Why Online Vendors Should Apply for Capital Float’s Online Seller Finance

Are you an online seller looking to optimize and grow sales? Given the highly competitive nature of e-commerce, it’s always advisable to have a cash flow option handy for successful expansion. Furthermore, you wouldn’t want to lose out on market opportunities due to the lack of convenient financing options. And that, is where Capital Float comes into the picture.

In the cut-throat world of e-commerce, having a lucrative financing option at the right time is likely to translate into a significant competitive edge. There are three key occasions, wherein, an online seller may require rapid financing:

  • Respond to an increase in sales by purchasing inventory
  • To be prepared for seasonal fluctuations in revenue, and bridge short-term gaps in liquidity.
  • To widen product portfolio by diversifying into other product segments or to widen reach by operating on a new marketplace

Here are a few compelling reasons as to why you must apply for Capital Float’s Online Seller Finance to maintain your competitive advantage in the business:

  1. Flexible loans that are customized to your need

The exciting features at Capital Float’s Online Seller Finance ensure speedy expansion for your business in a simple manner. As an e-commerce vendor, you can raise funds from INR 1 Lac up to 1 Crore, depending upon your cash requirements. Furthermore, we provide you with effortless repayment modes for a loan tenure between 90-180 days. Our partnerships with multiple, leading e-commerce platforms enables you to acquire our e-commerce seller loans to operate and expand across different online marketplaces.

  1. A quick, hassle-free process

        a) Minimum documentation

To apply for our eCommerce seller loans, you need not furnish a heavy stack of documents. All we would need from you are your bank statements of the last six months and KYC documents credentialing you and your business.

         b) Zero collateral

We provide unsecured loans, meaning we don’t take collaterals as guarantee for loans. You won’t be asked to pledge your property or vehicle to avail a loan from us. Our loans are bereft of the anxiety that are often associated with loans against collateral.

        c) Loans against marketplace sales

Our motto is to help businesses to ‘Break Limits’. We understand that many a time, businesses with potential are hampered by the lack of finance. We are committed to change that. You can avail Online Seller Finance on the basis of your proven sales on e-commerce marketplaces, receiving up to 150% of your average monthly sales.

  1. Apply anywhere, any time

While financial institutions like nationalized banks, private banks and traditional NBFCs not only take weeks to sanction a loan, but they also have tedious application procedures, Capital Float ensures immense flexibility in the process. We have designed a handy mobile app through which you can apply for a loan from anywhere, as long as you are connected to the internet. The four-step online application procedure is not only user-friendly, but allows you to raise funds without losing on precious time.

External financing is an excellent tool for you to grow as an online vendor and keep operations smooth. Capital Float’s sole aim is to bridge the current gap in the market with innovative and flexible credit products for online enterprises like yours. That said, Online Seller Finance is just the product you need to fulfill your finance requirements in a smooth, hassle-free manner.

Wait no more. Take your online business to the next level with our online seller loans. Click here to apply.

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The Challenges of Interpreting Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is one of the most universal return concepts, and rightly so because of its effectiveness in interpreting returns from an investment. However, it is also one of the most difficult concepts to wrap your head around. In my personal opinion, the difficulty arises primarily due to the understanding of the fundamental underpinnings of the definition. It is not my intention to turn this discussion into a technical one; since the objective is to demystify, I will break it down for simpler understanding.

Firstly, the IRR is better understood when used to compare returns from two or more investments. The decision rule is rather simple – the higher the IRR, the better. The confusion arises when investors look at the IRR in isolation i.e. an investment yields a 20% IRR so what does that mean? The answer is a complicated one and often leads to more questions.

Secondly, the IRR is a multi-period return measure. What this means is that when investors would like to compare investments that span different time periods, IRR becomes the best tool for this purpose. For instance, investment A returns 20% in X years whereas investment B returns 25% in Y years. The question as to which investment performs better is best answered by the IRR.

