Founders need working capital to grow their business – Punekar News

Pune, September 15, 2022: Have you ever wondered why some startups fail before they even get started and others stay afloat for years? The answer is that these businesses are able to acquire working capital and use it to their advantage.

Having access to cash is essential whether you are planning to start, expand or refinance your business. The main benefits of having working capital include better cash flow management and faster decision making. Without adequate cash, you could struggle to pay your bills at critical times, jeopardizing your long-term goals.

Entrepreneurs and startups often do not have access to sufficient working capital because their main sources of income are not always stable and predictable.

A Business loan for working capital allows founders to access short-term cash flow, allowing them to meet their financial needs.

Working capital is defined as the cash necessary for day-to-day operations. Simply put, working capital equals current assets minus current liabilities. Current assets refer to items such as inventory, accounts receivable, etc. while current liabilities refer to items such as payables to suppliers and customers.

Why do founders need working capital?

Founders need working capital for a variety of reasons, including buying raw materials, buying inventory, paying suppliers, paying employee salaries, paying benefits to workers and contractors. and the management of accounts payable and receivable.

1. Expansion and growth

Expansion and growth are the main requirements of any business. The expansion of a business should aim to increase its current size and expand into new markets and territories.

If the company does not have sufficient cash, it may not be able to achieve these goals effectively. However, having sufficient working capital will allow them to do so. Thus, working capital serves as a tool to facilitate expansion and growth.

2. Free up money for emergencies

A business’s working capital can be used to cover short-term expenses. If a business experiences unforeseen circumstances and begins to incur higher than expected expenses, and if the business does not have cash reserves, it may not be able to repay those expenses and could go bankrupt.

To avoid this situation, companies need to keep money aside in case something unexpected happens.

3. Evolve the team

Companies can scale their teams when they have sufficient working capital. Having sufficient working capital allows a company to provide opportunities to individuals and expand their workforce.

4. Improves creditworthiness

Businesses can sometimes run into difficulties due to a lack of sufficient working capital. These situations force them to delay payments, reduce prices and even delay payment terms, leading to loss of customers.

To avoid these situations, companies must have sufficient working capital for their activity.

How can Working Capital Finance help founders?

Working Capital Finance can help founders in the following ways: Working Capital Finance gives founders ongoing access to capital and helps them optimize cash flow while investing in business growth.

  • Working capital loans can help weather an unforeseen crisis by providing an adequate cushion to manage expenses to maintain the solvency of the organization.
  • Working Capital Finance maintains a solvent business by covering payment discrepancies and meeting financial requirements.
  • Unsecured working capital financing is provided to businesses with a good credit rating. In the event of default, they are not required to return the secured assets.
  • Businesses usually seek working capital financing to meet their urgent demand for cash, and lending institutions can easily meet their demand.

With Poonawalla Fincorp, a reliable lender, borrowers can get a business loan for their working capital needs and get up to ₹30 Lakhs at attractive interest rates ranging from 18% to 28%, flexible repayment tenure and rapid disbursement.

Conclusion

A working capital loan helps businesses meet their short-term cash flow needs.

When considering a working capital loan, borrowers should assess their business model and cash flow. In addition to this, it is imperative to assess the loan repayment terms, interest rates and the company’s ability to repay the loan. These factors will help to understand whether a working capital loan is necessary or not.

Also, make sure you choose a reliable lender and pay EMIs on time and in full. With Poonawalla Fincorp, a trusted lender, businesses can use Working Capital Finance without providing collateral at the lowest interest rates with a 100% digital process.

Borrowers can also access their online EMI calculator to calculate EMIs and find the total cost of borrowing to make an informed decision.

About Donnie R. Losey

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