Last night, a garment factory owner in Uttara told me something that still hurts: “My ledger shows profit, but I couldn’t sleep because payroll is due tomorrow and my biggest buyer won’t pay for another month.” That’s the cruel paradox most business owners face. You’re succeeding on paper while suffocating in reality. The suppliers are calling, the workers are waiting, and that bulk discount offer expires today, but your cash is trapped somewhere between invoices sent and payments pending.
Most guides throw banking jargon at you and skip the real panic. They talk about “liquidity management” when what you need is a way to pay salaries this Friday. They mention “revolving credit facilities” without explaining whether you qualify or what it actually costs when you factor in all those hidden charges nobody warns you about.
Here’s how we’ll tackle this together: we’ll name your exact cash struggle, decode what working capital loans actually do in terms you can explain to your business partner tonight, compare your real Bangladesh options with honest numbers including the fees banks bury in fine print, and build a plan so you borrow with confidence instead of desperation.
Keynote: Working Capital Loan
Working capital financing bridges the gap between operational expenses and incoming revenue for businesses. In Bangladesh, facilities like Cash Credit, Overdraft, and Loan Against Trust Receipt provide short-term funding from 7% to 15% interest rates. These solutions support inventory procurement, payroll management, and business expansion without requiring long-term commitments.
When Your Business is Breathing But Broke
The Moment Profit Stops Meaning Anything
Your accounting book shows 5 lakh profit while your bank balance reads zero. That’s not bad management, that’s the reality of running a business where money moves in cycles, not straight lines.
That profit is stuck in unsold inventory sitting in your warehouse for weeks, waiting for the right buyer at the right price. Or it’s trapped in invoices your clients will pay 60 to 90 days later because that’s just how corporate purchasing departments work. Meanwhile, your supplier demands cash today, not promises about next month. Your raw material vendor doesn’t care that your biggest client has a 90-day payment cycle.
This is the moment profit stops meaning anything. You can’t pay rent with future receivables. You can’t meet payroll with inventory that’s still sitting on shelves.
What This Cash Squeeze Actually Costs You
The real damage happens in opportunities you’re forced to miss. You’re turning down bulk purchase discounts because you can’t pay upfront now, and those discounts could save you 15 to 20% on your margins. That’s not small money when you’re running on thin profit lines.
Missing that big Eid season order because you lack the initial material investment to fulfill it. Your competitor takes that order instead, and next year, the buyer doesn’t even call you. Paying late fees and penalties that quietly destroy your supplier relationships forever. Once you become “that client who always pays late,” you lose negotiation power on everything.
Watching competitors grab your market share while you’re stuck in survival mode. They’re growing because they solved this cash flow puzzle. You’re shrinking because you haven’t.
The Sleepless Nights Nobody Talks About
It’s 2 in the morning and you’re calculating if you can delay this month’s rent payment to cover payroll. Your team trusts you for salaries on the 1st, but the money simply isn’t there yet. The payment you were counting on got pushed to next week. Again.
This feels like drowning while standing in shallow water. The resources exist, they’re just not in your hands right now. One delayed customer payment can collapse your entire monthly plan like dominoes. First payroll gets delayed, then suppliers start calling, then your credit score takes a hit, then next month’s loan application gets rejected.
What Working Capital Loans Actually Mean for Your Sanity
The Definition That Finally Makes Sense
Working capital financing is money for today’s operations: payroll that’s due Friday, inventory you need to fulfill this week’s orders, supplier bills that can’t wait any longer. It’s not for buying machinery that’ll last ten years, land for future expansion, or anything you’ll use for years ahead.
Think bridge, not building. A bridge gets you across this month’s cash gap safely. You’re not constructing permanent infrastructure, you’re creating temporary access until your own cash flows back to you.
Short-term fuel so your business engine runs smoothly until revenue actually arrives in your account. This is the oxygen that keeps operations breathing while profit is still traveling from your customer’s promise to your bank balance.
