Plastic money has revolutionised the commercial world in the last two decades, both for consumers as well as business owners. With the recent demonetization, more customers are compelled to use cards to purchase goods and avail services. An increasing number of merchants are installing point-of-sale card machines to ensure that sales are unaffected. After all, a card swipe is undoubtedly quicker and more convenient than cash.
Now, the receipts of those card swipes can help you raise capital to expand your business operations. Whether you’re a retailer, restaurateur, or a small-to-medium business owner whose revenue comes primarily from credit and debit card sales, Capital Float’s ‘Merchant Cash Advance’ is a quick, hassle-free financing option to fund all your working capital needs.
With Merchant Cash Advance, you can receive up to 200% of your monthly sales from card payment machines. The repayment process is entirely hassle-free on your part. Your POS partner repays a percentage of your daily card sales on your behalf as instalment for the loan. The balance amount is paid to you on a daily basis. So, instead of being burdened by hefty fixed repayments every month, you pay an agreed-upon percentage of your daily credit/debit card sales, until the advance is paid in full.
- Loan amount of up to Rs. 1 cr
Traditional banks aren’t as generous when it comes to how much you can borrow. Add to that the piles of documentation and proofs of credit score that you need to submit, which only elongate the process. At Capital Float, on the other hand, you’re eligible for an advance of up to Rs. 1 cr, depending upon your monthly card settlement and ability to repay between a tenure of 6 months to a year.
- Loan tenure of 6 months to 1 year
Every line of business has different challenges and requirements. We understand the importance of providing flexible credit offerings that are tailored to your business need. You can avail Merchant Cash Advance for a period varying between six months to one year. If you have a short-term working capital need, a six-month long loan might be ideal. Similarly, if your need involves securing a larger loan and if you would like to spread out the repayment schedule, you could take the loan for a period of one year.
- Get up to 200% finance on your monthly card machine sales
With Merchant Cash Advance, you can receive up to 200% working capital finance on monthly sales from card machines. As more customers use debit and credit cards to shop, your sales from point-of-sale machines is likely to increase significantly. These sales records can help you avail quick finance that you could channel into running your business. Our sophisticated loan product opens a new avenue of formal financing for you, as you seek credit channels to leverage business opportunities.
- Cash-flow friendly daily repayments
Usually, small business loans have a fixed repayment plan, wherein, you pay the same amount every month based upon the agreed-upon interest rate. At Capital Float, you pay back as per your daily credit/debit sales. Take, for example, if the agreed upon repayment is 15% of your credit card receipts, we will deduct 15% in proportion to how much business you’ve done through the day, until the repayment is done in full.
- Get funding in 3 days
It’s a highly competitive business world, and in case a potential opportunity knocks on your door, the last thing you want to do is wait for the funds to reach you. One of the many USPs of Merchant Cash Advance is its potential for fast approval and disbursal. Through our data-driven competencies, we render a decision within hours and deliver funds to you within 72 hours, so that you waste no time in covering an unexpected business expense or capitalising on a lucrative business opportunity.
- Zero collateral
Traditional banks cover their risk by taking collateral form the borrower while giving a loan. Given the completely unsecured nature of Merchant Cash Advance, you don’t have to put any personal or business assets on the line. All we require is your banking documents for last 12 months, KYC documents, VAT returns for last six months and card settlement statements for 3 months prior to loan application.
- Simple and secure online process
Like many small business loans of this type, you can apply for an advance from wherever you are, as long as you have a computer or cell phone with an internet connection. The procedure is extremely simple, and takes a mere ten minutes of your time. All you need to do is fill out an application form, upload the necessary documentation. The process is designed to be convenient for you. We maintain strict security protocols, safeguarding your data at all times.
Eligibility and Documents
To qualify for a loan at Merchant Cash Advance, you must comply with the following parameters:
- Your business must have minimum operational history of 1 year
- Minimum turnover of ₹20,00,000
- Minimum card acceptance vintage of 6 months
- Minimum monthly card volume of ₹1,00,000
- Minimum of six settlements per month
- Your banking documents for last 12 months
- VAT returns for last six months prior to loan application
- Card settlement statements for 3 months prior to loan application. All acquirer banks, except American Express, are eligible.