Thirdly, the IRR works best when investments have conventional cash flows patterns i.e. a negative cash flow followed by multiple positive cash flows. Any variations herein are bound to be detrimental to the IRR calculation. For instance, you buy a stock (negative cash flow) and receive dividends (positive cash flow) during the holding period. The IRR works well in this scenario. However, if you short a stock (positive cash flow) and buy another one (negative cash flow) with the proceeds and finally square of the transaction (positive or negative cash flow) later on, the IRR may not necessarily yield desired results.

Lastly, due to its very definition, in some instances an investment may have no IRR at all or at least one that can be determined! Obviously, in such instances, the IRR is of no use and creates confusion in the mind of the investor. Therefore, the challenges in interpreting IRR arise when investors use the IRR for purposes other than those mentioned above.

Although this list is by no means exhaustive, it captures the salient features of the IRR. Hope this piece has helped simplify the concept and gives you confidence to seamlessly compare investments using IRR.

Vinay Basavaraj

Vinay boasts of a decade of experience working in both large and small organizations. His roles have ranged from sales to operations and even a stint in academia. He currently manages affairs in capital markets in Capital Float.

Oct 24, 2018

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Implications of GST for Trading

India is amongst the fastest growing economies of the world, with retail trade contributing an estimated $600 billion+ to the economy. The impact which GST, the unified indirect tax structure introduced by the Government of India on July 1 2017, brings on such a major economic lever will be highly significant.

Further, the implications of this new taxation procedure on the trader will vary on the nature of the trade, i.e., wholesale or retail. In this blog, we explain the opportunities within the new tax reform that traders can leverage, and discuss how they can prepare themselves from a GST perspective. Read on to know the effects of this latest indirect tax reform for:

  1. Wholesalers
  2. Retailers
  3. Importers and Exporters

1. For Wholesalers:

The wholesale market is fundamental to extending the reach of goods and services to the interiors of the country, especially the rural markets. Most wholesalers operate in cash transactions because of which there is a good chance that some transactions are not accounted for, which was previously a concern but ceases to be one under GST.

Given below are the main advantages that GST brings to wholesalers.

  • Transparent tax management: The introduction of technology into the taxation system can be a blessing in disguise, an opportunity to bring about transparency in tax management. Rather than relying on cash transactions, wholesalers will now get an opportunity to go digital. They will also be able to avail the facility of input tax credit. Input tax credit is where the businessman will be able to claim tax on all input goods and/or services. For example, if a wholesaler is renting a tempo for transport of goods, going ahead they will be able to claim the tax paid on the rental and receive it as input credit. They will thus be able to reduce the final market price of the transported goods by making up for that amount.
  • Financial streamlining: Because the entire supply value chain including tax flows will be on GST records, wholesalers will be better connected to retailers and suppliers. For example, the payment for a consignment will reflect in the accounting records of the supplier company as well as the wholesaler, leaving no ambiguity about payables and receivables. This will make it easier to process payments and get tax returns in a timely manner, thereby improving the cash flows of traders. A reliable positive cash flow will help build confidence in the new regime, by making working capital available and aiding opportunities to grow the business.
  • Reorganization of supply chain: GST will enable high visibility and streamlining of the supply chain, providing wholesalers with a transparent view of supply movements. For example, taxation at the “place of supply” is already mobilizing FMCG companies establish fewer warehouses, the sizes of which will be larger than before. This will aid business efficiency in the long run. However, in the initial transition phase, many wholesalers may undergo de-stocking since they would have already paid VAT on their current stocks, and would like to avail of the input tax credit on the basis of the GST rules.
  • Ease of borrowing through digital lending: Because financial and tax transactions will now be recorded in the GST system, even small traders will have digital records of their company finances and credit status. These digital records will act as a ready reckoner of information when a trader opts for a loan. Financial institutions and online lenders like Capital Float can now easily assess the loan eligibility of small traders such as Kirana owners by accessing this data, and provide them quick and easy loans. Borrowing funds online and doing business will now be easier.