The Types You’ll Hear at Bangladesh Banks
Let me break down the main working capital facilities you’ll encounter, because banks use these terms interchangeably and it gets confusing fast:
| Facility Type | How It Works | Best For | Typical Interest Rate |
|---|---|---|---|
| Overdraft (OD) | Withdraw beyond your balance up to approved limit | Seasonal businesses with irregular cash needs | 10-13% |
| Cash Credit (CC) | Revolving access based on inventory and receivables value | Manufacturing and trading businesses with stock | 9-12% |
| Working Capital Demand Loan (WCDL) | Lump sum that can be recalled on 24-hour notice | Specific short-term projects | 11-14% |
| Loan Against Trust Receipt (LTR) | For importers, repaid when goods are sold | Import-based trading businesses | 8-11% |
Overdraft lets you withdraw beyond your balance up to an approved limit easily. It’s flexible but typically more expensive because you’re paying for that convenience.
Cash Credit gives revolving access based on your inventory and receivables value. As you sell inventory and collect payments, you can draw again. This works well for businesses with consistent stock turnover.
Working Capital Demand Loan can be recalled on 24-hour notice by the bank, which sounds scary but offers flexibility for both sides. Invoice factoring converts your unpaid invoices into immediate cash minus fees, usually 2 to 5% of invoice value.
The One Truth That Prevents Disaster
Only borrow what your cash cycle can realistically repay within months, not what you wish you could repay if everything goes perfectly. If your repayment plan depends on “hoping sales improve by 30%,” you’re building a trap, not a bridge.
Match the loan duration to how fast your stuck cash actually flows back. If your customers pay in 60 days and your suppliers give you 30-day credit, you have a 30-day gap. Borrow for 30 days, not 6 months. The longer the tenure, the more interest you pay on money you’ve already received back.
Your Real Cash Gap in Plain Numbers
Calculate Your Exact Stranglehold
Here’s how to see your actual suffocation period in days:
Working Capital Cycle = Inventory Days + Receivables Days – Payables Days
Track how many days your inventory just sits there collecting dust. Count from when you pay your supplier to when you actually sell the item. For a clothing retailer, this might be 45 days. For a restaurant, maybe 3 days.
Add how many days customers delay paying you after receiving goods. If you sell on credit and get paid 60 days later, that’s 60 receivable days.
Subtract the payment grace period your suppliers actually give you before demanding money. If they give you 30 days to pay, subtract 30.
So: 45 days inventory + 60 days receivables – 30 days payables = 75-day gap. That’s 75 days where your money is locked up doing nothing for you. That’s your working capital requirement, your actual suffocation period.
The Three Questions That Show Your True Need
What bills absolutely must be paid this week versus what can wait another few days? Be ruthlessly honest. Payroll can’t wait. Rent might have a grace period. Electricity will get cut if you don’t pay.
Which incoming payments are guaranteed versus which are just hopeful maybes? That government contract payment might be solid. That new client’s promise is less certain until the check clears.
How many days can you realistically stretch payables without destroying trust and future credit terms? Paying suppliers 5 days late might be fine. Paying 30 days late burns bridges you’ll need next month.
Warning Signs Banks Spot Before You Apply
Your bank statement tells a story, and loan officers read it like a detective novel:
- Irregular deposit patterns and repeated overdrafts scream instability to lenders
- Unexplained expense spikes make you look riskier than you actually are
- Missing proper records makes even a good business appear untrustworthy overnight
- Frequent returned checks or bounced payments signal you’re operating too close to the edge
- Large withdrawals to “cash” raise questions about what you’re hiding
Your Bangladesh Options Menu With Honest Pricing
Traditional Bank Loans and Their Reality
State banks like Sonali Bank and Janata Bank offer lower interest rates, sometimes as low as 9%, but slower processing that can take 4 to 8 weeks. If you’re not dying of urgency and can provide all documents properly, this saves money.
Private banks like BRAC Bank, Dutch-Bangla Bank, and Mutual Trust Bank charge higher rates between 11 to 14% but approve faster, sometimes within 2 weeks. You’re paying for speed and slightly better service.
The Bangladesh Bank CMSME refinance scheme drops rates to a maximum of 7% if you qualify. Here’s the catch: banks get these funds at just 2% from Bangladesh Bank but many don’t pass the full benefit to you. The scheme allocated Tk25,000 crore specifically for cottage, micro, small, and medium enterprises. About 40% of this can now be used for working capital, not just term loans.
