If a company wants to continue to develop, it needs to have sufficient funds to support it. If there are only temporary difficulties in capital turnover, the company can choose a working capital loan. So, what exactly does a working capital loan mean? Let’s learn about it with me~

The so-called working capital loan can also be called a short-term capital turnover loan. Its main function is to solve the problem of insufficient funds in the production and operation process of enterprises and provide them with development the necessary funds. In addition, depending on the loan period, working capital can be divided into three different forms of loans: temporary loans, short-term loans and medium-term loans.

Working capital loans can provide corresponding support for the production and development of enterprises, but banks have also made clear regulations on the use of working capital, which mainly have the following three aspects:

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1. To apply for a working capital loan, the legal person or legal representative of the enterprise needs to apply to a bank or financial institution. At the same time, when applying for a working capital loan, you need to agree with the bank on the main purpose of the working capital.

2. Under normal circumstances, the funds borrowed from working capital loans are mainly used for the daily operation and production turnover of the enterprise. The funds obtained from working capital loans cannot be used to invest in fixed assets or equity. At the same time, borrowed funds cannot be used for some projects and fields expressly prohibited by the state. If the borrowing company fails to use the funds in accordance with the loan agreement, it will be regarded as a breach of contract. If the situation is serious, the bank will recover the loan.

3. The borrower is not allowed to use the working capital loan at will. The bank has the responsibility to supervise the use of the loan funds according to the agreed purposes. If the bank still uses the funds for other purposes during the supervision process, Then the China Banking Regulatory Commission will impose corresponding penalties on the bank.

The above is an introduction to working capital loans. Therefore, if a company applies for a working capital loan, it must use the funds in accordance with the agreed purpose to avoid unnecessary trouble for itself.

Have you learned it? Welcome everyone to leave me a message in the comment area. If you have any unclear financial knowledge, I can help you answer your questions!