What is Capital Float’s Pay Later?

Business owners frequently face working capital challenges. Supplier payments are a constant concern for SMEs. In manufacturing, trading and services, where lead times are significantly high, businessmen often finance operations by resorting to informal channels of credit. Traders who deal with shorter sales cycles tend to miss out on large orders as they are unable to pay their suppliers large sums of money to make bookings.

Capital Float’s Pay Later works exceptionally well in these cases. Pay Later carries a pre- defined credit facility which is unique to each applicant depending on various factors, for instance, industry the applicant operates in, scale of the applicant’s business and some basic financial metrics. You can make multiple drawdowns from the assigned balance and pay interest only on amounts utilized. By repaying the amount used, you reset the balance for further usage, making Pay Later a flexible, rolling loan product.

For example, if you’ve been provided a credit facility of Rs 1 lakh, you can make up to 4 drawdowns of Rs 25,000 each. Upon your first drawdown, you have a balance of Rs 75,000. You will be charged interest on the drawdown (Rs 25,000) and not the entire amount (Rs 1,00,000). By repaying the amount used, your balance will be restored to Rs 1,00,000.

With Capital Float’s convenient mobile app, you can use this zero-collateral loan product from absolutely anywhere. To make payments, all you need to do is take a photograph of the invoice with your mobile phone and upload it using our app. The vendor is paid on your behalf within 24 hours of the upload.

Features

Pay Later is an incredibly fast and paperless access to credit that works along the similar lines of a credit card. The functionality of this product as the name suggests – use the facility now and simply pay later. Following are the salient features of the product:

1. Get credit of up to Rs. 25 Lacs

With Pay Later, you are eligible for credit of up to Rs. 25 Lacs, which ensures that you’re never short of funds.

2. Easy, hassle-free online application procedure

The entire procedure will take just 10 minutes of your time. To get started, you can sign-up on Capital Float using your desktop, laptop, tablet or smartphone. Fill a simple online application form and submit the requested documentation to conclude the process.

3. Get approved in 3 days

Where traditional financial institutions take up to 8-12 weeks, we assess your eligibility and offer you a customized credit amount within 72 hours.

4. Convenient repayment at the end of 30/60/90-day loan term

Pay Later offers three flexible repayment plans that work in accordance to your business cash flows. You can choose to repay loan amounts at the end of 30/60/90 days from the date the loan is utilized. This way, you’re never bogged down by hefty monthly instalments.

5. Pay distributors/suppliers via Capital Float’s convenient mobile app

Make payments with just a few taps on your smartphone via our mobile app that you can download for free from Play Store and App Store. The payment is confirmed instantly, and reaches the vendor’s account in less than 24 hours.

Benefits

1. Zero-Collateral

Pay Later is a collateral-free loan product, which means you don’t need to pledge your property or assets to avail the loan. Your credit amount is determined by the potential and profitability of your business.

2. Flexibility in drawdowns:

Pay Later allows you to use a portion of the total amount any time you wish to. For instance, if you have a credit facility of Rs. 10 lakhs, then you can utilise the full amount or a fraction of it at any given time, depending upon your requirement. The user-friendly mobile app efficiently keeps track of your balance, so that you can manage repayments accordingly. You can also draw amounts as low as 25,000 rupees, hence making this product extremely convenient to use.

3. Interest applicable only upon drawdown

You’re required to pay interest only for the amount you’ve utilised and not on the entire credit amount assigned to you.

Click here to read about the features and benefits in more detail.

Eligibility and Documents

The eligibility criteria for Pay Later is extremely simple. All you need is a small list of documents at the time of application:

Eligibility

  • Applicant’s business to have at least 2 years of vintage
  • Applicant must purchase from a reputed supplier
  • Applicant must have 3 months of transaction data with the supplier

Documents required

  • Audited financials for the last 2 years
  • VAT returns and bank documents for the last 6 months
  • KYC documents of the applicant as well as the organisation

How to Apply

Applying for credit via Pay Later involves a simple four-step procedure. As long as you have a computer or smartphone and a good internet connection, you can apply from anywhere. Here are the steps involved:

  1. Apply & get empaneled

Sign up on Capital Float’s website to kick-start the procedure. Fill out the form with your personal and professional details, and click on submit.