Your existing bank relationship gives you negotiation leverage others simply lack. If you’ve maintained accounts for 3+ years with consistent transactions, mention it. Banks favor existing customers because they already know your behavior.
| Bank Type | Interest Rate Range | Processing Time | Key Advantage |
|---|---|---|---|
| State Banks | 9-11% | 4-8 weeks | Lowest rates, government schemes |
| Private Banks | 11-14% | 2-4 weeks | Faster approval, better service |
| CMSME Refinance | 7% max | 3-6 weeks | Subsidized rates for qualified SMEs |
| MFIs | 12-18% | 1-2 weeks | Minimal documentation, faster access |
The Fast-Track Digital Revolution
UCB Sūcanā and Progoti by BRAC Bank promise approval potentially within one day to one week. This isn’t marketing fluff. They’ve digitized documentation verification and credit scoring. You upload documents, their algorithm assesses your risk, and if you pass initial filters, a relationship manager calls you within 24 hours.
National Bank’s Small Business loan goes up to 20 lakh taka without collateral required. You need a trade license, TIN certificate, bank statements, and a business plan. The catch is your CIB score needs to be clean and you need at least 2 years of business operation history.
Bangladesh Development Bank focuses specifically on industrial working capital needs exclusively. If you’re in manufacturing or processing, they understand your machinery cycles and seasonal raw material purchasing better than retail-focused banks.
Trade credit from suppliers often carries zero interest and is the cheapest option available. If your supplier lets you pay in 60 days instead of cash on delivery, you’ve just gotten a free working capital loan. Negotiate this before looking at banks.
What Interest Rates Actually Look Like Today
Market reality check: rates jumped from 7.31% in June 2023 to 11.52% by early 2024 according to Bangladesh Bank data. This happened because the central bank raised policy rates to control inflation. Your loan costs more today than it did 18 months ago.
Typical working capital loans now range between 9% to 14% depending on your relationship, business type, and collateral offered. Manufacturing businesses often get better rates than pure trading businesses because banks view production assets as more tangible security.
But here’s what kills you: processing fees and hidden charges add 1 to 3% more to your actual cost. You’ll pay documentation fees (0.5% to 1% of loan amount), legal charges for hypothecation agreements, insurance mandates covering 110% of stock value against fire and other risks, and sometimes excise duty on the loan instrument itself.
Ask for the “effective annual rate” including all fees, not just the advertised headline interest number. A 10% advertised rate might cost you 12.5% after all charges.
The Real Reasons Your Application Gets Rejected
Your CIB Score is the Silent Killer
Credit Information Bureau reports are non-negotiable in Bangladesh banking. Anything below 650 triggers immediate red flags. A score above 700 opens doors. This number determines more than approval, it determines your interest rate tier.
One missed credit card payment from three years ago still haunts your business loan applications today. The CIB remembers everything. Every single late payment, every bounced check, every loan where you restructured terms because you couldn’t pay.
Even being a guarantor for someone else’s defaulted loan destroys your chances. You co-signed for your brother-in-law’s business loan in 2020, he defaulted in 2022, and now your CIB shows “SMA” classification. Banks see you as contaminated risk.
Check your CIB report before applying, never after rejection surprises you. Go to any Bangladesh Bank office or request through your bank. It costs Tk300 per inquiry and is valid for 2 months. Finding problems after rejection wastes months of time.
| CIB Classification | What It Means | Impact on Approval |
|---|---|---|
| NIL | No credit history | 60% approval rate (seen as risky unknown) |
| STD (Standard) | All payments current | 90%+ approval rate, best rates |
| SMA (Special Mention) | 1-89 days overdue | 40% approval rate, higher rates |
| DF (Doubtful) | 90-179 days overdue | Automatic rejection in most banks |
| BL (Bad Loss) | 180+ days overdue | Blacklisted, needs clearing first |
Cash Flow Problems That Make Banks Nervous
Inconsistent monthly revenue patterns suggest your business is fundamentally unstable, not just experiencing a temporary gap. If your deposits swing wildly from 2 lakh one month to 50,000 the next to 8 lakh the month after, banks wonder if you even understand your business model.
