A working capital loan is a type of financing designed to cover day-to-day operational expenses of a business, such as payroll, inventory purchases, and overhead costs. Unlike long-term loans used for investments or assets, working capital loans are typically short-term and are meant to address shortfalls in cash flow or seasonal fluctuations.

These loans can be secured with collateral or unsecured based on the borrower's creditworthiness and business strength.

Interest rates vary based on factors like credit history, loan term, and the lender's policies, with options for fixed or variable rates.

Lenders evaluate the business's financial health, revenue trends, and ability to repay when determining eligibility and loan terms.

Successful management of working capital loans can help businesses maintain liquidity and seize growth opportunities, while mismanagement can strain finances and impact operations.

It's essential for businesses to carefully assess their cash flow needs, explore loan options, and ensure the loan aligns with their short-term financial objectives before proceeding.