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Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.
Working Capital loans are offered to small / medium Scale Industries where fund is used for setting up a unit, buying machinery, installations & working capital etc.
As SME is the segment on which the economy of any country is based & as any business needs finance depending upon the size of business thus based on project & requirement there are various types of SME business loans available.
The advantages of adequate working capital are helps in maintaining goodwill of the firm, helps in maintaining solvency of the firm, helps the firm in getting regular supply if raw material, helps the firm in getting regular return on investment, helps the firm in getting payment, helps the firm to face the crisis, helps the firm in getting loan easily from the banks and helps the firm in getting cash discount.
There is also a few of disadvantages and weakness in working capital that are a company cannot expand, cannot pay their staff, cannot pay themselves, and cannot pay their suppliers. So in a nutshell no cash flow or working capital and no viable business. Other than that lack of sufficient working capital and inability to liquidate current assets are frequent causes of business failure. It also leads to excessive debtors, spare funds are of no use and earn no profit, and firm fails to maintain the relationship with the banks due to non-requirement of funds and lastly, leads to unnecessary purchasing.
We Finefforts has been consistently secured as one of the leading working Capital/SME loan consultant, we understand the need of your business and always there to assist you in growing your business to the next level.