High debt-to-income ratio proves you’re already drowning in existing obligations. If 60% of your revenue goes to servicing other loans, where will the money for this new loan come from? Bangladesh Bank circular requires banks to assess debt servicing capacity before approval.
Operating below breakeven for consecutive months signals structural problems, not temporary gaps. One bad month is understandable. Six months of losses means your business might not be viable, and a working capital loan won’t fix that.
According to Bangladesh Bank data, default rates in the SME sector increased from 2.0% to 3.0% between 2023 and 2024. Banks are now more cautious, rejecting marginal applications they might have approved two years ago.
The Documentation Disasters You Can Fix
Incomplete financial statements are like showing up to an exam without a pen. You need at least 2 years of audited or CA-certified financial statements showing revenue, expenses, profit, and cash flow. Handwritten ledgers don’t cut it anymore.
Missing trade license makes lenders question if you’re even legally allowed to operate your business. This is your business’s birth certificate. No trade license means no loan, period.
Outdated bank statements raise suspicion about what you’re deliberately hiding from them. Banks want to see the last 12 months continuously. If you submit January to June and skip July to December, they assume those missing months hide problems.
A fuzzy business plan suggests you don’t understand your own business model clearly. You need to explain: What do you sell? Who buys it? How do you make profit? Why do you need this money? When will you repay it? If you can’t answer these in 2 pages, you’re not ready to borrow.
Collateral Requirements Nobody Explains Upfront
Insufficient asset value compared to the loan amount you’re requesting kills applications silently. If you want 10 lakh but your machinery is worth 6 lakh at forced sale value, banks see a 4 lakh hole.
Banks want tangible security, not just your personal guarantee and promises. Land with clear title, machinery with invoices, inventory that doesn’t spoil, receivables from creditworthy companies. Your confidence in future sales isn’t bankable.
Stock hypothecation only works if inventory is easy to value and liquidate quickly. Imported electronics? Fine. Perishable vegetables? Not acceptable. Finished garments ready for export? Usually acceptable. Raw materials specific to your production? Banks get nervous.
How to Actually Get Approved in Bangladesh
Before You Walk Into Any Bank
Calculate exactly how much you need using the working capital ratio formula. Don’t just guess. Take your monthly operational expenses, multiply by your cash conversion cycle in months, and that’s your requirement.
If monthly expenses are 3 lakh and your cash cycle is 2 months, you need 6 lakh, not 10 lakh “to be safe.” Over-borrowing costs you interest on money sitting idle. Under-borrowing means you’ll be back begging for top-ups in 2 months.
Gather three years of financial statements, income tax returns with acknowledgment receipts, and 12 months of continuous bank statements right now. Put them in a folder. Photocopy everything twice: one set for the bank, one set you keep. Banks lose documents. Regularly.
Get your CIB report and proactively address any issues you discover immediately. If you see wrong information, dispute it in writing with supporting documents. If you see legitimate old debts, settle them before applying. A cleared debt looks infinitely better than an unresolved one.
Prepare a one-page business plan explaining why you need funds and how repayment works. Not a 50-page MBA thesis. One page covering: your business, your cash gap reason, how the loan helps, where repayment comes from, and timeline.
The Documents That Remove Doubt Fast
Here’s your complete checklist for working capital loan applications in Bangladesh:
Mandatory Documents:
- Trade license (renewed, not expired)
- TIN certificate showing you pay taxes
- National ID card copies of proprietor/all partners/all directors
- Memorandum and Articles of Association (for limited companies)
- Board resolution authorizing the loan (for limited companies)
- Partnership deed (for partnerships)
- Certificate of Incorporation (for limited companies)
Financial Documents:
- Last 12 months of bank statements showing consistent transaction patterns
- 2-3 years of audited/CA-certified financial statements
- Income tax returns with acknowledgment receipts for last 2 years
- Sales records, supplier invoices proving business is operating
- Purchase orders or work orders showing future revenue
Property/Collateral Documents:
- Land title deeds if offering property as security
- Machinery purchase invoices and valuation reports
- Inventory valuation report from CA
- Rent agreement if operating from rented space
- Fire insurance and other mandatory insurances
Clean, organized records make you look stable even if you’re small. Put documents in labeled folders with a cover sheet listing contents. This 10-minute effort signals you’re serious and competent.
