Every growing business in Agra eventually faces a funding gap. The two most common solutions are Working Capital Loans and Term Loans — but they solve very different problems. Choosing the wrong one can choke your cash flow.
Working Capital Loan Explained
Funds your day-to-day operations — raw material, inventory, salaries, electricity, rent. Usually given as Cash Credit (CC), Overdraft (OD) or Bill Discounting.
- Tenure: 12 months (renewable)
- Interest: Charged only on used amount
- Limit: Linked to turnover and stock
Term Loan Explained
Funds long-term assets — machinery, factory shed, vehicles, expansion projects.
- Tenure: 3 to 10 years
- Interest: Charged on full disbursed amount
- Repayment: Fixed monthly EMI
Side-by-Side Comparison
- Purpose — short-term operations vs long-term assets
- Repayment — flexible vs structured EMI
- Interest cost — lower (only used) vs higher (on full)
- Security — stock & receivables vs fixed asset hypothecation
Real Example for an Agra Shoe Manufacturer
For buying leather and paying workers monthly → Working Capital CC of ₹50 lakh. For setting up a new sole-cutting machine → Term Loan of ₹40 lakh for 7 years.
Can You Take Both?
Yes — most established businesses run a CC account for operations and a Term Loan for capex. Banks like SBI, BoB, ICICI and HDFC offer combined MSME packages.
Get Expert Help
Banking Hub Services structures the right mix of working capital and term loans for your Agra business with the lowest blended interest rate.