances of the existing company by debt or equity which is required for running the business efficiently. The need for funds can be for making expansions and diversification in business, payment dues, etc.

2. Research and Development: 

Finance is a crucial aspect of the business, it is also required for undertaking research and development which enhances the functioning of a business organization.

3. Smooth Running of Business: 

For a business to run effectively, there should be proper legal and other compliance like paying dues and taxes on time, which is again developed by corporate finance.

Steps/Process in Corporate Finance

1. Interaction with the client: 

The foremost step in this process is interaction with clients and knowing about their company’s financial condition, i.e., the requirement for finance, product/instrument for raising finances, etc. The process starts with a discussion of clients' requirements and their expectations and ends after disbursing the loans. We arrange the best possible product and provide an easy process throughout. Also, our team of experts guides the applicant in every stage.

2. SWOT analysis of the company: 

It is important to know the strengths and weaknesses of the company, which will help us to draw the analysis of raising finances. Not only strengths and weaknesses but overall analysis of the company is essential to exactly understand which funding to go for.

3. Inspecting the market options: 

After understanding the overall aspects of the company, we check the conventional and non-conventional factors and suggest the best suitable option for them. We discuss the overall process in-depth with clients and make them understand it thoroughly. Here, we check the eligibility of the client, and the overall documentation procedure is undertaken.

4. Approval of Finances: 

We arrange the meetings with lending institutions and take their approval, which ultimately starts the loan procedure i.e, sanctioning of the loan. These arrangements are settled by our team, which finally leads to easy disbursement of funds. Our journey doesn’t end here, we make sure that the suggested product suits the client’s interest, and the client should be in an adequate position to return it within a specified period.

Why choose Terkar Capital?

Terkar Capital is a corporate finance company in India. We are one such financial firm that provides both secured and unsecured business loans in Pune, Mumbai, and across India. Our timely execution and professional services make us different from others. We understand the borrower's needs, strengths, and weaknesses and work hard to provide the best services. If you are looking for corporate finance assistance, here we are!

Raising Funds For The IT Industry

Funds For The IT Industry

Running an industry leads to a lot of complications, be that a manufacturing or service industry. If we talk about the Service Industry, it includes providing services to businesses or final consumers, which comprises Information Technology Services, Tourism, Restaurants, Transportation, Health Care, and Entertainment.

, Clothing Brands, etc. Being the most developing sector, the IT sector constantly requires funds for developing new software, starting a new company, and many others. But while asking for loans, the major gap they face is the collateral.

Since these companies generally do not have fixed assets for collateral, they generally cannot opt for secured loans. Perhaps, the only assets that they possess are Intellectual Property Rights (IPR) which cannot be kept as collateral for finance. Therefore, these industries have to go to unsecured funding. We at Terkar Capital, provide hassle-free funding solutions in Pune and beyond. It is one of the most modernized and highly specialized finance facilitators that arranges the best suitable options for all our clients. Below is a list of products which we arrange for you:

Unsecured Business Loan: Having no asset as collateral, IT industries have to opt for unsecured funding. As the name suggests, unsecured loans are financed where the collateral security is absent, and the loan is provided based on the credit score of the borrower. Such a loan can be taken to overcome their short or long-term inconsistency in the operation. The Rate of Interest is comparatively high because of the absence of collateral, but Terkar Capital will arrange the reasonable cost of borrowing for you!

Eligibility criteria for Unsecured Business Loan:

1. Unsecured loans are granted to only creditworthy borrowers. i.e., according to their CIBIL score. A score of 750 is required by many lenders. A score between 650 to 750 is considered favorable, the companies with low CIBIL scores face huge issues for such a loan.
2. Another criterion is that the borrower company must have a specific turnover for applying unsecured funding (which varies according to the set criteria of different lending institutions)
3. The minimum age of the borrower should be 21 and the maximum 65.
4. The business should have been in operation for at least 3 years.

Services in unsecured business loans:

Following are a few of our services available in unsecured funding:

Business Term Loan: The term loan for business is available in both secured and unsecured ways. The type depends upon the availability of the collateral and needs to be repaid in the form of EMIs within a defined time period. This can be for the short-term, medium-term, or even long-term as per the various business needs of the company. The period from such a loan ranges from 1 to 5 years, which can go beyond 5 years. The loan can be availed for business high-cost investments like expansion, purchase of expensive plants and machinery, etc.

CGTMSE: The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), was introduced by the Government of India in 2000. CGTMSE is a government-backed scheme for micro and small enterprises. The scheme can be granted to both the manufacturing and service industries. The scheme aims at strengthening the credit lending facility for industries facing funding issues.

Working Capital Finance: Many times it becomes difficult to manage finances, and there comes the need for funds. Small or medium enterprises face these issues more frequently. Here, working capital finance helps in such a scenario. Working Capital is the difference between the company’s current assets and its current liability. This type of finance helps one in short-term operations like purchasing raw materials, undertaking operational payments, etc. Hence, the Working Capital facility allows one to run its operations smoothly and efficiently. Below is the list of a few of our working capital instruments:

Cash Credit(CC): This facility enables customers to use the amount specified by the lender and pay interest only on the used amount. Here, the amount cannot exceed the sanctioned amount. The amount of CC depends upon the credibility of the borrower.

Overdraft facility: Overdraft is the financial instrument allowed by the bank for their customer that enables you to withdraw money from your bank account even if you do not have such a favorable credit balance. One cannot exceed the limit given by the bank.

Bill Discounting: It is a method of trading where the seller gets the amount in advance before the maturity of the bill at a smaller amount than its actual, i.e., at a discounted rate. The reasons for discounting can be the requirement of working capital requirement, paying dues, and many more. In simple words, Bill Discounting can also be termed as Short Term Loans against a bill as security.

Factoring: It is the financial instrument or debtor finance in which the seller sells its accounts receivable to a third party called ‘factor’ at a discount. There are three parties involved in such a transaction: a seller, a buyer, and a factoring company. In simple words, it is selling unpaid invoices for the requirement of instant cash.

LC Discounting: It is a guarantee given by the bank to pay the seller for the buyer’s obligation, in case a buyer fails to make the payment. LC discounting takes away the risk and gives assurance to the seller for the funds.

Bank Guarantee: Bank Guarantee is issued by the lender to the debtor to cover its liability in case of default by him. In case of the failure of payment by the debtor, the bank will pay on his behalf.

Why choose Terkar Capital?

Adequate funding is essential for companies to operate the business and achieve growth. Under these circumstances, Terkar Capital’s financial products can be a quick solution to all the problems. These convenient and collateral-free funds can be used to address the urgent needs of finance and grow your business. So without having any second thought, approach Terkar Capital for both debt and equity funding solutions!