Choosing Your Bank Strategically
Your existing relationship bank already knows your transaction history, so leverage that trust. Call your relationship manager before formally applying. Ask: “Based on my account history, do I have a realistic chance for 8 lakh working capital?” This informal conversation saves you from wasting application fees on certain rejections.
Women entrepreneurs get special schemes with lower interest rates at several banks. Dutch-Bangla Bank offers 7 to 7.5% for women-owned businesses. BRAC Bank has dedicated women SME products. Jamuna Bank’s “Joyeeta” program provides easier terms. If you qualify, use it.
SME-focused institutions like BRAC Progoti, City Bank SME Banking, and Mercantile Bank’s SME division understand small business cash flow struggles better than their corporate banking colleagues. They’re trained to see potential in businesses that look messy to traditional corporate bankers.
| Bank Category | Typical Approval Timeline | Documentation Intensity | Best For |
|---|---|---|---|
| Existing relationship bank | 2-3 weeks | Medium | Fastest approval, leverage history |
| SME-focused private banks | 2-4 weeks | Medium-High | Better understanding of small business |
| State-owned banks | 4-8 weeks | High | Lowest rates, patient borrowers |
| Digital/fintech products | 1-2 weeks | Low-Medium | Urgent needs, digital-savvy businesses |
Application to approval typically takes 2 to 8 weeks depending on complexity, your responsiveness, and the bank’s workload. Eid and year-end periods take longer because banks are swamped.
The Pitch That Gets You Approved
When you sit across from the loan officer, explain what caused your cash gap with specificity, not vagueness. Don’t say “business needs” or “expansion plans.” Say: “My receivables cycle extended from 45 to 75 days because two major buyers switched to quarterly payments. This created a 30-day gap I’m covering with this loan until their payment arrives on March 15.”
Detail exactly how the loan gets repaid from which specific cash inflows. “I’ll repay from the 12 lakh receivable coming from Buyer A on April 1 and the 8 lakh from Buyer B on April 10. Here are their purchase orders showing confirmed amounts.”
Say with conviction: “I’m borrowing to maintain smooth operations during a temporary timing mismatch, not to gamble on hypothetical growth.” Banks approve the first scenario. They reject the second.
Practice explaining your business model simply, passionately, and with conviction in 90 seconds. If you can’t make your business sound compelling in 90 seconds, the loan officer won’t fight for your application in the credit committee meeting.
How Much to Borrow Without Choking Tomorrow
Borrow for the Gap, Not the Dream
Calculate your actual need: fixed costs you must pay (rent, salaries, utilities) plus inventory you must purchase to fulfill confirmed orders, minus cash actually coming in from collections you can count on.
If monthly fixed costs are 2.5 lakh, you need 1.5 lakh for inventory, and you’re collecting 3 lakh this month, your real gap is 1 lakh. Borrow 1 lakh, maybe 1.5 lakh for safety buffer. Don’t borrow 5 lakh because it’s available.
Only borrow for the weeks you absolutely cannot stretch payables any further. If you can negotiate 10 extra days from suppliers, that reduces your loan requirement by a third. Every day you delay borrowing or every taka you don’t borrow saves interest.
Don’t finance your wish list, finance only your survival necessities right now. That new delivery van can wait. Meeting payroll cannot wait.
Build Three Scenarios Before You Sign
Scenario A (Expected Case): Sales come in as expected at 10 lakh, collections happen by the 25th, you repay the 6 lakh loan by month-end. Everything runs normally smooth. Your interest cost is 50,000 taka.
Scenario B (Stress Case): Sales drop 20% to 8 lakh, or collections delay by 15 days. Can you still make the loan payment comfortably without defaulting? Do you have alternate cash sources like reducing owner withdrawals or postponing non-critical expenses?
