MSME Finance: 5 Ways to Utilize a Working Capital Loan

April 3, 2023
Updated on

Keeping a close watch on the working capital is a must for successful businesses. It ensures the survival of routine business operations and is a reliable determiner of the overall financial health of an enterprise and capacity for growth. 

Small business owners often confront cash flow concerns and stand at risk of being unable to meet their short-term financial obligations, especially in the initial stages of business. 

A working capital loan is a form of MSME finance that allows small business owners to meet all regular business expenses such as purchasing raw materials, paying wages, renovating premises, and others. However, not knowing how to effectively utilize a working capital loan can prevent small business owners from ensuring sustainability.

In this article, we look at 5 ways that can help you make the best use of a working capital loan. 

Cash flow management:

As soon as your MSME finance loan is approved and disbursed, you need a plan to manage the cash flow of your enterprise. Identify the periods when your business goes through a cash crunch or when large orders may come in and plan your expenditures accordingly. 

Invest in inventory:

One of the best ways to utilize your working capital loan is to restock your inventory to meet the present and future demands of your customers. With your inventory stocked, you can also plan discounts to invite more sales.

Planning for seasonal shortfalls:

If you are in a seasonal business, the chances are that you are expecting a drop in sales or a delay in payments. A working capital loan can help you meet all your routine expenses such as rent, salaries, and supplier invoices in the off-season to ensure survival. 

Renovate and expand:

MSME finance is one of the best mediums for you to renovate your premises and eye business expansion. Renovations can enable small manufacturers to make the workplace safe for their employees. On the other hand, if you are in the retail business, a revamp can uplift the aesthetic value of your enterprise and invite more customers. You can also use a working capital loan to relocate to a better location. 

Hiring more employees:

Another great way to utilize your MSME finance is to hire more people for the job. Hiring more employees can make operations efficient and expedite growth plans. 

Grow your MSME with collateral-free business loans

Applying for a Working Capital Loan at Kinara Capital

Kinara customers can avail of a short-term or long-term working capital loan ranging from Rs 1 lakh to a maximum of Rs 30 lakhs. The option of short-term working capital is available to our existing customers who can apply for any amount between Rs 50,000 to Rs 200000 for a tenure of 6-12 months. The short-term loans are disbursed immediately and are intended to facilitate the immediate financing needs of small business entrepreneurs. 

Our minimal documentation allows you to substitute some documents in lieu of others, depending on the availability. In order to apply for a working capital loan at Kinara Capital, you will need the following documents:

  • The KYC document of the applicant (PAN Card)
  • The KYC documents of the co-applicant (PAN and Aadhaar). These documents are recommended but not mandatory
  • Proof of business registration. This will include your Udyam Registration.
  • Submission of GST and ITR documents is optional 
  • The bank statement for the last 12 months

Here is a quick rundown of the features of our working capital loan:

  • The working capital loan at Kinara Capital does not require any collateral 
  • The loan application is completely digital and available in 7 languages. It can be completed by the customer or with the help of a professional Kinara representative
  • As soon as the loan application is completed, the loan is disbursed within 24 hours
  • The acquired amount can be used to meet a plethora of business expenses such as paying wages, fixing a machine, upgrading inventory, adding a new product or even renovating the business premises. 

So, propel your business plans today with a collateral-free working capital loan from Kinara Capital!

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