With a dream to revolutionize business lending in India, Capital Float provides loans to small businesses – YourStory

Written by Pardeep Goyal

The Indian business environment is exciting especially now, where every bright idea is turning into a business, big or small. There are over 30 million SMEs in India. Small businesses are run by passionate entrepreneurs, but unlike digital startups, venture capital money is not accessible to them. Despite efforts, some of these businesses are losing out on growth or shut shop due to lack of working capital.

With a dream to revolutionise business lending in India, Gaurav Hinduja and Shashank Rishyasringa are changing the business of money lending with Capital Float.

Initially, Shashank was an engagement manager at McKinsey & Company, where he advised several leading financial institutions, investment funds, governments and foundations on business strategy, governance, operations and risk management. Co-founder Gaurav was running operations at India’s big apparel manufacturer Gokaldas Exports with over 40,000 people and USD 250 million in revenues.

The duo were at Stanford together before they co-founded Capital Float. They considered various business ideas but doing something related to capital was a natural inclination for them. So they decided to take on the money lending problem for small businesses.

How Capital Float works?

According to Gaurav, Capital Float works in three basic steps:

  1. Customer has to apply online,
  2. Submit documents,
  3. He/she gets a loan if eligible in about three days.

Yes, just three days for loan!

He adds, “We make sure to go through as many data points as available, including external data sources to determine credit worthiness. Once we have established that, we have been able to disburse a loan in under three days and in a lot of cases where the loan is small, it happens instantaneously. In the future, we hope to reduce that time for disbursal even further.”

Team Capital Float understands the importance of friendly capital, and is quick to deliver that much-needed finance to promising businesses that approach them. It is rare in India that a small business can get a loan in such a short time from any traditional finance company. Gaurav says, “Besides the swiftness and hassle-free nature of our service, one of the key USP is that we do not charge a prepayment penalty and our products have dynamic tenures that suit our customer’s needs.”

Key Challenges and Motivation

Starting up always comes with its set of challenges. At Capital Float, they went through the motions like everyone else: from the initial days of hiring the right team to defining clear goals, to ensuring compliance.

For startups, challenges are part of the larger scheme of things to survive and grow. Capital Float is an RBI-certified NBFC but registration was not an easy task. “At one point, we almost quit and took a break for a couple of months. But we understood regulation is very important in a complex market like India and we got back on track and persisted with our goals”, says Gaurav.

Gaurav shares how the company started conversations with their customers in the early days: “Most traditional loan providers find reasons to say ‘no’ to an entrepreneur looking for capital, but we look for a reason to say yes.”

The company has come a long way now; it is serving in major cities like Delhi, Mumbai, Bengaluru and Chennai and has testimonials from CFO of Zovi and other big brands.

According to Gaurav, today’s SMEs will drive tomorrow’s billion dreams. “But we need to ask ourselves who the driving and supporting force behind such SMEs are today,” he adds. The dream to revolutionise business lending in the country has kept Gaurav and Shashank going. “The fact that we get close to a hundred applications a day vindicates our belief in what we set out to do: create a capital revolution in India,” says Gaurav.

Being an entrepreneur himself in the fin-tech domain, Gaurav believes that entrepreneurs form the backbone of the Indian economy as the creators of the largest number of jobs and biggest contributors to the GDP. A significant hurdle for most of them is timely access to appropriate finance.

He shares some advice for entrepreneurs working in the financial domain and other budding startups:

  • Compliance is key; never ignore it
  • You should choose investors who share your vision
  • Don’t give up easily; starting up can initially wear you out but it should not bring you down
  • Don’t always hire for skills. Sometimes it’s important to hire for values
  • Don’t make promises to the customer that you cannot deliver on
  • Don’t launch your product in too many markets at once. Have a soft launch first, test it, tweak it and then re-launch the revised product

Gaurav adds, “There are many banks and NBFCs which provide loans to businesses, but you need to become a partner to your customer, not a lender. Use technology and big data to improve your customer’s experience. Understand how different customers use your products in different markets so that you can customise your product to meet their needs.”

Piece sourced from YourStory. You can read the full piece here.

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Importance of Working Capital for Businesses

What is Working Capital?

Working capital is the difference between the total number of assets and the total number of liabilities in a company. This amount is spent on executing day-to-day operations in a business. As a result, it is used as an index to measure the health of a company. Enterprises with high working capital are often strong businesses.

