Working capital: the fuel your business runs on
Most profitable businesses have failed not because of bad products — but because they ran out of cash at the wrong moment. A seasonal spike, a delayed customer payment, or a bulk inventory opportunity can all create a working capital gap that a loan can bridge.
Working capital loan types for e-commerce and MSME sellers
| Type | How it works | Best for |
|---|---|---|
| Term loan | Fixed EMI, predictable cost | Planned inventory purchases |
| Overdraft / CC | Draw as needed, pay on usage | Irregular cash needs |
| Invoice discounting | Advance on receivables | Sellers with B2B buyers |
| Mudra loan | Up to ₹10L, no collateral | Micro businesses |
| TReDS | Marketplace for MSME receivables | Larger MSMEs with corporate buyers |
Typical rates for MSMEs (2025)
| Lender | Rate | Collateral | Max amount |
|---|---|---|---|
| SBI MSME loan | 8.5–11% | Sometimes needed | ₹50 crore |
| Lendingkart | 18–26% | No | ₹2 crore |
| Indifi Finance | 18–24% | No | ₹50 lakh |
| Flexiloans | 18–30% | No | ₹1 crore |
| CGTMSE (bank guarantee) | 9–14% | No | ₹2 crore |
Should you borrow for working capital?
A working capital loan makes sense when:
- Your return on capital exceeds the interest rate (e.g., you earn 25% margin and borrow at 18%)
- You need to meet a large order that you'd otherwise miss
- Cash flow timing mismatch — you've shipped the goods but payment is 30 days away
Avoid if you're borrowing to cover operating losses — that's a business model problem, not a cash flow problem.