Working Capital Limit

 is a short-term financing solution provided by banks and financial institutions to help businesses manage their daily operational expenses. It ensures smooth cash flow for activities such as purchasing inventory, covering overhead costs, and managing accounts payable. This facility is usually sanctioned as an overdraft (OD) or cash credit (CC) limit based on the business’s financial health.

Advantages of a Working Capital Limit

• Ensures Business Continuity – Helps businesses maintain steady cash flow for smooth operations.
• Flexible Usage – Funds can be withdrawn as needed and repaid at convenience.
• Interest on Utilized Amount – Interest is charged only on the amount used, not the entire limit.
• Improves Liquidity – Supports immediate financial needs without disturbing long-term investments.
• Enhances Creditworthiness – Timely repayments help build a strong credit profile for future financing.

Required Documents for a Working Capital Limit

✅ Business Registration Proof – GST certificate, MSME certificate, or incorporation documents.
✅ KYC Documents – PAN Card, Aadhaar Card, or Passport of business owners/partners.
✅ Financial Statements – Last 2–3 years’ audited balance sheets, profit & loss statements.
✅ Bank Statements – Previous 6–12 months’ business bank account statements.
✅ Income Tax Returns (ITR) – Business ITR for the last 2–3 years.
✅ Collateral Documents (if required) – Property papers, fixed deposit details, or any pledged asset.