Working Capital Demand Loan

Working capital demand loans are short term loans borrowed by businesses to meet their capital financing needs and maintain minimum operational requirements. Healthy working capital is essential for keeping a business up and running. Demand loans are flexible debt instruments that help businesses meet immediate cash flow requirements & run everyday operations smoothly, even in a tight situation.

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What is a Working Capital Demand Loan?

working capital demand loan

It is common practice for lending institutions to offer business loans to fledgling companies to help them expand & sustain themselves. Working capital demand loans are a form of demand loans that must be repaid when the lender demands. For demand loans, the lender can demand repayment whenever they want, even on short notice.

For any business, working capital is the liquidity it possesses for immediate business needs. The difference between its current assets( cash, inventory, and receivable accounts) and its current liabilities (debt instruments, accounts payable, etc.) is the working capital that pays the bills & salaries and meets operational financing needs.

If a firm is struggling to maintain healthy working capital, its day-to-day cash flow requirements may get hampered. As a result, it may not be able to continue funding its current operations and find itself unable to grow & invest in the future. Working capital loans can help businesses, especially start-ups, circumvent short-term financing challenges and meet everyday needs. In addition, these loans offer businesses immense flexibility and maintain healthy liquidity without tying up generated revenues.

Unlike term loans, a demand loan is generally used to meet short term business requirements, the chief among which is meeting or upgrading working capital demands. Therefore, if a business is clear about its working capital requirements & revenue generation and availed of loans at a competitive rate, then a working capital demand loan can be the perfect shot in the arm!

What are the Benefits of Working Capital Demand Loans?

The benefits of a working capital loan are pretty significant.

  • Flexible funding to meet short-term cash flow requirements.
  • Easy credit facility at attractive interest rates with a flexible repayment schedule.
  • Repayment can be based on generated revenues & cash flows.
  • Minimum documentation and eligibility requirements across major banks and NBFCs.
  • Zero restrictions with regards to end-usage

When Would Taking a Working Capital Demand Loan Be a Good Idea?

Working capital demand loans are the effective debt instruments to avail when your business is going through a lean season.

Lower sales than usual or large amounts of unpaid receivables can disrupt the liquidity of a business, especially fledgling ones. A WCDL is a short-term loan that helps meet regular capital needs & maintain optimal operational efficiency. Meet daily cash flow requirements, from raw material purchases to payrolls and supplier payments, and maintain healthy liquidity with working capital financing. It is a highly effective great short-term debt instrument for businesses going through a temporary fund crunch.

  • A working capital demand loan is ideal for replenishing a company’s funds for a short period and filling the gaps between inflow & payouts.
  • Demand loans are beneficial for businesses with cyclical operations. In such cases, the demand for the business’s products/deliverables rises during a specific period and reaches a steady or dormant state. Working capital solutions can help meet all financial requirements during the lean season so that the business goes all guns blazing during peak season.
  • The borrower has complete control over how they intend to spend the loan amount. Furthermore, a WCDL is a debt financing instrument with no adverse effect on a company’s equity.

Is There an Alternative to a Working Capital Demand Loan?

Multiple working capital solutions are available to businesses besides a working capital demand loan. Among them, one of the most prominent is a trade credit, also known as a business line of credit.

A business line of credit is akin to an emergency capital that a business can avail as necessary. Borrowers can tap into the line of credit & use any amount of funds up to the credit limit. Unlike working capital demand loans, where borrowers have to pay the interest for a lump sum, a line of credit requires interest payments for only the amount withdrawn.

Business lines of credit are incredibly flexible, allowing businesses to avail of any loan amount and borrow once again once the erstwhile payment has been cleared. In addition, low interest rates are additional bonuses.

Besides the business line of credit, other short term loans for working capital financing include:

· Working Capital Term Loans

· Letter of Credit

· Bank Guarantee

· Bill Discounting

· Cash Credit & Overdraft

· Invoice Factoring

· Channel Finance

Why choose Yubi for Working Capital Demand Loan?

Yubi, India’s largest digital credit solutions platform, offers connects businesses with the right financing partners. Connect with a network of 750+ lenders and 3000+ enterprises and find the best match for your business through Yubi Loans, our proprietary AI/ML engine.

  • Get working capital demand loans from all major domestic central & private banks such as SBI, HDFC, Union Bank, Federal Bank, Kotak Mahindra, ICICI, Standard Chartered, TATA Capital, and many more!
  • Close deals quickly & successfully, access vital information easily, and coordinate seamlessly with Yubi’s comprehensive API infrastructure that facilitates communication between borrowers & lenders.
  • Hassle-free loan disbursement, fully digitized solutions, data analytics & machine learning support, a wide array of loan solutions, and a vast network of lenders & banking partners make Yubi the one-stop-shop for all your business financing requirements.


  • Minimum turnover of Rs. 10 lakhs
  • A company turning a profit for the past two years
  • Credit bureau score of 750 or above
  • A minimum annual income of Rs. 2 lakhs per year

Different banks and non-banking lending institutions offer different loan amounts and tenors. Borrowers can avail of substantial, collateral-free WCDL of more than Rs. 45 to 50 lakhs with a flexible tenor of 144 months for convenient repayment. The loan tenor can be revised per discussions between the lender and borrower.