- The company’s as well as the promoter’s KYC documents
Fees and Charges
At Capital Float, we conduct business in the most transparent manner. This means, you’re only obligated to pay a processing fee of up to 2% for the loan. There are no hidden or pre-closure penalties during or after your application procedure.
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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.
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.
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.
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.
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
In the past ten years, India has seen a growth in the number of start-ups coming forward to offer customised solutions in the fields of education, hospitality, travel, transport, healthcare, entertainment, marketing, e-commerce, waste management and consulting. Most of them, however, start with modest funds. They also deal with the challenges of validating their R&D, finding profitable markets and managing office administration costs and overheads.
It is also a common for small and medium enterprises (SMEs) in the service segment to experience their initial expenses being higher than their revenue.
Another problem encountered frequently is that while a business may be prompt at paying the bills raised by its suppliers and utility companies, it may not have customers who pay on time. Even though Accounts Receivable is an asset for any organisation, it gets converted into cash only at a later date. How then should such a business fund its current expenses and keep fuelling its operations? The answer lies in an SME loan, which is the best resort at this point.
Taking an SME or MSME loan is also a wise decision for an enterprise that has planned its next step towards growth or wants to invest some funds immediately in utilising a new business opportunity.
What kinds of loans are available in the market?
The service industry has numerous sub-domains, and a business loan for service company are provided by banks and non-banking finance companies (NBFCs).
The potent ability of digital NBFCs to offer unsecured business loans have made them a competitive source of finance for micro, small and medium enterprises. With a lending model facilitated by digital technology, these companies are also known as FinTechs, and they offer bespoke credit products for organisations providing professional solutions.
Your business loan for service company could be a working capital loan, invoice finance, credit for expanding the business or any other tailored loan for professional services.
A Working capital loan is usually taken to fund the daily operations and cover expenses such as wages, purchase of equipment or to manage entries on accounts payable. These are short-term loans that help businesses to stay focused on their growth.
Similar to a merchant cash advance, invoice finance is another popular SME loan where the lender advances money against the unpaid account receivables of the borrowing business. If you have raised bills to some of your clients, and they are yet to be paid, you can use the same to get a loan from a FinTech company.
Loans can also be used for business expansion and opening new branch offices or shops. Doctors who wish to start more prominent clinics, retailers who want to add more shelves in their shop or to purchase the adjoining premises to expand, and other entities that seek a business loan for service company growth can approach a FinTech lender for quick funds.
Can these NBFCs provide adequate amounts to suit your requirements?
A loan application requires you to state the purpose of the funds. It is good to have a precise idea of the amount to fulfil such business needs, and for this, you should check the exact market costs of the assets that you plan to buy with the borrowed amount.
As an example, if you are taking a working capital loan to buy motorcycles to facilitate the courier delivery services offered by your company, find the price of these vehicles and enter the same amount in your loan application. While there are no rules against requesting a more substantial sum, it is good not to go overboard. This prudence will help you in avoiding higher EMIs.
The amount that you can get on business loan for service company may range from a few lakh rupees to almost a crore. With such a broad scope for funds, the requirements of most SMEs are conveniently met.
How to apply for a business loan: The Process in General
To avail credit from conventional sources, you generally have to visit the lender’s office at least once and discuss the complete procedure. You may be asked to submit multiple photocopies of ID proofs and business financial health documents.
An MSME loan from the digitally operating FinTech company, however, is availed on much easier terms.
While the eligibility criterion differs from loan to loan, it is accommodating enough to include a high number of businesses. FinTechs only need to be sure of the repaying abilities of their borrowers, for which they ask for at least one year of successful operational history.
Owners of any Pvt Ltd, Prop, or LLP (limited liability partnership) company can check their eligibility and apply for their business loan online. They merely need to visit the website of the FinTech lender and fill in the application digitally. Remember that the portal of a genuine lender will be encrypted with a valid security certificate, and the URL will start with an ‘https’ prefix.
Since it is a digitized process, the upload of soft copies of documents is enough to verify the authenticity and eligibility of business for the funds. Among other things, the latest copy of tax returns may also be required.
It does not take long to know the status of your application. You will learn of the lender’s decision in minutes, and for every approved loan application, the amount is disbursed in 2-3 working days. It is deposited directly in the business bank account.
