What is the interest rate of a working capital loan?
Working capital loans are short-term loans that are usually taken out by businesses to meet cash flow requirements or pay off debts. They are often offered at higher rates than other types of loans due to their shorter repayment periods.
A working capital loan is a type of debt financing where the lender provides funds against collateral such as inventory or accounts receivable. The borrower uses these funds to finance its operations during the time period between receipt of the funds and payment of the principal and interest.
A working capital loan is typically secured by the collateral (inventory) and/or accounts receivable. The interest rate charged varies depending on the amount borrowed, the term of the loan, the quality of the collateral, the creditworthiness of the borrower, the risk profile of the borrower, and the prevailing market conditions.
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