What is a Working Capital Loan?

Industrial revolving loan is a short-term loan that an industrial enterprise applies to a bank for the completion of the production and operation plan for the current year, which exceeds the normal capital requirements for liquidity required by the plan, within the annual credit plan approved by the bank. The main feature of industrial revolving loan is that it uses sales revenue and current assets turnover indicators as the basic basis for calculation and grasp, so it can better meet the needs of production development and circulation expansion. The amount of industrial revolving loan directly depends on the amount of annual sales income planned by the enterprise. As sales revenue increases, the amount of funds required increases, and the amount of loans also increases; when sales revenue decreases, the amount of funds required decreases, and the amount of loans also decreases, which is highly adaptable. In this way, on the one hand, it can meet the capital needs of the production and operation of the enterprise in a timely manner, and on the other hand, it can adjust the loan amount in a timely manner according to the scale of the production and operation, thereby maximizing savings in capital costs. ^[1]