Loan costs and repayment
FinTech loans are offered without hidden overhead charges such as legal fee, loan insurance premium, documentation charge, commitment fee and other miscellaneous dues.
This implies that you only pay interest and a nominal loan processing fee along with the principal in your EMIs. Additionally, the terms of repayment are flexible, and instalments can be varied as per your business earnings.
While availing of a loan to solving cash crunch, SMEs can finance their business strategies without hypothecating any valuable asset to a lender.
Capital Float has adopted a digitally refined lending framework to enable the growing number of SMEs in India to easily procure the funds they need for their ambitious plans. As an online platform offering funds for various business requirements, we have trimmed the formal loan issuing process to make it stress-free and quick for businesses.
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To get more information on loans for specific business types, please visit our website or call us at 1860 419 0999.
Oct 24, 2018
One of the biggest tax revolutions of India is underway as businesses and tax payers are gearing up for the change. These enterprises and individuals are assessing how the GST rollout will make a difference to them. One such segment is the Small and Medium Enterprises (SME) segment, which contributes significantly to India’s GDP and exports. The positive effects from GST are expected to drive decentralization of opportunities and provide an impetus to India’s GDP. However there is some concern that some of its policy implications could slow down business, and that is what small and medium enterprises must prepare for. Gaining know-how on GST rules and implications is the first step towards becoming GST-compliant and becoming tax-savvy. This blog will help you understand which SMEs are eligible for GST and the impact on the sector as a whole.
How GST will impact business transactions
GST will typically impact any business at two ends of the spectrum where transactions are involved i.e. for input transactions and for output transactions.
- Input transactions: An input transaction is a transaction carried out for the supply of input goods / services like raw material procurement, imports etc. Input transactions will be directly affected due to the changes in taxation levels of raw materials/industrial inputs, affecting the product or service pricing.
- Output transactions: An output transaction is one that is done for outbound supplies or service delivery. For example, sales is an output transaction. GST will directly impact the sales by altering the taxation of the product or service being sold. Depending on the new tax slab of the goods or service, the profitability of the enterprise will be directly impacted.
Another significant impact area is due to the concept of “place of supply” and “time of supply”, calling for more stringent supplier compliances.
Which SMEs are eligible for GST?
SMEs are a major driver in the Indian economy, contributing to almost 7% of the manufacturing GDP and 31% of the services GDP. With a consistent growth rate of about 10%, they employ about 120 million people and contribute to around 46% of the overall exports from India.
Under the GST regime, this significant sector too is set to change. First and foremost, all businesses, including SMEs will need to register for GST under the rules as per the following threshold limits related to aggregate turnover:
|Region||Liability to Register||Liability for Payment of Tax|
|North East India||Rs. 9 lakh||Rs. 10 lakh|
|Rest of India||Rs. 19 lakh||Rs. 20 lakh|
Why should SMEs enrol for GST?
An SME registered under GST will be recognized as a legal provider of goods and/or services. Tax accounting will be streamlined. Such an SME will be able to maintain proper accounting of taxes paid on input goods or services, and be able to utilise the inputs credit facility to enable better cash flows. GST will provide an opportunity for SMEs to digitize their transaction management, making it efficient for the future. If such an SME scales up, it will be prepared in advance to manage large-scale transactions through software. GST enrolment thus provides a window of opportunity to modernise the business and set up standards for doing business easily in the future.
Moreover, digital transactions tend to leave a digital footprint. These footprints can be used to assess the sector with greater accuracy, as Fintech lenders can create customized financial solutions for these SMEs, which are currently under-served from a credit perspective.
Impact of GST on SMEs
Overall, the SME sector seems to be skittish about the impact of GST. Here is a look at some of the pros that GST brings to SMEs.
- Ease of starting a business: The old tax regime requires new entrepreneurs to obtain VAT registration for every state separately, with each state having its own rules. Though GST too requires businesses to register in each state, the rules for GST are more uniform and outlined clearly on the portal. This will make it easier to set up an SME.