      2. Upload the necessary documents

The next step involves uploading the requested documents. This includes business vintage of two years along with some basic KYC documents.

     3. Receive instant approval

Receive approval on your application within hours. In less than 3 days from the time of application, your credit facility will be set up for your use.

    4. Credit facility ready for use

Once your credit amount is determined, you can start using Capital Float’s mobile app to create tranches by uploading invoices and making vendor payments.

Fees and Charges

At Capital Float, we conduct business in the most transparent manner possible. Therefore, you’re only obligated to pay a processing fee of up to 2% for the loan. Rest assured, there are no hidden or pre-closure charges that pop-up during or after your application procedure.

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What is UBL and how we underwrite it

The SME sector in India is large and burgeoning. It contributes 45% of the industrial output and 40% of exports, and employs over 40 million people. With rapid economic growth and the impetus being given by the Government, this sector is expected to grow at a phenomenal pace, from accounting for 15% of India’s GDP in 2015 to 22% in 2018.

SMEs need funding

Despite its enviable growth, the smaller merchants and retailers face chronic cash shortage. Traditional banking offers more challenges than solutions to such enterprises. They are faced with long approval periods, demands of collateral, unsurmountable eligibility criteria and loan terms that are unsuitable to address short-term cash flow issues.

Unsecured Loans Provide the Relief

This is where unsecured loans come to their rescue. These are typically shorter-term loans that do not require collateral or guarantors. Some financial solutions are specifically designed to aid SMEs to address their working capital needs or expand their existing business. SMEs often work with limited resources and may find it challenging to pledge collateral to secure a loan. Unsecured business loans prove to be highly beneficial in this regard.

The Greatest Challenge to Overcome

Since unsecured loans by definition have no collateral to back them, a stringent underwriting process needs to be in place to ascertains the applicant’s intent and ability to repay the loan. The loan underwriting process must include the collation and verification of all the data provided by the applicant. This information is analyzed to determine the financial health of the enterprise and the creditworthiness of the individuals most closely associated with the business.

Relying on Cutting-Edge Technology

At Capital Float, we deploy cutting-edge technology to ensure that the process of loan approval is smooth, seamless and swift. This data driven process begins with the loan seeker filing an online application and uploading/giving access to all the relevant documents, including the company’s ITR, sales figures, balance sheet and cash flow statements. Our systems pull the data automatically from various external sources and populate the relevant fields. Capital Float lays specific importance to digital data available in the eco system e.g.; telly ledgers and purchase ledgers.

Apart from the documents provided, weightage is given to company ratings provided by rating agencies like CRISIL and ICRA. The bureau data is used extensively which goes beyond CIBIL scores and looks at hundreds of variables which might predict customer behavior.

The system collates all this information and draws up algorithm-based scores for each business. This initial screening process has no human intervention, since the technology is intelligent enough to identify a risky borrower and reject an application that does not meet the minimum criteria. All this is done in a matter of five minutes; whereas traditional banking could take anywhere between one to three months to decision a loan.

Once an application clears the first screening, experts from Capital Float visits the company’s premises, which could be the registered office or the factory. The experts spend time to understand the business model, the processes, the production capacity and the utilization of existing resources to gain a deeper insight into the health of the enterprise.

These inputs are also entered into the system, which uses powerful algorithms to analyze all the data being collated. These algorithms aid credit managers to take a more informed decision regarding loan approvals.

Thus, with the help of ground-breaking technology, Capital Float is able to approve loans in less than a week, while also ensuring NPAs remain exceptionally low.

Oct 24, 2018

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5 Things to Know About Short Term Business Loans

If you are planning to embark on a new venture or are already running an enterprise, knowing all about short-term loans will serve you well.

Money plays a crucial role in your entrepreneurial journey, determining the size and scope of your business. After all, when you are brimming with ideas to cater to a market need, the last thing you want on your hands is a financial concern that could result in a compromised business opportunity.

Fortunately every problem has a solution and financial solutions for businesses come in many forms.

