HomeBlog – Insights by CredAbleBlogHow to get Working Capital if you are a New Business Owner

How to get Working Capital if you are a New Business Owner

Published on 19 Feb,2021

With increased business awareness, working capital needs and the wide bevy of tools, resources, and services on offer, modern Indian entrepreneurs have a wider scope than ever to make their long-time entrepreneurial dreams come true. As new sectors crop up and the business landscape keeps evolving to make room for new demands, aspiring business owners are capitalizing on the opportunities provided to them by establishing new, innovative businesses.

However, while launching and kick starting a venture has its share of challenges to overcome, it is only the beginning of the journey towards making a business sustainable and helping it thrive for years to come. For this purpose, many new entrepreneurs find themselves in the need of working capital that essentially affects every aspect of their business from employee and vendor payments, to debt repayment and planning long-term growth.

If you too are the owner of a newly launched business, you might also find yourself in a similar situation. It could be that you are starting to feel the anxiety of having your working capital end up on its last legs. It could even be that your business does not have an immediate need for working capital, but you might want to rest assured that when the day arrives, you will know exactly where to look.

For either of those purposes and many more, here is a breakdown of the sources from which you can get working capital as well as how you can go about the process:

Why is Regular Cash Flow Essential?

Before we review the various ways in which you can secure working capital for your business, let us review the concept of working capital and why it is essential to the sustenance of a business.

In technical terms, the working capital of a business is calculated by subtracting the value of its current assets from its current liabilities and it is represented as a ratio. However, in practical terms, working capital essentially refers to the capital of a business that is utilized in its everyday trading operations and represents its operating liquidity, or the amount of cash it can safely spend within a short amount of time.

The working capital of a business, therefore, is an indicator of its ability to make its inventory, accounts, and debt payments. It takes into account everything from the cash that the business has, to its assets that can be converted into cash and even the expenses that it will be expected to make in the future.

As a business owner, it is your goal to ensure that the current assets for your business are more than your current liabilities in order to ensure regular payments and an overall healthy cash flow. However, in the case of new businesses, it can often be hard to maintain this balance as the business strives to find its footing in the industry. That being said, if your current liabilities do exceed your current assets, your business can find itself in a working capital deficit and face a hard time making day-to-day expenditures. That is why when it comes to looking at options for raising working capital, it is essential to explore as many alternatives and sources as you can.

Various Ways to Get Working Capital

Here are the various ways in which you can raise working capital for your new business:

Business Loans:

Possibly one of the most popular and effective means of raising working capital for a new business is availing a business loan from a bank or financial institution. A business loan is a form of a lending agreement made between the lender and the business owner. As per the agreement, the lender agrees to give out a specific amount of money to the business owner as long as the latter repays it, with added interest, according to a predetermined schedule. The time period for which the loan is availed is known as its tenure and the regular amounts paid back by the borrower are known as Equated Monthly Installments or EMIs.

While it is possible to take up a personal loan and utilise it for the purposes of your business, it is often more useful to instead opt for a specialized loan designed to cater to the needs of your specific business. While some business loans are geared towards helping you kick start your small business, others are intended specifically for purchasing new equipment or machinery.

Unlike traditional business loans that were the norm in the past, new-age business loans offer much more flexibility to the borrower, allowing them to make their choice of tenure and availing various convenient benefits through the process.

Partner with a Fintech Company:

Among the many options you explore when trying to raise working capital for your business, why not consider the option of partnering with a company that specializes in exactly that aspect? Fintech, or financial technology, companies have seen a rapid rise in India over the past few years and continue to show promise and deliver results.

These promising Indian fintech companies, such as CredAble, that have specialized expertise, programs, and platforms are designed to pump cash into the Supply Chain Finance Ecosystem and help raise working capital for new businesses. Moreover, compared to traditional means of delivering financial services, CredAble and similar fintech companies are known to be far more efficient, financially, operationally as well as technologically. You are also much more likely to find a much more comprehensive and customized solution to your working capital needs than you might with a traditional financial institution.

Business Line of Credit:

Among the options to raise working capital for your new business, you can certainly consider applying for a business line of credit. When it comes to raising capital, most business owners immediately head in the direction of banks or other financial institutions to apply for business loans, which in themself are indeed a useful option. However, a business line of credit is also a type of loan option that often gets overlooked among the other various capital-raising methods.

A business line of credit is essentially a type of revolving loan offered by banks and financial institutions that provides access to a specific amount of capital to you as a business owner. You can utilize this capital as and when required to meet the needs of your new business and then repay either immediately or over a period of time. As soon as the offered capital is borrowed, the interest rate is applied to the amount.

A business line of credit is often described as a hybrid of regular loans and business credit cards. Much like the other two options, a business line of credit also requires the approval of the borrowers from the lender which is determined by their credit score.

Angel Investors:

When it comes to raising working capital, an important option to consider can be bringing on board an angel investor. To define an angel investor, they are individuals with high-net-worth that are seeking to provide financial assistance to new ventures and businesses. This financial assistance is often offered in exchange for a share of ownership in the business, typically in the form of equity.

Depending on the type of investment and participation they are looking for, angel investors can either provide a one-time financial backing or continue to invest and support the new business through various processes. Angel investors are essentially on the lookout for new, innovative business opportunities and often like to participate in various aspects of the ventures in which they invest. When approaching an angel investor, it is best to have a clear, detailed pitch deck that illustrates why your business is essential and how you plan on expanding it over the coming years.

Business Credit Cards:

An option that business owners can consider when trying to get working capital is that of business credit cards. Also known as corporate credit cards, these forms of credit cards are specifically assigned to a business, not an individual, in order to meet the regular financial needs of that business. These forms of credit cards can be used to make a variety of purchases, payments, and bookings that might be necessitated by the requirements of business operations.

Not only are these credit cards ideal for keeping professional and personal expenses apart, but they also offer an opportunity for business owners to easily get access to short-term working capital. If the working capital required is not substantial, your business credit card can easily help you fulfill any financial gaps you might be experiencing without having to spend time waiting for approval. If you have a new small business, having a well-maintained business credit card can also help your company build credit over time and improve your loan approval chances in the future.

Friends and Family:

When it comes to raising working capital for a new business, some business owners turn their sight homewards and consider taking a loan from close friends and family members. This method of raising working capital can certainly have its obvious upsides. For one, if you are receiving a loan from your close loved ones, you are likely to receive it quickly and without hesitation. It also has the advantage of sidestepping the process of credit approval.

However, involving family members and friends in matters of business can often prove to be tricky and can easily get complicated. In the event that you are unable to pay back the loan amount within the promised time frame, relationships can get tense and friction might arise. Therefore, taking a loan from friends and family should ideally be considered a last resort option or be handled with immense caution, clear terms, and professionalism.


For the keen entrepreneur, seeking and securing the working capital he or she desires can be a much easier process with this wide variety of sources to turn to. Whether it be securing working capital for the short-term or for the long-term, this comprehensive list of options can be a good place to get started for any new business in the market.

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