What is working capital loan? Experience in borrowing and managing working capital most effectively

Additional loan working capital Simply put, it is a short-term "blood pumping" solution to ensure that businesses do not stop production and do not miss business opportunities. What are the forms of additional working capital loans and what is the experience of borrowing? Find out more in the article below.

What is a working capital loan? What is the purpose of working capital?

Working capital is the difference between current assets and current liabilities, including cash, inventory, and receivables. Additional working capital loan is a form of short-term borrowing (usually less than 12 months) from a bank or credit institution to meet payment needs in daily production and business activities. This source of capital is used for:

• Payment for raw materials and goods.
• Pay salaries, operating costs.
• Short-term debt repayment, maintenance payment ratio.
• Reserve for cash flow disruptions (eg. late payment by customers).

Help businesses cover short-term capital shortages, pay domestic expenses, or expand business scale.

When does a business need to supplement working capital?

Businesses often need to borrow additional working capital in the following situations:

• Temporary cash flow shortage
  • Customers pay late, while businesses still have to pay for goods, salaries, and operating costs.
  • For example, a company sells to a supermarket and it takes 60–90 days to collect payment.
    
• Peak season
  • Demand increases sharply (Tet, festivals, student season, tourist season).
  • Businesses need capital to import more goods, increase production shifts, and expand warehouses.
    
• Need to take advantage of business opportunities
  
  • Suppliers offer discounts for bulk purchases.
  • A big contract appears but the business temporarily lacks capital to implement it.
    
• Unexpected operating costs
  
  • Incurred repair costs, small investments, sudden marketing.
  • Businesses need to quickly turn around cash flow to avoid missing opportunities.

In other words, not every business should borrow. Those that are suitable are:

• Small and Medium Enterprises (SME)
  
  • Often "stuck" capital due to long-term customer debt.
  • Not enough potential to reserve large cash flow.
    
• Businesses with seasonal business models
  
  • For example: garment (Tet, festival), agricultural products (harvest season), FMCG (summer, Tet).
  • Short-term loans help increase inventory to meet explosive demand.
• Fast growing business
  
  • There are many large orders but the equity cannot be turned around in time.
  • Borrow to seize market expansion opportunities.
    
• Businesses with transparent financial history
  
  • Have financial reports, contracts, stable cash flow.
    
  • Prove your ability to repay the loan → easy to get approved by the bank and enjoy good interest rates.
    
• Businesses want to optimize capital costs
  
  • Don't want to "freeze" too much capital in inventory.
  • Use short-term loans (lower cost) instead of long-term mobilization.

What are the forms of working capital loans?

Working capital loans often come in many different forms depending on the needs and financial capacity of the business. Below are some of the most common forms and their outstanding features:

Loan form	Main features	Suitable for which business?
Credit limit	Flexible withdrawal of capital multiple times within the limit	Have regular capital needs
Overdraft	Spending more than the account balance, high interest	Need urgent payment, long-term relationship with bank
Borrow once	Loan by specific item, approval for each item	Capital needs arise according to contract/project
Discounting/Factoring	Advance payment from invoices and contracts	Selling to slow paying customers
Medium-term loan to supplement working capital	Long-term, stable capital supplement	Fast growth, need long-term revolving capital

What do businesses need to prepare to borrow additional working capital?

To borrow additional working capital, businesses not only need to demonstrate reasonable capital needs but also demonstrate financial capacity and debt repayment ability. Below are the things businesses need to prepare before approaching banks or credit institutions:

Business legal profile

• Business Registration Certificate / Investment License
• Company charter (if any)
• Tax code, seal, other legal documents

Transparent financial records

• Financial statements for the last 2–3 years (or at least 1 year for new businesses).
• Income statement, balance sheet, cash flow statement.
• Accounting books / bank statements to prove cash flow.

Capital utilization plan & debt repayment cash flow

• Clear loan purpose: import raw materials, stock inventory, pay suppliers, operating costs...
• Cash flow forecast: shows revenue, expenses, debt collection period.
• Specific principal and interest repayment plan.

Collateral (if any)

• Real estate, machinery, vehicles, inventories, or valuable papers (savings books, bonds).
• Some types of loans (like unsecured lines of credit) may not require collateral, but they can be more difficult for new businesses.

Credit profile and business reputation

• Good loan and repayment history (CIC has no bad debt).
• Long-term, transparent relationship with the bank.
• Reputation with suppliers and customers (contracts, orders, VAT invoices).

Prepare a “transparency package”

• Sales contract/order with partner → proves real capital need.
• Debt management policy → shows the ability to recover capital.
• Use cost-cash flow management software (like Bizzi.vn) to automate reports, help keep records clear and increase credibility with banks.

What is the process and experience of borrowing additional working capital?

The working capital loan process is often quite similar across banks and credit institutions, but if a business is well prepared, it will shorten the approval time and increase the chances of success. 

Determine capital needs and what are the options for supplementing working capital?

• Businesses must calculate the amount of capital needed to borrow, the time it takes to use it, and the ability to repay the debt.
• Prepare a clear plan for capital use: importing goods, purchasing raw materials, paying debts, operating costs, etc.

Prepare loan application

• Legal documents: Business registration certificate, tax code, business charter...
• Financial Profile: Financial reports, bank statements, sales contracts, input and output invoices.
• Collateral (if needed): real estate, machinery, savings books...
• Debt repayment cash flow plan: proof of revenue, debt collection period.

Application submission & assessment

• The bank checks the legality, financial capacity, and credit history (CIC).
• Interviews and on-site surveys at the business may be required.

Approve and sign credit agreement

• After approval, both parties sign the contract: limit, interest rate, term, disbursement and repayment method.