Reach out to experts

Should you require commercial finance, a short-term business loan could prove to be immensely useful. Wondering what exactly short-term loans are? You could ask friends who have applied for one, or approach specialized financial companies like us. You would be better placed to know more about short term business loans before applying for one. This is particularly useful if you are venturing into business for the first time as a small entrepreneur.

What is a short-term loan?

The simplest way to understand the concept of a short-term loan is to think of it as a business loan that provides immediate working capital to your company. You are given a lump sum amount that you have to repay within a period of one year, or up to five years at most. This is in contrast to other loans which can be repaid over a longer term.

Financial experts say that a short term business loans hold the potential of making or breaking your company. As per a study, conducted by the National Small Business Association, 19% of small business owners cite lack of available capital as the major challenge in their growth, and 82% of businesses fail due to improper management of cash flow.

Given its importance to small businesses, let’s take a quick look at the implications of a short-term business loan.

Factors to keep in mind

Short-term loans are easier to obtain as compared to long-term loans. You can avail of them in the alternative finance market through online lenders, and thus you can completely bypass the slow and cumbersome conventional lenders like banks. These loans are less tedious to get as they have a shorter list of qualifications and lesser paperwork. But you also need to repay them faster, usually within a year. If you manage to raise your profitability in the short term, this can be comfortably achieved.

However, there are certain points that you need to keep in mind while applying for a short-term loan. The interest rates of short-term loans are relatively higher in the commercial finance segment. Thus, it’s advisable for you to go through and understand the total cost of the loan before applying for it. Short-term loans often demand frequent payments from you. In case you don’t have regular/stable cash flow, you may find it difficult to repay your loan with weekly payments.

To help you further, here are five things you should know before applying for a short-term loan.

  1. Be clear about the purpose: Having a clear purpose is the pre-requisite for exploring a short-term business loan. It’s of utmost importance to be crystal clear as to the purpose of the loan—to hire new talent, expand your supplier network, invest in technology etc. If the purpose is not clear, the loan amount could well be frittered away on incidental expenses that can hold back the progress of young companies. Analyze in detail if the short-term loan is going to work for you in your current situation.
  2. Have an operational plan: Have a clear business strategy in place before securing a loan from a financier. It’s crucial to have a strategy that optimizes your resources. Without a proper business plan/strategy, it’s likely that you are going to find yourself in a debt-trap.
  3. Research interest rates and overall cost: Interest rates are an important part of any loan. It’s a smart move to know the interest rates on your dream loan early on, along with the other charges/fees that your lender may levy. A fee would not cause an increase in your interest rate, but it will be a part of your monthly payments.
  4. Calculate risks: As a wise entrepreneur, it is crucial that you carefully weigh all the possible risks before arriving at any decision. Analyze and ask yourself questions like: Will this loan help me in reaping the benefits? Will it generate regular cash flow? Will I be able to repay my loan in regular weekly or monthly payments?
  5. Know your loan duration: Apart from calculating all the risks, and having the strategy in place, it is important to know the duration of your loan and to choose the repayment tenure wisely. You can choose a slightly extended period, keeping risks and emergencies in mind, instead of choosing a short tenure.

Take a leap of faith

We understand that the journey of any venture, especially of a small business, is not an easy one. It takes a lot to take your business to a certain level and when issues like finances become a hindrance, one is likely to lose hope. But remember, today’s new age financial solutions offer a timely respite. Yet, you need to have an analytical and calculative mind, which can understand the pros and cons of the loan in order to leverage it fully.

If you are still in a dilemma, wondering how to get loan for your business or are unable to decide if a short-term business loan suits you or not, we, at Capital Float would be more than happy to assist you.

Oct 24, 2018

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Capital Float looks to expand to over 100 cities – Livemint

Capital Float plans expansion in over 100 cities as it bids to offer loans for small brick-and-mortar store owners for a bigger share of the growing financial lending market

Capital Float, which is currently focused on offering loans to small and medium merchants in Tier 1 and metro cities, is now looking to concentrate more on tier 2 and tier 3 cities.

Mumbai: SME lending platform Capital Float, run by Zen Lefin Pvt. Ltd, is looking to expand its reach to over 100 cities and venture into newer categories like loan for small brick-and-mortar store owners, as it eyes a bigger share of the growing financial lending market in the country.