Scenario C (Disaster Case): Your biggest payer, who represents 40% of receivables, delays payment by 60 days. Does this completely break your repayment plan? Do you default, damaging your CIB? Or do you have contingency access to funds?
If Scenario B financially destroys you, you’re borrowing too much or choosing the wrong loan structure. Maybe you need a longer tenure with smaller monthly payments, or a smaller loan amount entirely.
The Sleep Test That Keeps You Safe
Ask yourself honestly: will I sleep peacefully at night if revenue arrives 20% late or 20% lower than expected? If the answer is no, if you’ll be lying awake calculating emergency plans, you’re borrowing too much or accepting terms that are too aggressive.
Peace of mind is worth more than maxing out your credit limit. Better to borrow 5 lakh and sleep well than borrow 10 lakh and wake up at 3 every morning in cold sweats.
Using the Loan Without Falling Into Debt Trap
The Golden Rule Nobody Follows
Spend only on the exact gap items you listed in your loan application. This is medicine for a specific ailment, not sugar you consume freely. If you said you need money for inventory and payroll, don’t divert it to renovating your office.
Never use working capital loans for clearing old debts or covering personal expenses ever. That’s using short-term money to solve long-term problems. It doesn’t work. It compounds your troubles.
Track spending weekly in a simple spreadsheet: date, purpose, amount, remaining balance. Monthly review arrives way too late to correct course. By then, you’ve spent money wrong for 4 weeks.
This is investment capital for revenue generation, not relief for past mistakes. Every taka should create more takas through sales. If it’s not generating revenue or enabling operations that generate revenue, don’t spend it.
What Smart Borrowers Do Differently
Use funds for inventory during peak season when you know demand exists, not to cover permanent structural shortfalls you can’t fix with borrowed money. Eid season inventory? Smart use. Covering losses from poor pricing? Terrible use.
Bridge the gap between supplier payments and customer collections timing only. You paid 5 lakh for raw materials on the 1st, you’ll collect 7 lakh from finished goods sales on the 30th. That 29-day bridge is exactly what working capital loans are for.
Cover temporary payroll crunches during seasonal slowdowns, never ongoing structural salary expenses you fundamentally can’t afford. If you can’t afford your current staff from normal operations, borrowing to pay them means you’re heading toward closure, just slowly.
According to industry data, 40 to 50% of SMEs in Bangladesh face cash flow issues at some point. You’re not alone, you’re not failing, you’re navigating a common business challenge. The difference between survivors and failures is using financing strategically versus desperately.
Building Towards Financial Independence
Smart businesses use working capital loans as temporary bridges while building toward self-sufficiency:
Use Dropline Overdraft facilities that gradually reduce your limit as you improve operations. You start with 10 lakh, and as your cash cycle improves, the limit drops to 8 lakh, then 6 lakh. This forced reduction builds discipline.
Improve your cash conversion cycle by negotiating better payment terms with everyone. Get suppliers to extend credit from 30 to 45 days. Incentivize customers to pay faster with 2% early payment discounts. Reduce inventory holding periods by improving demand forecasting.
Build cash reserves during good months to survive lean periods independently without running to banks. Even saving 50,000 monthly during peak season creates a 3 lakh buffer by the time slow season arrives.
| Current Stage | Next Stage | Final Goal |
|---|---|---|
| Frequent overdraft usage | Predictable working capital loan | Cash reserve buffer |
| 90-day cash cycle | 60-day cash cycle | 30-day cash cycle |
| No financial planning | Monthly cash flow forecasting | Quarterly reserves built |
Aim to transition from needing loans to being your own capital source within 2 to 3 years. This isn’t fantasy, this is what stable businesses achieve through disciplined cash management.
The Communication That Saves Your Credit
Call your bank early if collections slow unexpectedly, not when you’re already defaulting. The conversation on day 5 of delay is: “My major payment got postponed, I need 15 extra days.” The conversation after defaulting is: “Please don’t classify my account as SMA.”
Banks appreciate proactive communication infinitely more than they punish temporary struggles. Relationship managers have discretion to grant 10 to 15 day extensions if you call before missing payment, not after.
