A working capital loan is a type of short-term loan offered by a bank or alternative lender to finance a company’s everyday operations.It provide working capital for short-term capital expenditures, such as wages, rent, debt service payments, or to finance activities, such as sales and marketing or research and development.
Last Updated Date: May 17, 2022
Bank of Kathmandu is a commercial bank in Nepal that merged with Lumbini Bank. Bank of Kathmandu is currently trading in Nepal Stock Exchange with symbol BOKL. BOK has provided a dividend return of 25 percent in fiscal year 2074/75. Bank of Kathmandu Limited has appointed Nabil Investment Banking Limited as it’s share registrar. Bank of Kathmandu Limited has become a notable name in the Nepalese banking scenario today with a high ranking performance.Bank of Kathmandu Limited today has created a milestone in the Nepalese banking sector by being among the few commercial banks which is entirely managed by Nepalese professionals and owned by the general public and by becoming one of the largest private sector commercial banks in the country in terms of capital base, number of branch locations, ATM networks and customer base.
A working capital loan is a loan that is taken to finance a company's everyday operations. These loans are not used to buy long-term assets or investments and are, instead, used to provide the working capital that covers a company's short-term operational needs. Those needs can include costs such as payroll, rent, and debt payments. In this way, working capital loans are simply corporate debt borrowings that are used by a company to finance its daily operations. A working capital loan is a loan taken to finance a company's everyday operations. Working capital loans are not used to buy long-term assets or investments; they are used to provide working capital to covers a company's short-term operational needs. Companies with high seasonality or cyclical sales may rely on working capital loans to help with periods of reduced business activity. Working capital loans are often tied to a business owner's personal credit, so missed payments or defaults may hurt their credit score. Types of financing include a term loan, a business line of credit, or invoice financing, a form of short-term borrowing extended by a lender to its business customers based on unpaid invoices. Business credit cards, which allow you to earn rewards, can also provide access to working capital. Bank offers working capital finance to meet short-term fund requirement for managing the day to day operation of the business. Bank’s working capital finance is extended to meet the different demands from all segments of industry, trade and the services sector. Assistance is extended by way of Fund based and Non-Fund Based facilities to business entities and public sector undertakings (PSUs). Funded facilities include Overdraft, Demand Loan, Bill Discounting, etc. Non-funded instruments comprise Letters of Credit as well as Bank Guarantees to cover advance payments, bid bonds, performance bond, etc.
The immediate benefit of a working capital loan is that it's easy to obtain and lets business owners efficiently cover any gaps in working capital expenditures. The other noticeable benefit is that it is a form of debt financing and does not require an equity transaction, meaning that a business owner maintains full control of their company, even if the financing need is dire. Some working capital loans are unsecured. If this is the case, a company is not required to put down any collateral to secure the loan. However, only companies or business owners with a high credit rating are eligible for an unsecured loan. Businesses with little to no credit have to securitize the loan. A collateralized working capital loan that needs asset collateral can be a drawback to the loan process. However, there are other potential drawbacks to this type of working capital loan. Interest rates are high in order to compensate the lending institution for risk. Furthermore, working capital loans are often tied to a business owner's personal credit, and any missed payments or defaults may hurt their credit score.
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