“We are expecting a 10 times growth by the end of March 2017, adding 15,000-20,000 customers (borrowers) cumulatively across all the loan products segment,” said co-founder and managing director Sashank Rishyasringa.

The company has offered loans to 3,000 borrowers until now.

Founded in 2013 by Rishyasringa and Gaurav Hinduja, Capital Float has disbursed loans amounting to over Rs.400 crore.

A technology-led non-banking financial company (NBFC) underwrites unsecured loans online to start-ups, business-to-business (B2B) providers, manufacturers and e-commerce merchants through its own books.

It currently gets 33% of the business from online vendors.

With the aim of extending its focus to small mom-and-pop or kirana shops along with micro small and medium enterprises (SMEs), the company has already made a mobile application that approves loans in less than eight minutes.

Loans to kirana shops could be in the range of Rs.50,000-100,000.

India currently has minimal lending options for small businesses. These businesses are largely ineligible to receive any financing from banks or NBFCs.

Traditional banks ask for collateral, financial statements and bank statements and do not offer small ticket size loans.

Capital Float is trying to solve the problem by lending money to small businesses that might not have collateral, significant revenues or years of experience.

The company offers an alternative for these small traditional business houses that have largely banked on chit funds and local money lenders to borrow money from.

Identifying a need to extend credit to such under-served, Rata Tata, Vijay Kelkar (former finance secretary and chairman of the National Institute of Public Finance and Policy) and Nandan Nilekani (co-founder of Infosys Ltd and the architect of Aadhaar) will soon start a microfinance institution named Avanti Finance, Mint reported on Monday.

Capital Float, which is currently focused on offering loans to small and medium merchants in Tier 1 and metro cities, is now looking to concentrate more on tier 2 and tier 3 cities. “I expect a significant contribution of these cities (tier 2 and tier 3) to the company’s growth, which could be around 33% by next year,” Rishyasringa added.

The loan products currently include working capital finance to online sellers for 90-180 days, long-term finance to merchants for six months to three years, bill discounting and taxi financing (loans for cab drivers), among others.

Broadly, the company has partnered with e-commerce websites, payment gateways, cab services, amounting to 50 partnerships, including with Snapdeal, Shopclues, Paytm and Uber to offer loans to a large pool of small businesses and merchants who work with these partners.

The company is also eyeing profitability in the next 12 months on the back of a robust demand for loans by SMEs.

To enable faster disbursal of loans, the company launched its mobile application two to three months ago, which is privately available to businesses through partners.

While loan applications were initially accessible only through the website, Capital Float is now seeing that mobile application and mobile browsing has grown to contribute 50% of loan applications, said Rishyasringa.

The mobile application is built on four technology pillars of India Stack—Aadhaar-based authentication, an electronic process of know-your-customer (e-KYC), electronic signature (e-Sign) and unified payment interface (UPI).

India Stack is a set of publicly available application programming interface (API)—that enable companies to build applications and businesses based on these four pillars.

The fin-tech company receives a loan enquiry every three minutes, said Rishyasringa. An inquiry implies a prospective borrower initiating a loan application process.

While the company remains stringent in extending loans, by approving 20% of the applications, total loan disbursal amounts to an average of Rs.70 crore per month.

Additionally, the average loan amount extended to a merchant is Rs.10 lakh at an interest rate of 16-19%, for a tenure of between 60 days to 2-3 years. The company maintains and targets to continue to maintain a non-performing asset (NPA) proportion of less than 1% of its total loan amount.

NPA is the proportion of the amount of bad loans to the total amount of loan disbursed.

Backed by George Soros’s Aspada Investment Co., SAIF Partners and Sequoia Capital, the company has raised $42 million, including $25 million in series B round of funding in May.

Other players in this segment that Capital Float competes with are Capital First Ltd, NeoGrowth Credit Pvt. Ltd and SMEcorner.in (Amadeus Advisors Pvt. Ltd). In July, NeoGrowth raised $35 million from IIFL Asset Management, Accion Frontier Inclusion Fund managed by (Quona Capital) and Aspada Investments, along with other investors, reported PTI.

The original article is written by Arushi Chopra. Click here to read the original article.

Oct 24, 2018