Working Capital Demand Loan (WCDL): Know its meaning and benefits

  • Published on: 30 Nov 2023
Working Capital Demand Loan (WCDL): Know its meaning and benefits

Getting a WCDL, or a working capital demand loan, is a great way to address the day-to-day financial needs of your business. This is a specialised loan to help businesses meet their short-term financial obligations and operational costs. With this loan, you can get the required funding to meet seasonal business demands or tackle unforeseen financial emergencies.

You can address various expenses with this loan, including:

  • Sales fluctuations
  • Rental and electricity bills
  • Payroll expenses
  • Accounts payables
  • Raw material procurement

Read on to learn the attractive features and benefits of a WCDL.

Features and Benefits of a Working Capital Demand Loan

This short-term loan offers a range of advantages including:

Quick Disbursal

A significant benefit of these loans is their approval time. Lenders typically approve these loans within a few days. They are a better funding option than traditional loans since the latter takes a long time to process. With quick access to funds, businesses can respond to emergencies on time, adapt speedily and remain competitive. 

Competitive Interest Rates

The interest rates for these types of loans are nominal, making them an affordable financing option. Typically, lenders charge interest only on the loan amount that the business utilises. So, businesses do not need to pay interest on the total sanctioned loan amount. 

Note that the interest rate also depends on your creditworthiness and the lenders’ policies. The associated costs are also lower, with most lenders requesting a one-time processing fee for the loan.

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Flexible Repayment Schedule

Most lenders offer a range of repayment options on working capital demand loans for convenient repayment. Based on the cash flow and affordability, businesses can opt for a monthly or quarterly EMI plan. 

Businesses can also choose to foreclose the loan after the first EMI payment at any time. Lenders typically do not charge any foreclosure fees for these loans.

Easy to Renew

Another attractive feature of this loan is that you can renew it to get more funds. This can be advantageous when the initial loan amount is insufficient to cover business expenses. 

Financial institutions offer loans based on the original agreement, which means that the loan amount, interest rate and repayment duration remain the same. Based on your creditworthiness and relationship with the financial institution, you can negotiate for a higher amount and other favourable loan terms too.

Pre-approved Offers

Financial companies also provide pre-approved offers on these loans. These are often rolled out based on the financial profile and profitability of a business. In case you need quick access to funds, these pre-approved offers can help. 

Their processing and disbursal time is quicker since your information is already verified. Also, you can get lower interest rates on these loans based on your repayment ability. 

No Requirement of Collateral

Another great benefit of these loans is that they do not need collateral as security. This is because most of the working capital demand loans are unsecured loans. In traditional loans, businesses need to provide assets as collateral, like property documents, machinery or inventory. 

Also Read: Different Types of Loans that You Should Know

So, you do not need to risk your assets to get these loans. This feature benefits small businesses and startups to get financial assistance without risking their assets.

Now that you know the working capital demand loan definition, know that this form of credit can fill the gap between the inflow and payouts. Since these loans come with no restriction on end use, you can use them to address any expense related to your business. Also, this loan does not have any negative impact on the company’s equity. 

An alternative way to address your financial needs is by getting a personal loan. Fibe offers Instant Personal Loans of up to ₹5 lakhs. You enjoy quick sanction, a simple application process and minimal documentation. Download the Fibe Personal Loan App today and get the funds hassle free.

FAQs on Working Capital Demand Loan

What is a WCDL in working capital?

A Working Capital Demand Loan or WCDL, is a loan that provides financial assistance to address working capital shortfalls and other short-term financial obligations of a company.

What are the features of WCDL?

A few stand-out features of working capital demand loans include quick access to financing, flexible repayment schedules, competitive interest rates and no requirement for collateral, among others.

Why is WCDL required?

Working capital demand loans help companies cover their day-to-day operational expenses, including procurement of raw materials, payroll needs, accounts payables, etc. They are suitable in managing short-term requirements, including temporary gaps or seasonal fluctuations in cash flow.

Is WCDL a term loan?

A WCDL is a term loan with a shorter timeline. This form of credit helps cover the short-term financial obligations of a business.


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