What are the Uses of Working Capital?

In most situations, working capital is used to run operations. A well-managed business will also use it’s working capital to achieve growth. For instance, an online seller would spend to add a new type of product to his portfolio. A retailer may liquidate funds to increase his store size by adding a new section to his outlet.
Other uses of working capital include:
• Equipment and inventory purchases
• Hiring, salary payments and employee training
• Unforeseen expenses

What are the Outcomes of Low Working Capital?
Responsible financial management may help companies secure higher levels of working capital. On the contrary, poor management of capital could result in the following issues:

• Bankruptcy risk: In the case of negative working capital, SMEs use money received from creditors to finance business operations. Businesses run the risk of bankruptcy due to the lack of sufficient income to counterbalance the expenditure.

• Lack of investment opportunities: Investors are less likely to consider companies which regularly have low or negative working capital. This demonstrates that the company is not being run effectively.

• Missed growth opportunities: With large amounts of positive working capital, businesses will have money to spend on pursuing growth. With negative or low working capital, businesses may find it difficult to capitalize on investment opportunities. Low working capital could have stifling effects on the ambitions of any businessman.

• Trade discounts: Many suppliers will offer substantial discounts if they are paid on time. Low or negative working capital can make it difficult to meet payment obligations which, effectively, increases the cost of inventory.

What are the Ways of Accessing Working Capital Finance with Capital Float?

At Capital Float, we offer a wide range of financing options for small and medium scale businesses. By providing quick and easier access to funds and with flexible repayment options, we can give businesses the right financial support to help them achieve their next milestone.

We offer Online Seller Finance to e-commerce sellers who operate on online marketplaces. Through a simple online process, the seller can apply for a loan and receive funds in three days. The loan tenure ranges between 90-180 days and is repaid on a biweekly basis. This loan is ideal for sellers who are looking at expanding into other marketplaces, increasing their product portfolio or purchasing higher volumes of stock.

Term Finance is applicable for traditional businesses that have been operating for three years. The loan tenure varies between six months to three years. Small scale manufacturers, retailers and distributors can use this loan to meet short-term investment requirements and finance inventory purchases.

Invoice Finance helps SMEs convert their invoices into cash, that can be channeled into financing business operations. This loan product has an exclusive feature of one-time bullet repayment mode, which might suit the cash-flow needs of several SMEs.

We also provide Merchant Cash Advance which will interest vendors using point-of-sale machines with consistent card settlements. Merchants can receive working capital finance of up to 150% of their monthly card swipes within three days of the loan application.

Our unique product called ‘Pay Later’ is a rolling credit facility, that enables the borrower to make multiple drawdowns within a predefined credit limit. The borrower pays interest on the utilized amount and not on the entire limit. By repaying the amount utilized, the borrower resets the credit limit, thereby instantly availing the facility in whole. Click here to read more about ‘Pay Later’. You could read about the product features by clicking here.

At Capital Float, we have working capital finance options for SMEs across all segments. Visit our website to know more about all our products. Click here to apply now.

Oct 24, 2018

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6 Types of Business Loans Available to SMEs In India

The Small and Medium Enterprises (SME) sector is of key importance to the Indian economy given that it employs the second largest workforce in the country after the agricultural sector.

Statistics offer a clearer picture. Accounting for 45% of industrial output and 40% of exports, the SME sector can be a significant driver of economic growth. SMEs also produces more than 8000 quality products for the Indian and international markets.

In recognition of their significant contribution, SMEs are receiving a welcome push from industrial associations and government bodies. Yet their biggest challenge continues to be business loan requirements. Lack of timely financial help wreaks havoc on the growth of small businesses. Funding, if not received at the right time is of no use. Often, SMEs are turned away by traditional banks for a number of reasons. Further, the inflexible and complex loan application and approval processes of conventional lenders are discouraging for most small enterprises.

Fortunately, change is in the offing. Thanks to the growing presence of FinTech lenders, small and medium enterprises have reason to cheer. Business loan requirements for two different companies can never be the same. Keeping this mind, online lenders like Capital Float have stepped in to offer a wide variety of customized loans for business in India.

Here is a quick look at the bouquet of flexible credit products that Capital Float provides to SMEs.

