What is a working capital loan? What's the difference between working capital loans and other capital loans?

Working capital loan is a loan issued to meet the short-term capital needs of producers and operators in the process of production and operation, and to ensure the normal production and operation activities. According to the loan term, it can be divided into short-term working capital loans within one year and medium-term working capital loans with a term of one to three years; According to the loan method, it can be divided into secured loans and credit loans, among which secured loans are divided into guarantee, mortgage and pledge. As an efficient and practical financing method, working capital loan has the characteristics of short loan term, simple procedures, strong liquidity and low financing cost.

Difference:

Working capital loan is a loan issued to meet the short-term capital needs of producers and operators in the process of production and operation, and to ensure the normal production and operation activities.

Other capital loan is a form of credit activity that banks or other financial institutions lend monetary funds at a certain interest rate and must return them. Loans in a broad sense refer to loans, discounts, overdrafts and other borrowing funds. Banks put concentrated money and monetary funds out through loans, which can meet the needs of social expansion and reproduction and promote economic development. At the same time, banks can also obtain loan interest income and increase their own accumulation.

I. Main varieties of working capital loans

1. Working capital revolving loan:

The lender and the borrower sign a loan contract at one time, and within the validity period stipulated in the contract, the borrower is allowed to withdraw money in installments, repay the loan one by one, and recycle the loan.

4. Zero compensation liquidity loan:

A working capital loan that customers can withdraw money in one lump sum and repay in installments.

3. Company account overdraft:

According to the customer's application, the overdraft limit of the account is approved, and when the deposit in the settlement account is insufficient, it is allowed to overdraw directly within the approved overdraft limit to obtain credit funds.

Second, the working capital loan business process

1. Apply for a loan. Enterprises apply for working capital loans from banks, and provide relevant materials of enterprises and guarantee subjects (when necessary).

2. Sign loan contracts and related guarantee contracts. After the enterprise's loan application is approved by the bank, the bank and the enterprise need to sign all relevant legal documents.

3. Implement the guarantee according to the agreed conditions and improve the guarantee procedures. If the enterprise is required to provide guarantee according to the bank's approval conditions and the signed guarantee contract, it is necessary to further implement specific guarantee measures such as third-party guarantee, mortgage and pledge, and complete relevant guarantee procedures such as mortgage registration and pledge delivery (or registration). If you need notarization, you also need to perform notarization procedures.

4. Issue loans. After all the formalities are completed, the bank will issue loans to the enterprise in time, and the enterprise can reasonably control the loan funds according to the loan purpose agreed in advance.