2. For Retailers:

Almost 92% of the retail sector in India is unorganised, operating in cash payments. They are, essentially, the tangible representation of FMCG multinationals to end-consumers; yet they are challenged by chronic issues such as the lack of technology enablement and low operating margins. A majority of the retail market consists of “kirana stores”, which are often the smallest link of the trade chain.

Here are the benefits of the new taxation system for retailers.

  • Input tax credit facility: As mentioned for wholesalers, retailers too would be able to claim taxes paid for input products and services availed. This will present a cost advantage to retailers. For example, under the previous tax regime, if a retailer purchases a refrigerator to store perishable goods, they were not able to claim credit for tax paid on it. Under GST, they will be able to claim the tax paid on the new refrigerator when they file their taxes. This will be possible due to tax connections reflecting in the GST value chain at each stage of the transaction. Availing input tax credit means financial gain.
  • Ease of entry into the market: The market is expected to become more business-friendly due to the clarity of processes related to procurement of raw materials and better supply logistics. This is a good opportunity for new suppliers, distributors and vendors to enter the market. The registration process has also become very clear under the GST, aiding entry into the market.
  • Retailer empowerment through information availability: Small retailers often do not have complete visibility into their stock receipts, payments, etc. and are forced to blindly rely on the word of the supplier. GST will streamline these supply and cost challenges and empower the retailer with readily available information through digital systems. For example, when different types of bills like invoices, credit and debit notes, etc. are stored digitally as proposed by GST using accounting software, these will provide retailers with real-time reports on sales, stock information and live balance sheets, in addition to performing error checks before placing an entry into ledgers.
  • Better borrowing opportunity: The retailer scope for business growth can be increased by increasing the retailers’ access to finance. This is where Fintech lenders like Capital Float step in – they can ease their passage to the new tax regime. Capital Float recognises the financial challenges these small business players face and strives to bridge this gap by financing them with small ticket loans. As “kiranas” move onto GSTN, Capital Float will be able to better serve this micro-entrepreneur segment, helping them overcome upcoming challenges by leveraging the GST-enabled digital footprint.

However, like any new reform, there are certain challenges that need to be addressed. We see that both retailers and wholesalers must manage the following eventualities of GST implementation.

!  Higher costs of input services: Input services such as manpower, legal, professional services, auditor services, travel expenses, etc. will now be taxed at 18% as against the earlier bracket of 15%, leading to higher costs to the wholesaler.

! Additional costs to upgrade technology: Many wholesalers, especially rural ones, are not technology-savvy and will need to rely on help from their supplier companies to undergo a technological transformation. This means that supplier companies may need to increase commissions for wholesalers— an added cost to the company, or wholesalers and retailers themselves will need to invest in new systems, incurring additional expenses.

3. For Importers and Exporters

According to the financial reports of 2016, India is the 16th largest export economy in the world with the net value of exports contributing to one-third of the GDP. The subsuming of various local state level taxes will have a direct impact on imports and exports, a critical component of trade. For example, the Countervailing Duty (CVD- an additional import duty levied to offset the effect of concessions or subsidies, currently 0% or 6% or 12%) and Special Additional Duty (SAD- a special kind of customs duty paid on imported goods currently at 4%) have been done away with under the new GST regime. However, Basic Customs Duty continues to be applicable and importers will need to pay it as per previous rates.

Here is a look at the overall impact of GST on trade:

  • Imports Taxation: Every import will be treated as an interstate supply, and will be subject to Integrated Goods and Services Tax (IGST) along with Basic Customs Duty (ranging between 5% and 40% depending on the good imported). This implies that IGST will be levied on any imported item, based on the value of the imported goods and any customs duty chargeable on the goods (say 10%). IGST is a combination of SGST (say 9%) and CGST (say 9%). For instance, for an import item worth Rs 10,000:
Total Duties + Taxes Payable Basic Customs Duty (10%) GST (18%) GST Cess(if applicable)
₹2800 ₹1000 ₹1800 Nil

Thus, imports taxation is an added tax liability for retailers who import goods or services.

