Pay Later is a unique loan product that was conceptualized and created by Capital Float, keeping in mind specific needs of Indian SMEs. This product is exclusively available at Capital Float. With Pay Later, a borrower is given a predefined credit limit, post which the borrower can make multiple draw-downs from the approved limit. The limit is reinstated upon repayment by the borrower. Interest is charged only on the amount utilized and not on the entire limit. These amounts can be used to make payments to suppliers. Click here to read more about this innovative product.
Pay Later: Features
1) Flexible draw-downs
You’re never obligated to utilize the entire credit limit in one go. In fact, you can always utilize a portion of the total amount sanctioned at any given point in time. To help you monitor your transactions, we recommend that you use our mobile app and manage your repayments accordingly. The mobile app keeps you updated about the draw-downs created and the limit currently available to you. More importantly, this loan amount is not consumed at once, but is a repetitive credit facility which can be used multiple times. The cycle of draw-downs, replenish and reset continues as often as you want it to.
For instance, if you have been assigned 1 lakh rupees with Pay Later, you can make up to 4 draw-downs of 25,000 rupees each and use these funds to make payments as and when necessary. By repaying the amount used, you immediately reset the credit balance, enabling the usage of funds once again. This leads to a rolling balance of funds that can be used and replenished as per requirement, giving the businessman the agility to do business unlike ever before.
2) Interest applicable only upon draw-down
Traditional loans levy a fixed interest on the entire amount sanctioned. With Pay Later, you’re required to pay interest only for the amount utilized. This means that the pre-defined interest rate is applicable only on the portion consumed and not the entire limit.
For example, if you’ve used only 25% of your credit limit, then you will be charged interest on the 25% used and not the entire credit limit.
3) Payments to distributors/suppliers at the click of a button
You can make payments with just a few taps on your smartphone via Capital Float’s convenient mobile app. You can download this app from the Play Store and the App Store for free. Upon downloading the app, you can login using your username and password. These details are provided to you at the time of your loan application. Following the login, the home screen would show you the credit limit assigned to you. Then on, you can create tranches based on the payments you need to make. Whenever you make a payment request, all you need to do, is take a photograph of the invoice with your mobile phone and upload it onto the app to avail funding. Within 24 hours, the vendor receives the payment that you requested.
4) Convenient repayment at the end of 30/60/90-day loan term
Instead of a conventional EMI plan that may burden you at the end of every month, Pay Later allows you to choose the repayment duration as per your business cash flows. Our easy, flexible plans work in accordance with your bullet repayments at the end of 30/60/90 days, so that you’re never bogged down by hefty monthly installments.
5) Zero collateral
Pay Later is a collateral-free credit product, meaning you don’t need to mortgage your property, business or personal assets, etc. to apply for the loan. All you need to do is submit the necessary documentation and choose repayment terms that are most suitable to your business. Click here to know more about the documentation required and the eligibility criteria.
6) Quick, hassle-free online application procedure
Traditional financial institutions take up to 8-12 weeks to disburse a loan. Additionally, the tedious procedures involved can burden the SME and slow down business responsiveness to opportunities. This is where Pay Later comes to your rescue. A mere 10 minutes is all it takes to fill out the online application form and to submit the necessary documentation. Through our data-driven competencies, we assess your eligibility and offer you a customized line of credit within 72 hours.
7) Get credit of up to Rs. 25 Lacs
With Pay Later, you are eligible for credit of up to Rs. 25 lakhs, which ensures that you’re never short on funds when you have to respond to a lucrative business opportunity. The exclusive facility of multiple drawdowns provides you with a higher access to working capital. By replenishing your credit limit, you can access the funds in real-time. This boosts your ability to do business leading to higher revenue.
Take your business to the next level by choosing Pay Later! Click here to get started.
Watch this video to experience the success story of Mohammad Ali Zeeshan, a travel agent who expanded his business by using Capital Float’s ‘Pay Later’.