- Ability to compete with multinationals and multi-state enterprises: GST is a destination-based taxation system and not source-based. Locally manufactured goods by SMEs will pay the same amount of tax as imported goods from multinationals. Moreover, corporates generally ‘stock transfer’ transfer goods to escape the taxes on inter-state transfers. SMEs are not able to ‘stock transfer’ goods due to lack of infrastructure; they physically transfer goods and pay inter-state taxes, leading to higher expenses. Under GST, the stock transfers would be taxed. This will help put SMEs at par with large multinational corporations, allowing them to compete on an equal tax footage.
- Transparent transactions: SMEs often do not have the resources (processes and people) to dedicate to tax transaction management. GST will enable an online and transparent view of tax obligations and on-goings, minimizing the need to liaison with tax authorities offline. Though it will take some initial investment now, SMEs that streamline their transactions now will be setting up future-ready systems and processes.
- Reduced tax burdens due to rise in threshold: Under the old regime, business owners with an annual turnover of Rs 5 lakh (Rs 10 lakh in the North East), mandatorily need to register for VAT and make VAT payments. Under GST businesses above Rs 20 lakh turnover (Rs 10 lakh for North East) qualify for GST registration, which brings huge relief to SMEs. Thus, businesses that fall in the Rs 5 lakh – Rs 10 lakh revenue bucket need not register and will experience better cash flows because they are exempt from GST.
- Better Cash flow due to input credit facility: Cash flows may increase because of facility of input tax credit, wherein businesses will be able to avail credit on input expenses such as supplies. For example, for a business that procures steel as the raw material to manufacture utensils, the businessman will need to pay tax on the raw materials procured i.e. iron ore. He can adjust the tax paid on inputs from the taxes collected on outputs. This means that only the actual “value addition will be taxed.
- Better logistics: GST will help eliminate time-consuming border tax protocols, allowing for free flow of goods across borders. This will result in savings in logistical costs. CRISIL estimates that the logistical cost for companies manufacturing bulk goods will be reduced by around 20%.
Key Concerns around GST
- Investment to go tech-savvy: SMEs are typically not used to managing complex tax compliances, but GST will need SMEs to go digital. SMEs may need to hire or consult with GST experts to bring about a technology makeover resulting in additional expenses.
- Reduced tax exemptions: SMEs are eligible to avail a central excise threshold exemption of Rs 1.5 crore gross turnover; under the GST regime this exemption will reduce to Rs 20 lakh. As a result, SMEs with turnovers between Rs 20 lakh and Rs 1.5 crore will not be eligible for this tax exemption. This is an additional cost that will pinch SMEs that were previously used to being tax exempt.
- Higher tax rates may impact profitability: Despite assurances by the Finance Minister that overall tax slabs will not increase, the GST slabs indicate otherwise. The services tax rate has distinctly increased from 15% to 18%. Higher tax outflows means lesser profitability.
- Strict tax-compliance norms means more costs: GST will bring in an era of stringent compliance. For example, purchase invoices raised will have to be reconciled with the supplier of the goods. These invoices have to be uploaded by the entity by the 10th of every month and will need to be reconciled by the 15th of every month. SMEs are not used to carrying out such detailed and timely tax transactions and will need to hire personnel to help with tax management and compliance.
- Supplier-side compliance will affect the GST compliance rating: The ability of an SME to claim refunds is a direct result of its GST compliance rating. Going ahead, SMEs will be accountable for their suppliers’ non-compliance and they may take a hit on their Compliance Rating due to non-compliance at any leg of the operating cycle, right from procurement to service. Maintaining compliance records, periodic audits will need to be instated to ensure compliance of all stakeholders. This responsibility of supplier-side compliance is an added cost to the company.
- Time lag in input credit process: Input credit will only be available after a supplier declares the particulars of the supply and after these details are validated by the buyer electronically. Thus, a supplier is heavily dependent on the buyer’s response, leading to a probable time lag in availing input credit. Moreover, the timeline for claiming input tax credit is very limited— before the due date of filing returns for September of the next financial year, or, the due date of filing annual returns, whichever is later.
GST is all set to usher in an era of simplified taxation. SMEs must decide on the right investments to optimise the benefits of the change. This means investing time and resources in understanding the change, getting the right people and processes to change the way they do business to ensure GST-adherence. Such SMEs will emerge future-ready and poised to scale their business like never before.Get more information about GST on our GST blog.
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Oct 24, 2018