Overdraft Facility Against Working Capital - CiteHR
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Hi, Can you please tell me the procedure for Overdraft Facility against working capital requirements?. In our company we are planning to go for OD. Please help me in this regard.
Dear Sir,
For getting OD for Working Capital, you have prepare the financial proposal like project on hand, working capital necessary on short term basis and revenue receivable along with payment schedules. The same to be furnished to your preferred bank. The bank, after verifying your proposal ask for more clarifications and forms to filled by the Guarantors. Your company auditor may assist you in this regard.
With Regards,

Dear Yesurajja,
In Banking terminology overdraft can't be against working capital. The facility you required is of Cash Credit for working capital and you are required to approach your Banker. Pl furnish last three years audited balance sheet with application in Bank's prescribed format. Bank will go through your financial data as well as your turn over in existing account. Accordingly they will fix your working capital requirement i.e the funds required which are blocked/put in by your company. Generally the working capital gap is derived by deducting Current Assets from Current Liabilities-the result is called as "Working Capital Gap". The Bank generally prefers to finance 70% of working capital gap. Further your company shall have to hypothicate the stock, stock in trade as well as debtors. The Bank may ask to mortgage some property.
With Regards,
A. Prakash

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