Disbursement and use of capital

• The bank transfers money in installments or at once, depending on the capital plan.
• Enterprises must use capital for the registered purposes.

Track and pay debt

• Pay principal and interest on time.
• Report on capital usage to the bank (if required).

What is your experience in borrowing additional working capital?

Borrowing additional working capital is not just about “getting capital” but also about proving financial capacity, a reasonable business plan and repayment ability. The better prepared a business is, the easier it is to get approved and the more favorable interest rates it will receive. Below are some experiences that help increase the ability to successfully supplement working capital that businesses can refer to:

• Identify the right capital needs

• • Only borrow the amount you really need, avoid borrowing more than you need to avoid wasting interest costs.
  • Calculate the business cycle to determine the appropriate loan term.

• Prepare transparent documents

• • • Financial reports need to be clear and transparent.
    • Use financial management software (eg: Bizzi.vn) to automate cost and debt reporting → increase reliability during appraisal.

• Maintain good credit history

• • Avoid bad debt on CIC.
  • Maintain good relationship with the bank to easily extend the limit in the future.

• Have a clear cash flow plan

• • Ensure that revenue during the period can cover interest and principal.
  • Set up a contingency fund in case of late payment by customers.

• Choose the right loan type

• • Loan by limit: suitable for businesses with continuous cash flow.
  • Loan by installment: suitable for short-term, one-time capital needs.
  • Overdraft: flexible but interest rates are usually higher.

• Capital management after disbursement

• Use capital for the right purpose to avoid being checked and negatively evaluated by the bank.
• Control cash flow through regular reporting.

Bizzi Financing Working Capital Loan Solution – Flexible Choice for SMEs

In addition to traditional bank loans, many small and medium enterprises (SMEs) have now begun to pay attention to Bizzi Financing – smart working capital loan solution integrated directly on the Bizzi platform. This is a suitable choice for businesses that need quick capital, simple procedures and do not want to rely too much on collateral.

Highlights of Bizzi Financing

• Fast disbursement: Businesses only need to provide sales invoices or contracts, Bizzi connects directly with financial institutions to approve and disburse in a short time.
• No need for much collateral: Applications are reviewed based on actual transaction data and debt history, reducing pressure on SMEs that do not have many collateral assets.
  Flexible funding options:
  
  • Advance payment by invoice (Invoice Financing)
  • Contract Financing (Contract Financing)
  • Short-term credit limit based on actual cash flow
    
• Transparent and easy to estimate costs: Interest rates and fees are clearly disclosed, businesses can calculate in advance to balance cash flow.
• Integrate right on Bizzi Platform: Businesses can both manage debt and proactively access working capital in just one system.

Benefits of using Bizzi Financing

• Timely capital replenishment to import raw materials and goods during peak season.
• Take advantage of great business opportunities without worrying about disrupting cash flow.
• Optimize capital costs with short-term, flexible loans.
• Easily control and manage cash flow with Bizzi's digital accounting and finance tools.

With Bizzi Financing, SMEs can confidently "pump blood" into business operations, reduce cash flow pressure and increase competitiveness even in a volatile market context. If you need advice on loan solutions suitable for your business needs, register here: http://finance.bizzi.vn

Bizzi: The optimal solution for business cash flow

In addition to providing optimal lending solutions for businesses, Bizzi also offers a comprehensive digital solution ecosystem, helping to automate the entire financial and accounting process, from Invoice processing – expense management – debt – B2B payments.

With in-depth features, Bizzi is both an AI assistant for the finance and accounting department and a comprehensive cost control tool, helping businesses accelerate, be transparent and optimize internal cash flow in real time.

• Cash inflow (Accounts Receivable Management – ARM):

Bizzi.vn supports businesses Accelerate debt collection Thanks to the automatic debt reminder feature, detailed debt tracking, debt aging report, proactive detection of risky collections, helping to coordinate cash flow flexibly and reduce liquidity pressure. Thereby, businesses can minimize bad debt, improve payment ability and maintain stable cash flow.

• Cash Outflow (Invoice Processing & Expense Management):

Bizzi platform provides solutions automation Invoice processing, corporate expense management and Bizzi credit card integration, helps optimize payment time, tightly control costs, and limit the risk of financial loss. Not only set up a budget according to department/project and install Over level warning; Bizzi also helps accountants automatically download, check and compare invoices with PO (Purchase Order) and GR (Goods Receipt) to manage cash flow accurately and promptly.

• Full integration with ERP systems

Unlike single solutions, Bizzi.vn is built to become a powerful supporting tool for businesses. ERP systemBizzi helps businesses automate financial operations further, thereby improving operational efficiency and strategic financial decision-making capabilities.

Conclude

Hopefully, through the above article of Bizzi, managers have a better understanding of what is working capital supplementary borrowing. What is working capital supplementary or borrowing capital is only really effective when the business ensures 3 factors: Having a clear short-term need - Having a certain ability to repay debt - Expected profit is greater than interest expense.

If you are still struggling to control your debts and expenses, you should optimize your cash flow with technology solutions like Bizzi to ensure financial security. Combining traditional loans with effective technology support is the key to helping businesses manage their working capital comprehensively and effectively.

With Bizzi, businesses not only manage better but also optimize cash flow, grow sustainably and stay resilient against market fluctuations. To improve the efficiency of invoice management as well as automate the financial and accounting processes of the business. Register to experience Bizzi's comprehensive solution suite today!

• Link to register for a trial of Bizzi products: https://bizzi.vn/dang-ky-dung-thu/
• Schedule a demo: https://bizzi.vn/dat-lich-demo/