  • Exports Taxation: Exports will be treated as zero-rated supply, i.e., no GST will be charged on exports. This is in line with the “Make in India” campaign that aims to make India a global manufacturing hub, for which exports are important.
  • Import of Services: The new clause of import of services places the onus of tax payments on the service receiver when the services are provided by a person residing outside India. This mechanism is called reverse charge and will apply in certain scenarios. For example, if the assessee has no physical presence in the taxable area, then the representative of the assesse will be required to pay tax. In the absence of representation, the assesse has to appoint a representative who will be liable to pay GST. Another example is when a registered dealer is buying goods or services from an unregistered dealer. In this case, the registered dealer will have to pay the tax on supply.
  • Need for restructuring working capital: A major shift is that GST is based on “transaction value” rather than MRP. In the old system, CVD was charged as a percentage of the MRP. Under GST, IGST will be charged as a percentage of the transaction value. This will affect the cash reserves of retailers and wholesalers, and they will need to reassess their working capital needs.

On the whole, GST is expected to bring domestic players at par with large multinational corporations due to the renewed import and export norms and the rules for FMCG suppliers. This is a good sign for Indian trade and exports in general, and thus the implementation of GST shows promise to propel India onto the international trade arena.Visit our GST blog to know more about GST and keep track of latest.

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Oct 24, 2018

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A Complete Guide to Private School Loans for School Owners

As the number of schools continues to grow in India, the existing institutions must keep improving their standards to ensure that they have the facilities sought by students and their parents.

The methodologies of teaching today are significantly different from what they used to be two decades ago. In addition to well-ventilated classrooms, laboratories, library, spacious playgrounds and sports gear, the infrastructure of schools today also needs a host of audio-visual equipment and computer devices to provide quality education. At times, it is necessary to apply for school loans to finance the purchase of such school infrastructure components.

How to get loan for school

Loans for private schools can come from several sources including banks, non-banking finance companies (NBFCs) and private money lenders. From the construction of a new school building and renovation of old ones to the purchase of furniture, lab equipment and other devices, school loans are issued for a variety of purposes.

The flexible lending policies of digitally enabled NBFCs, also known as FinTech companies, have made it easier for schools to get quick loans at easy terms. Furthermore, these organisations do not need any collateral from their borrowers: this makes a high number of institutions eligible to apply for school loans.

Eligibility Factors

In India, a FinTech company’s loan for educational institutions is usually available to private schools that:

  • Have regular and fully functional classes from Lower Kindergarten to Class VIII/X/XII
  • Collect a total fee of more than Rs 75 lakh per annum
  • Have their school building on a self-owned property
  • Have promoters or trust to run the school

Schools that fulfil the criteria can borrow any sum up to Rs 50 lakhs for a term ranging between one and three years.

How to apply for FinTech school loans

In addition to being collateral-free, the easy application process of FinTech loans draws a majority of borrowers to this source of funds. You may need a loan for construction of school building, to buy audio-visual devices used in teaching or to bring other improvements to your institution. You can digitally request for the funding at any time from anywhere.

The application takes less than 15 minutes to be filled and needs to be substantiated by only soft copies of documents that verify your eligibility for the loan. These typically comprise:

  • Financial statements for the last two years
  • Bank statement for the last 12 months
  • KYC of at least two promoters
  • The fee structure for students
  • Remuneration structure for staff

Once the application is reviewed by the lending organisation and is approved for the loan, the requested amount is disbursed in less than a week.

Since you will fill the application and provide your details digitally, you have to ensure that the lender’s website domain begins with https: so that the information gets encrypted. Also, check the interest rate and loan processing fee to know your EMIs for repayments.

As a leading FinTech company in India, Capital Float issues loans for private schools in India at the simplest terms and disburses funds in only 2-3 business days for approved applications. We have no additional fee other than the interest rate and a loan processing charge of only up to 2%. To know more about our school loans, feel free to connect with us on 1860 419 0999.

Apply for Unsecured school loan

Oct 24, 2018