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The Finance Minister, Arun Jaitley, announced the Union Budget 2018 on 1st February 2018 with components possessing the potential to have a transformational influence on various sectors of the economy. The current Indian economy has reached US$ 2.5 Trillion and is on its way to becoming the 5th largest in the world. GDP is projected at 7.4 % while the number of taxpayers has increased from 6.47 crores to 8.27 crores and a direct tax revenue growth rate of 18.7% has been achieved as of January 15th. The Union Budget is poised to leverage this upward trajectory and provide the impetus for further development at a macro and micro level. Many of the provisions in the Budget directly impact the daily life of a common man. This blog intends to dwell upon these provisions.
Health, Housing and Employment Receives a Major Boost
NHPS (National Health Protection Scheme) dubbed as the world’s largest government-funded healthcare program will be extended to provide up to ₹5 lakh towards hospitalisation for 10 crore families and ultimately 50 crore actual beneficiaries from underprivileged backgrounds.
Affordable Housing Fund (AHF) has been announced to ensure housing for all by 2022. Under this program, 51 lakh houses in 2017-18 and 2018-19 each will be constructed in rural areas with 37 lakh houses in urban areas.
₹40,000 crores worth of concessions were announced for senior citizens. The annual exemption limit on interest income from fixed and recurring deposit schemes including small savings instruments has been increased from ₹10,000 to ₹50,000 in addition to increasing the ceiling for Section 80D from ₹30,000 to ₹50,000.
To facilitate employment generation, Government will contribute 12% of wages to EPF for 3 years. The Finance Ministry has also reduced EPF deduction to 8% for women employees thus significantly increasing their take-home salary while maintaining employer contribution at 12%.
A Huge Fillip to Travel and Transportation – Growth and Modernisation
Travel and transportation received a huge fillip across roads, railways and civil aviation. ₹1,48,528 crores have been reserved for boosting railway network capacity and gauge conversion. Over 4000 km will be electrified in addition to redeveloping over 600 major railway stations and progressively equipping all stations and trains with Wi-Fi and CCTV. ₹17,000 crores have also been allotted for augmenting Bangalore’s suburban railway network. The Government will quintuple the number of airports to 124 and connect hitherto unserved 56 airports and 36 heliports under UDAN, the regional connectivity program. Around 9000 km of highways will be completed by the end of FY 2017-18 and over 35,000 km of interior roads will be completed in Phase 1.
Digital India – Integrated Education and Research – Major Focus
Under the massive ₹3,073 crore Digital India Program, over 5 lakh Wi-Fi hotspots will be set up to provide broadband access to 5 crore rural citizens. This opens up an avenue for individuals in rural India to access formal finance from digital lenders via the internet. New centres of excellence in the areas of AI, Big Data, Quantum communication and Internet of Things (IoT) will be established to boost indigenous intellectual capital in these crucial areas. An additional ₹14,500 crores have been earmarked for strengthening telecom infrastructure including BharatNet. To harness emerging technologies, particularly 5G, an indigenous Test Bed at IIT, Chennai will receive ₹135 crores.
The Government has launched a new program RISE (Revitalization of Infrastructure and Systems in Education) funded by a non-banking financing agency HEFA (Higher Education Financing Agency) with ₹1 lakh crore. In higher education, under the Prime Minister’s Research Fellow Scheme, 1000 B.Tech students will be identified and facilitated to complete PhD at India’s prestigious institutes. Up to 24 new medical colleges are to be started and upgrade of several existing colleges was announced to ensure at least one Government College for each state in India. Two new schools of planning and architecture will also be set up in addition to 18 more IIT/NIITs.
On the personal income tax front, there are no new changes in income tax slabs or structure. However, a standard deduction of ₹ 40,000 will be introduced in lieu of transport and medical allowances while a higher allowance will be allowed for disabled individuals. From April 1, 2018, long-term capital gains of more than ₹ 1 Lakh will be taxed at 10% though gains until January 31, 2018, and will be grandfathered. Dividends from equity Mutual Funds will now attract DDT to perhaps discourage investors investing in Equity funds primarily for dividends. In an effort to promote gold as an attractive asset class, the existing Gold Monetisation Scheme (GMS) will be made more investor-friendly and a network of regulated gold exchanges will be set up.
