Finance the gap, not the headline.
Size your operating need and choose between cash credit, overdraft and invoice finance.
Your business numbers
Take the day figures from your last full year. Rough numbers are fine; the result changes far more with the cycle than with a few lakh of turnover.
Your operating cycle
The number of days between paying for stock and being paid for it. Every one of those days is cash you have to fund from somewhere.
Your cash is locked for 75 days. At your projected turnover that is Rs.37,808 of sales every day, so each day you shave off the cycle frees roughly that much cash.
The turnover method covers your requirement. A bank would sanction up to Rs.27.6 L against a genuine need of Rs.23.4 L. Do not draw the full limit simply because it is available. Interest accrues on what you use.
Your own funds in the business are Rs.5.0 L against a required margin of Rs.6.9 L. That shortfall of Rs.1.9 L is a common reason working capital applications are cut back, and it is checked before anything else.
KarobarUdhar Insider Tip
Most owners walk into a bank with a number based on what they want. The credit officer computes a number from the turnover method and the two rarely match. Bring the operating cycle working with you. A file that shows inventory days, receivable days and payable days with a stock and debtor statement behind them gets assessed on the cycle method, which usually produces a larger limit than the flat turnover formula for a business with a long collection cycle.
KarobarUdhar Insider Tip
Cutting receivable days is worth more than negotiating your interest rate. At the numbers above, every single day you take off collections frees roughly Rs.37,808 of cash permanently. Collecting ten days faster is worth about Rs.3,78,082, which at a 14% cash credit rate saves around Rs.52,932 of interest every year, on top of the cash itself. A rate negotiation of half a percent on this limit is worth roughly Rs.13,800.
Indicative only. The turnover method figures follow common bank practice, where working capital requirement is taken as 25 percent of projected annual turnover with the bank funding 20 percent and the borrower providing a 5 percent margin. Individual banks apply their own norms, and larger limits are usually assessed on a full projected balance sheet rather than either shortcut method.
Guidance by stage
Choose a facility
Release cash
Working capital rates and costs
| Provider | Facility | Published pricing | Charges | Limit or coverage | Verified |
|---|---|---|---|---|---|
| HDFC Bank | Dukandar overdraft | 50 paise per Rs.1,000 per day | 2% above Rs.5 lakh | Up to Rs.10 lakh | 2026-09-08 |
| SBI | ABL Saral CC or overdraft | 7.50% onwards; EBR or MCLR linked | Up to 0.65% | Above Rs.10 lakh to Rs.5 crore | 2026-09-08 |
| Axis Bank | Cash credit or overdraft | Profile based | Up to 1.25%; renewal up to 1% | Profile based | 2026-09-08 |
| ICICI Bank | Working capital finance | Profile based | Disclosed with the offer | Profile based | 2026-09-08 |
| M1xchange | TReDS invoice discounting | Competitive financier bids | Platform terms apply | Accepted buyer invoices | 2026-09-08 |
| Invoicemart | TReDS invoice discounting | Competitive financier bids | Platform terms apply | Accepted buyer invoices | 2026-09-08 |
| RXIL | TReDS invoice discounting | Buyer or seller sets the cap rate | Platform terms apply | Accepted buyer invoices | 2026-09-08 |