Difference between Term Loans and Capital Loans

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• Difference between Term Loans and Capital Loans
  Nafa

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Table of content

• Difference between Term Loans and Capital Loans
  Nafa

• About Us

Term loans
Which finance option to choose?

• Working Capital loans

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About Us - Financing Solutions For Climate
Resilient, Future Ready Profitable Farming.

• Netafim Agricultural Financing Agency Pvt. Ltd.
  (NAFA) was promoted by Netafim Group, Israel to
  finance the stakeholders in micro-irrigation
  value chain. Netafim invented and pioneered the
  adoption of drip irrigation system across the
  world with the mission to promote a global change
  in the way water is used in agriculture.
• One of the major hurdles in adoption, of micro
  irrigation by farmers, was their access to
  finance, hence Netafim decided to provide
  financial solutions to the stakeholders in micro
  irrigation value chain. NAFA, the Non-Banking
  Finance Company (NBFC) of Netafim Group, received
  the RBI license and commenced operations in
  March2013.

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• Difference between Term Loans and Capital Loans
  Nafa

• Term loans and working capital loans are two of
  the most popular financial aids available to
  farmer enterprises in India. Financial crunches
  in business organisations that may hinder capital
  flow and handicap business development are dealt
  with effectively with the help of these financing
  options. The agricultural stratum in India can
  use these financial aids to boost production and
  sustainability. Hence, farmers need to choose
  suitable loan terms wisely based on their cash
  flow and liquidity needs.
• Several organisations are faced with this choice
  multiple times during their lifetime. However,
  the need for financial support may come up rather
  frequently when youre operating in the
  agriculture sector. Therefore, you need to set
  your financial sources straight and know your
  best option for getting the funds you need. You
  must understand and differentiate between term
  loans and working capital loans to make the right
  decision.

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• Term loans

• Term loans are secured loans that are usually
  used to fund capital expenses including
  business expansion, acquisitions, new asset
  purchases or expensive machinery, and more. Also
  known as business term loans, these
  loans typically have a repayment tenure between
  one to ten years and they usually involve higher
  sums of money.
• However, it is essential to note that this type
  of loan is available for diverse terms such as
  short-term, long-term, and medium-term.
• A term loan is best suited for an established
  small business with sound financial statements.
  This type of loan limits other financial
  commitments the company may take on, including
  other debts, dividends, or principals
  salaries, and can require an amount of profit set
  aside for loan repayment.
• While the principal of a term loan is not
  technically due until maturity, most term loans
  operate on a specified schedule requiring a
  specific payment size at certain intervals.

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• Working Capital loans

• Working Capital loans are short-term loans mainly
  used to meet the costs of running a business be
  it routine operational expenses or insufficient
  working capital. Working capital is an important
  funding source for farmers. It is the immediate
  cash they receive for the daily expenditures that
  their business might encounter. Organisations can
  take a working capital loan to pay staff
  salaries, monthly rent, and other day-to-day
  expenses or to meet some seasonal demands that
  might have shown up at the last minute. The
  assistance they get from these external funding
  sources helps them get back on track and continue
  with their work.
• It is important to note that one cannot use the
  working capital loan for new investment or to
  start a new project or expand the business that
  they already have. These are liquid loans with a
  short term. This type of loan has a repayment
  tenure between three months to fourteen months if
  there is a timely repayment.

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• Which finance option to choose?

• Both types of loans are remunerative and
  essential to keep the business operations
  optimal. While selecting, the choice of finance
  will depend primarily on the nature of the
  capital need. Term loans are usually better
  choices for investment in heavy ventures. But if
  the company only requires small amounts to meet
  the operational expense, working capital loans
  are ideal.
• For working capital improvement, capital loans
  are relatively easier to get, especially with
  a good credit score.
• In term loans, the interest rates keep growing
  with the years, so in the end, you pay more in
  interest for the term loans when compared to
  working capital loans. Because of the longevity
  of repayment, it requires a lot of paperwork and
  many complex procedures.
• You can use a loan calculator to estimate the
  requirements for working capital. It will help
  you analyse the inventory that has been built up,
  all the cash that you already owe, and consider
  the amount that you are supposed to pay to the
  suppliers. This also helps in more manageable
  repayment of the loan that is taken. For term
  loans, you can use a business loan calculator,
  which helps estimate the total of the repayment,
  along with the interest and the principal.

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What We Promote?
Sustainable Agriculture Practices by promoting
climate resilient technologies by focusing on
using water efficiently to reduce negative impact
on environment.
Access to Financial Service To small holder
farmers and Small Medium rural agri enterprises
Improving Farmers Income Level By helping him to
adopt cash-crops, increasing crop-productivity
and helping him to grow more with less
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Thank you
Netafim Agricultural Financing Agency Pvt. Ltd.
(NAFA) Registered Office 1602 1603, The
Affaires, 16th Floor, Plot no. 9, Sector 17, Palm
Beach Road, Sanpada, Navi Mumbai 400 705,
Maharashtra.
Phone Number 91-22-6170 7600 Toll-Free  1800
2677762 Whatsapp  [phone] Email
info_at_nafa.co.in customercare_at_nafa.co.in
Web https//nafa.co.in