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Working capital loan is the loan which is used to finance everyday operations of a company and not for buying any capital asset and not for buying any long term assets or investments.
This Loan is given for small businesses currently facing problem, usually commercial banks do not provide working capital support for small projects. Mudra Finance will be able to arrange working capital loan for these small businesses, so that they can also start their own self-made projects. In day to day terminology, working capital is what your customers owe you plus any inventory you have built up minus what you owe your suppliers and employees. Any cash which will be available in their bank accounts that also consider as a Working Capital.
Eligibility for the Scheme:
Companies that could be covered under thus scheme could be:
a. Companies who are bank defaulter but not a wilful defaulter.
b. Companies that are under financed & hence running in lower capacity.
c. Companies that have good market for their product.
d. Promoters of the company are competent and persons of integrity.
e. Technology is not outdated.
Quantum of Working Capital Assistance: Generally, a business requireworking capital which is 75% of the whole cycle of operation.
PromotersTM Contribution:
25%
Interest rate:
PLR + weightage of risk.
Repayment Period:
Maximum 3 years
In the current scenario, it's almost impossible for most of the businesses which are small to get the working capital they require to invest in their own projects from traditional lenders and banks. But without participation of these small businesses, our economy will likely remain stable. Mudra Finance, here, plays a vital role to taking up these small businesses to the next level by providing them working capital loans.
Security:
i. First charge by way of hypothecation of current assets.
ii. Charge on fixed assets of the unit.
iii. Personal Guarantee of Promoter Director/Corporate Guarantee
iv. First pari-passu charge on the fixed assets of the unit, if the assets are mortgaged to other institutions/ Bank
v. Adequate collateral security
Upfront fee:
1.00% of the loan amount
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