Working Capital Loan

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Definition of 'Working Capital Loan'

A working capital loan is a short-term loan that is used to finance a company's day-to-day operations. It can be used to cover expenses such as payroll, rent, and inventory, and it can also be used to fund growth initiatives.

Working capital loans are typically provided by banks and other financial institutions. The interest rate on a working capital loan will vary depending on the borrower's creditworthiness and the terms of the loan.

Working capital loans can be a valuable source of financing for businesses that need cash to cover their operating expenses. However, it is important to note that these loans are typically repaid on a short-term basis, so it is important to make sure that the borrower has a plan to repay the loan.

Here are some of the key features of working capital loans:

* They are short-term loans, typically with terms of one year or less.
* They are used to finance a company's day-to-day operations.
* The interest rate on a working capital loan will vary depending on the borrower's creditworthiness and the terms of the loan.
* Working capital loans can be a valuable source of financing for businesses that need cash to cover their operating expenses.

If you are considering a working capital loan, it is important to speak to your banker or other financial advisor to discuss the pros and cons of this type of loan.

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