Small honesty today prevents harsh legal actions and account freezing tomorrow. Once your account gets classified as non-performing, the legal department takes over and relationship managers can’t help you anymore.
“Transparency doesn’t guarantee approval, but deception guarantees rejection and relationship destruction.”
Conclusion
If you remember one thing, let it be this: a working capital loan isn’t magic money that solves broken business models, it’s a strategic bridge that only works when you know exactly where it starts and where it ends. We’ve walked from that “profit ase, cash nai” suffocation through the entire landscape of working capital financing in Bangladesh.
You understand what working capital loans actually are: temporary funding for operational gaps, not permanent solutions for structural problems. You know which Bangladesh options exist with real interest rates hovering around 9 to 14%, from state banks offering cheaper slower money to private banks providing faster expensive access, and the Bangladesh Bank CMSME refinance scheme offering subsidized 7% rates if you qualify and can wait. You’ve seen what banks truly look for beyond paperwork: clean CIB scores above 650, consistent cash flow patterns, complete documentation, and viable repayment plans based on confirmed receivables, not hopeful projections. And you learned how to borrow amounts you can repay without losing sleep: calculating exact gaps, stress-testing scenarios, and using funds only for the revenue-generating purposes you stated.
Your first step today is brutally simple. Grab a notebook and create two columns: “Cash arriving next 30 days” with specific amounts and dates from actual purchase orders or confirmed payments, and “Cash leaving next 30 days” with your rent, salaries, supplier payments, and other obligations. When you see your exact gap on paper, when you can point to specific numbers instead of vague anxiety, the fear loses its grip on you. You’ll make smarter decisions, the kind where you borrow what you actually need instead of what feels safe, where you negotiate with banks from knowledge instead of desperation. This is how you cross that bridge safely to the other side where your business breathes freely again, where profit in the ledger finally matches money in the bank.
Working Capital Loan Requirements (FAQs)
What is the difference between cash credit and overdraft in Bangladesh?
Yes, they’re fundamentally different. Cash Credit (CC) provides a revolving limit based on your inventory and receivables value, typically secured by hypothecation of stock. You draw and repay repeatedly against the same limit. Overdraft (OD) lets you withdraw beyond your current account balance up to an approved limit, usually unsecured or secured by fixed deposits, offering more flexibility but higher interest rates typically 1 to 2% above CC rates.
How does CIB report affect working capital loan approval?
Yes, dramatically. Your CIB classification determines everything. STD (Standard) classification gives you 90%+ approval rates with best interest rates. SMA (Special Mention Account) status, showing even 1 to 89 days of past delays, reduces approval chances to 40% and increases your interest rate by 2 to 3%. DF (Doubtful) or BL (Bad Loss) classifications result in automatic rejections across almost all banks until you clear those records completely.
What are Bangladesh Bank’s refinance schemes for CMSME working capital?
Yes, the Tk25,000 crore CMSME refinance scheme allows banks to access funds at 2% and lend to qualifying cottage, micro, small, and medium enterprises at maximum 7% interest. About 40% allocation specifically covers working capital needs, not just term loans. You need minimum 3 years banking relationship, no classified loans in last 12 months, and initial 12-month tenure with renewal options. Only 60% of the scheme gets utilized due to strict eligibility criteria.
What documents are required for working capital loan application?
Yes, prepare these mandatory items: trade license renewed and current, TIN certificate, NID copies of all proprietors/partners/directors, 12 months continuous bank statements, 2 to 3 years audited or CA-certified financial statements, income tax returns with acknowledgment receipts, purchase orders or sales invoices proving active business operations, incorporation certificate for limited companies, and collateral documents if offering property or machinery as security. Missing any single document delays or kills applications.
How to calculate working capital requirement for loan application?
Yes, use this formula: Working Capital Gap = (Inventory Days + Receivables Days – Payables Days) multiplied by average daily operational expenses. If you hold inventory 45 days, collect payments in 60 days, and your suppliers give you 30-day credit, that’s 75-day gap. Multiply 75 days by your daily expense rate, say 10,000 taka, and you need 7.5 lakh working capital. This gives you the mathematically accurate requirement, not a guess.