Check your eligibility
What These Loans Fund
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Inventory purchase and stock build...
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Receivables funding against credit...
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Seasonal stock build-up ahead of p...
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Import purchases under a letter of...
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Bill discounting against accepted...
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Working capital for the trading cy...
Who Can Consider This Loan?
- Business vintage, commonly two to three years of operations
- Minimum annual turnover set by lender and segment
- Profitable operations, or a demonstrable path to profitability
- Clean banking conduct with no cheque returns
- Promoter credit scores, which lenders assess alongside the business
- GST registration and filing compliance, where applicable
What May Not Be Funded?
- Capital expenditure, which needs a term loan
- Slow-moving or obsolete stock, which lenders discount heavily
- Receivables beyond the ageing the lender accepts
- Speculative commodity positions
- Drawings above the sanctioned limit
Always check the sanction letter before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading loans companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced loans professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
Trading businesses have a distinctive financial shape: thin margins, high turnover, and a balance sheet dominated by stock and receivables. Lenders underwrite them differently from manufacturers, focusing on inventory turnover and collection discipline rather than on fixed assets.
Because margins are thin, the cost of funding matters more here than in most segments. A percentage point on a working capital facility can consume a meaningful share of a distributor's net margin, which makes structure and pricing genuinely consequential rather than a detail.
Channel finance is worth knowing about. Where you distribute for a large principal, that principal's own banking relationship can often be used to fund you at rates far below what you would obtain independently.
Who should consider it
Wholesalers, distributors and retailers. Import and export traders. Businesses holding significant inventory against credit sales. Distributors for large manufacturers, who should ask about channel finance.
Benefits
- Facilities structured around stock and receivables rather than fixed assets
- Channel finance available where you distribute for a large principal
- Seasonal limits for businesses with festival or harvest peaks
- Bill discounting to convert receivables into cash immediately
- Letter of credit facilities for import purchases
- Interest deductible as a business expense
What the loan funds, and what it does not
Read the right-hand column first. It is the one that decides how much you have to arrange yourself.
Usually funded
- Inventory purchase and stock building
- Receivables funding against credit sales
- Seasonal stock build-up ahead of peak periods
- Import purchases under a letter of credit
- Bill discounting against accepted invoices
- Working capital for the trading cycle
Usually not funded
- Capital expenditure, which needs a term loan
- Slow-moving or obsolete stock, which lenders discount heavily
- Receivables beyond the ageing the lender accepts
- Speculative commodity positions
- Drawings above the sanctioned limit
Funding limits and the treatment of add-ons vary between lenders and move with the borrower profile. The sanction letter you receive is what governs — we will walk you through it before you sign.
How it works with us
- 1 We read your financials before approaching anyone Turnover, margins, banking conduct and existing obligations. Lenders read the same numbers, and it is better to know what they will see.
- 2 Matched to lenders who write your segment Manufacturing, trading and services are underwritten differently. Applying to the wrong lender wastes weeks and marks your credit file.
- 3 Structure chosen before rate A term loan, a working capital line or an overdraft solve different problems. The cheapest wrong structure is still the wrong structure.
- 4 Documentation prepared properly, once Financials, GST returns, bank statements and projections in the format lenders expect. Incomplete files are the main cause of delay.
- 5 Sanction, disbursal and an eye on the covenants We flag the conditions attached to the sanction so a covenant breach is not the first you hear of a problem.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- If you distribute for a large manufacturer, ask about channel finance. Being funded through the principal's banking relationship is frequently far cheaper than borrowing independently.
- Receivables ageing drives your drawing power. Invoices beyond ninety days are usually excluded entirely, which makes collection discipline a funding issue rather than only an operational one.
- Slow-moving stock is discounted heavily in the drawing power calculation. Clearing it improves both cash and your facility.
- On thin margins, funding cost is a large share of profit. It is worth spending real effort on structure and pricing here rather than accepting the first sanction.
- Ask for a seasonal peak limit if your business has one. A standard limit sized on average stock will constrain you in exactly the weeks that matter.
Documents required
- Business registration — incorporation, partnership deed or proprietorship proof
- PAN of the business and of the promoters
- Last two to three years of audited financial statements
- Last two to three years of income tax returns with computation
- GST returns for the last twelve months
- Bank statements for the last twelve months
- KYC of promoters, partners or directors
- Existing loan sanction letters and repayment records
Frequently Asked Questions
What is channel finance?
A facility arranged through the manufacturer or principal you distribute for, using their banking relationship and credit standing. For a distributor it is frequently the cheapest funding available, and it is worth asking your principal about before arranging anything independently.
Why does receivables ageing matter so much?
Because it drives your drawing power. Lenders typically exclude invoices beyond ninety days from the calculation entirely, so slow collections directly reduce the funding available to you — usually at the point you most need it.
How is stock valued for drawing power?
At cost or market value, whichever is lower, with slow-moving and obsolete stock discounted heavily or excluded. Clearing dead stock improves both your cash position and your facility.
Can I get a higher limit for the festive season?
Yes — seasonal peak limits are standard for trading businesses. A facility sized on average stock will constrain you during exactly the weeks that generate most of your annual margin, so ask for the peak limit at sanction.
What is bill discounting?
Selling an accepted invoice to the lender at a discount to receive cash now rather than at maturity. For a trader with creditworthy customers on long credit terms, it converts receivables into working capital without increasing overall borrowing.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.