Term Finance:

A quickly disbursed working capital loan, Term Finance is a great product for B2B service providers, manufacturers, traders and distributors alike. It helps fast-track business growth and boost profit margins. Term Finance is a convenient means to acquire fast business funding needed to meet your short-term requirements and ensure a positive monthly cash flow.

Online Seller Finance:

With the online selling space growing exponentially, there is an omnipresent demand for high liquidity. Our Online Seller Finance has made loans for businesses in India, especially e-commerce merchants, easily available. B2C and B2B marketplaces can get ahead of competition, expand to new markets and diversify into new product categories with the help of this customized credit solution. Attuned to your business ambitions, this collateral-free business funding ensures you have liquidity in the swiftest manner possible.

Pay Later:

An innovative financial product, Pay Later is ideal for SMEs with increasing orders in the pipeline and need to make supplier payments regularly. It greatly benefits those that can avail large cash discounts from suppliers. Pay Later works well for an enterprise with a base of blue chip suppliers, too. Carrying a predefined credit capacity customized for every applicant, Our Pay Later credit facility helps a variety of SMEs in times of cash crunch.

Merchant Cash Advance:

A simple and user-friendly business funding solution, Merchant Cash Advance ensures you have access to liquidity as and when required. Most suitable for restaurateurs and retail store owners, your unique business loan requirements are met in the most affordable manner. Active use of card payment devices offers an easy experience to customers. Point-of-sale machines aren’t just means of cashless transactions; they can become instruments for availing working capital finance. Merchants who earn revenue from debit and credit card swipes can avail of business funding through this tailor-made financial product. We offer working capital finance up to 200% on the merchant’s sales from monthly card swipes. Capital Float has partnered with multiple point-of-sale (POS) card machine vendors such as MRL Posnet, Pine Labs, Bijlipay Mswipe, ICICI Merchant Services, etc. Partnering with these vendors helps merchants access their customized working capital solutions.

Supply Chain Finance:

Enterprises often need to work with multiple suppliers. Using bills as financial instruments then becomes a given. Delays in payment are likely to impact the growth of a business. Fully comprehending the importance of correct timing, Capital Float’s Supply Chain Finance has been designed to come to the aid of small and medium business owners. This unique loan product takes care of cash crunch situations through accounts receivable financing, which instantly liquidates the SMEs bills into cash. A revolutionary way to put more money into your business by collateralizing your business’ outstanding bills, Supply Chain Finance enables SMEs to procure an advance of up to 80% of their bill value.

Taxi Finance:

India is witness to the recent boom in the radio taxi business. Finding an Ola taxi or an Uber cab is convenient and something one can do round the clock. Inspired by these success stories a number of people from diverse walks of life are looking at taking up work as drivers for tech-based taxi services. While it offers an easy means to earn a good income and hold a steady job, the taxi business needs basic investment in the tools of the trade— a car wired into a tech-based platform.

Taxi Finance, Capital Float’s innovative financial product, offers taxi drivers the freedom to earn more. With this loan, a taxi driver can now own a car, operate independently, and enjoy the benefit of flexible working hours. Capital Float has partnered with several reputed taxi aggregators to enable cab drivers to ply their cars on their platforms and substantially increase their revenue. The aggregator repays the loan installments by deducting the amount from the driver’s earnings on a weekly basis.

Taxi Finance offers a simple, affordable way to earn on the driver’s terms, providing easy business funding that is in stark contrast to business loans in India offered by traditional banking institutions.

Conclusion:

Unique business loan requirements underline the need for tailor-made financial products. We have financial solutions that cater to any SME’s working capital need. Minimal documentation and zero-collateral are among the unique selling points of these business funding solutions. Additionally, easy eligibility criteria combined with no pre-closure or hidden charges make these funding options SME-friendly. With instant approvals and quick disbursal of business loans, it makes sense to choose from one of our many innovatively designed financial products.

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Oct 24, 2018

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Top 10 Time Management Tips for Small Business Owners

Time is money. No phrase proves this statement better than when you own a growing business.

As you strive to achieve your business aspirations, juggling responsibilities and managing activities end-to-end sums up a typical work day. You simply cannot afford to compromise on any of the processes at hand, because it might have a profound impact on the growth of your venture. The trick is to focus your productivity on the limited resources you have in a time-efficient manner till you can confidently handover the heavy lifting to experts. Successful businessmen will tell you the same, but in two words: time management.

