H. Saraogi & Associates

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Working Capital Loan


Working Capital Loan

The company offers services for the sourcing of the Working Capital Loan and is based in Kolkata. The Working Capital Loans can include Cash Credit, Over Drafts, Packing Credits and Post Shipment Finances. The experience of the company and the astute team of the company ensure that the clients get the best Working Capital Loans on favorable terms.

Working Capital Loans Include

  • Cash Credit : Working Capital is also known as Cash Credit. Cash Credit is a facility to withdraw the amount from the business account even though the account may not have enough credit balance. The limit of the amount that can be withdrawn is sanctioned by the bank based on the business cycle of the client and the working capital gap and the drawing power of the client. This drawing power is determined, based on the stock and book debts statements submitted by the borrower at monthly intervals against the security by hypothecating of stock of commodities and/ or book debts. The excess withdrawal of cash is made generally on demand from the customer and the customer has to pay interest on the excess amount he/she has withdrawn. The Cash Credit facility is quite useful to those businesses where cash payment like wages, transportation, cash purchases are to be made and the receivables are not realized in time. We assist our client in availing various other forms of credit facilities.
  • Over Draft
    • Over Draft Against Stock : Traders and manufacturers prefer availing the Over Draft facility against the stock. The value of the stock of goods is assessed by the bank or lending institute and against the same overdraft limit is sanctioned. The amount is gradually settled against the amount of sale of the stock. The value of stock is assessed by physical verification and from the purchase invoices and is ensured that it is fully paid for.
    • Over Draft Against Receivables : Any kind of authenticated receivables like Bills Receivable, Rent Receivables can be pledged as security for the Over Drafts is known as Over Draft Against Receivables. The proceeds of all such receivables are routed through the Over Draft account and immediately settled against the overdrawn amount. However drawings can be allowed against fresh receivables. Thus the amount of receivables remains as a continuing security for all drawings. The bank or lending institute ensures that no other loan or obligation is availed by the customer pledging the same receivables. The amount of receivables and the time required to honor or materialize the receivables are the key factors to determine the limit of Over Draft.
    • Over Draft Against Property : To Avail Over Draft Against Property you have to mortgage your property with the bank or lending institute to get Over Draft Against Property facility. The value of the property generally appreciates hence they are preferred as securities. On defaulting on the settlement of overdrawn amount the bank or lending institute may sell the property to recover the overdrawn amount with interest thereon and balance, if any, is returned to the customer.
  • Packing Credit : Packing Credit is a loan/cash credit facility sanctioned to an exporter in the pre-shipment stage. This loan facilitates the exporter to purchase raw materials at competitive rates and manufacture or produce goods according to the requirement of the buyer and organize to have it packed for onward export. The lending institutions seek a Letter of Credit opened in favor of the exporter from the overseas buyer along with the irrevocable (cannot be canceled once drawn) Purchase Order favoring the exporter. Packing Credit facility will cover all the working capital needs of the exporter including raw materials, wages, packing costs and all pre-shipment costs. Packing Credit is available for generally a period of 90 days and the exporter has to pay lower rate of interest compared to traditional Over Draft or Cash Credit facility. Exporters use this facility so they can bid the most competitive price for export thus gaining more business opportunities for export.
  • Post Shipment Finance : Generally exporters who have availed Packing Credit need finance to clear the Packing Credit availed. This can be done by availing the Post Shipment Finance from the lending institutes or banks. This advance or finance is made available by the lending institutes or banks in the form of export bill discounting facility on raising bills along with the shipping documents and according to the terms and conditions of the L/C issued in favor of the exporter. The usage period generally is between 90 to 180 days starting with the date of shipment. Seller's Credit (extended to exporter) or Buyer's Credit (Overseas Buyer) is the two options available under post shipment finance. It is a most preferred method to finance or fund the export receivables.


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