Here are our favorite tried-and-tested time management tips for small business owners to save you time and make running your business easier.

1. Fix a Schedule and Stick to it

The best way to accomplish a productive day is to show up at work with a clearly defined set of goals and tasks, preferably hand-written. A disorganized schedule leads to ineptness and wasted hours, eventually leading to a loss of focus on business objectives. Account for every hour of the day, from the time needed for meetings and document review to travel and shopping. Create your schedule with three categories- one for the responsibilities that need to be completed that day, another for those activities that require your attention but can be put on hold and a third with minor tasks that you can work on if you have extra time. Know your downtime- you can use this for short breaks.

2. Focus on ONE Task at a Time

Multitasking might seem like a clever way to do many things within a short amount of time, but it divides your attention among the responsibilities at hand. Being a budding enterprise, this is not a risk that you want to take now. Instead, you can try the ‘Pomodoro technique’. This involves setting your timer for a specified time and focusing wholly on one task before the timer goes off. Repeat this after taking short breaks of 5 minutes between tasks. An efficient way to structure your time, this technique ensures that you devote time for a specific activity regularly.

3. Delegate Work

All small businesses are a one-man army early into their business operations. But your growth journey to becoming a larger enterprise begins when you start delegating responsibilities to expert personnel. Hire people who are dependable to manage tasks you don’t have time for or you are not suitably skilled for. This will give you more time to work on things that you are best at and need your personal attention. Keeping in mind that most growing enterprises might not be sufficiently funded to hire the right people, Capital Float offers Unsecured Business Loans to support the recruitment needs of these businesses.

4. Avoid Distractions

Any means of distraction is harmful for the growth of your business, as the work you do is very different compared to those of your employees. If you think your team members are wasting time on social media, set up a URL blocker on your system. You can forward calls, set up caps on answering emails or designate others to perform repeated tasks, if these are causing you to deviate from your daily schedule.

As you get busier, more people demand your time. Reducing distractions implies training the people around you to respect your time. Your employees tend to consume your time with constant problems or through attempts to garner your attention. Take steps to identify the major time-wasters and keep them at bay.

5. Prioritize difficult tasks

An effective time management hack is to start your work hours with the most challenging task at hand. Despite varying individual notions of productivity, mornings are accepted as the time of the day when you are at your optimum performance levels. This leaves the rest of the day to handle repercussions or developments, and you can work on other priorities with a relaxed frame of mind.

6. Watch out for ‘Shiny Objects’

Many a small business that has just entered the economic space face the ‘shiny object syndrome’ early into their growth phase. Shiny objects, or seemingly bright opportunities, keeping popping up from time to time and they tend to distract you from your business objectives. You can eliminate such time-wasters by asking for agendas before attending any business proposition and comparing new prospects with the value of opportunities at hand.

7. Organize your Work Space

There is no bigger demotivating factor than coming to a cluttered workspace every morning. Not only does it create an unorganized mental space, but according to recent surveys, makes you stay at office longer. Documents categorized into inbound and outbound piles, color-coded filing cabinets, scanning forms onto Outlook, and similar techniques will save you the trouble of rifling through scores of paperwork to find information.

8. Evaluate and Improvise Consistently

The worst thing to do to your business is to continue implementing processes that do not benefit your cause. Most small business owners might be busy with specific projects to spend time analyzing their business models. This is where a quarterly evaluation becomes the most significant of time management tips and strategies. A quarter, or three months, is relevantly sufficient amount of time required to determine the effectiveness of a strategy or a business relationship. Carrying out evaluations at the end of every quarter gives ambitious entrepreneurs better process insights and a chance to move in the right direction.

9. Measure Big Successes & Failures

One of the critical time management skills that a small business owner must possess is goal setting. Define scalable weekly business goals with an emphasis on a particular aspect of your business that you want to focus on, and evaluate the big wins and losses at the end of the week. What makes this strategy so productive is that here, failures are treated as important as successes, as early analysis saves the time that your team might have continued working on them.

10. Leverage Technology

Most small business owners spend more time running a business than growing it. Tasks like staff rotas, invoicing, payroll and tax consume more than 30 hours of productive time every month. With the infinite number of apps and services available online, technology can be used to fill the gap in your current business processes. Automating repetitive tasks such as these will help you save a lot of time to focus on activities that directly impact the growth of your business.

Oct 24, 2018