Though the budget was projected as agriculture-oriented and farmer-friendly, it is balanced and well-intentioned. Huge boost to expanding and upgrading transportation infrastructure especially the railways and supporting underprivileged with healthcare, housing and employment are the cornerstones of this Union Budget. Substantial measures in the areas of digital economy and education pave the way towards India becoming an economic superpower.
Oct 24, 2018
The growing entrepreneurship and start-up culture in India has increased the demand for flexible business loans to support such new ventures monetarily. However, funds that come through banks, government agencies and other financial institutions are not always easy to procure. The detailed paperwork, the long waiting times to get approval for the required amounts, and the high interest rates to be paid over an extended period deter many new businesses from approaching the conventional sources of working capital.
Propelled by technological developments, an alternative source of loans for small business has emerged in the form of new FinTech (financial technology) lending. In India, the FinTech market has witnessed a period of rapid growth in the last two years. As per reports by KPMG India and NASSCOM, it is expected to cross the $2.4 billion mark by 2020. Its lending model is driven by digital technology and is inherently different from the conventional approach that has been used by banks for years.
Most FinTech lenders specialise in micro financing and SME lending. The loan is granted promptly based on financial statements, bank transaction history and e-commerce transaction behaviour where applicable. As a leading player in the digital lending industry, Capital Float has already carved out its niche and is trusted by entrepreneurs who need quick loans to materialise the innovations in their business plans.
Why are SMEs shifting from conventional sources of finance to FinTech lenders?
Credit underwriting has been a major challenge with regards to the SME sector. The loan officers in Indian banks still use outdated methods to determine the creditworthiness of a small business. Furthermore, the loans offered by banks are secured in nature, those that require the borrower to offer some collateral – such as real estate, gold, investment portfolio, machinery or stocks – as security. This prevents several enterprising ventures from availing finance even if they have good prospects to grow and the ability to pay back their small business loan on time.
A digital SME loan is comparatively easier to obtain. The FinTech lending structure is backed by the assessment of digitally uploaded documents. The creditworthiness is evaluated using big data, psychometric questionnaires and social media behaviour, in addition to the trading position of the concerned business. If the SME does not maintain a formal balance sheet, alternate documents throwing light on its prospects in the industry can be used to determine the creditworthiness.
The experience of procuring loans before the advent of FinTech revolution was not very customer-friendly. Borrowers had to fill in long paper-based forms, gather many documents in support of their applications and pledge an asset to the lender. Subsequently, there was a waiting period running into weeks before the small business loan amount was approved.
Digital lending companies have improved the user experience by leveraging technology to tone down the paper work and processing time. Just like retail shopping and online travel bookings, the capital market for SMEs also needed to evolve and move online.
Was there a need for this new source of small business loans?
The emergence of FinTech sector for lending to small and micro enterprises is not only limited to India, but is a global phenomenon. An article published by Forbes has comprehensively analysed the case for this new source of business loans. The financial crisis of 2008 had left the banking sector with almost no scope for innovation. They were heavily regulated by new rules for lending and were urged to limit their risk by demanding for liquid collateral and Tier 1 capital. They also had to be more attentive than before to their back offices and compliance management.
Such changes encouraged finance-savvy and customer-focused talent pools to devise new ways, whereby technology could be leveraged to make borrowing easier. Digital lending services build a bridge between lenders and borrowers. There is a difference in the time taken to process the application, the underwriting process, the actual disbursal of the amount and the period for which the SME loan is granted. While adequate care is taken in evaluating the eligibility of a business for the grant, a FinTech company also ensures that there are no superfluous delays.
In line with the standards established by banks, an online lender must also ensure a high degree of transparency in the process of granting loans. At Capital Float, before a transaction becomes active, borrowers receive complete information on the rate of interest, the tenure of loan and any condition attached to the deal. There are no unpleasant surprises at the time of loan repayment.
Another advantage of procuring unsecured loans from a digital lender is that this new industry can adjust to changes more actively than conventional banks. With lower costs of underwriting using technology, lower rates of interest also become feasible.
Digital lending is helping a new class of business borrowers who have not been able to obtain funding from traditional sources. With an automated underwriting process and risk management, it has a lower operational cost and smoother loan processing. A major of FinTech-based lending is the assessment of client’s credit worthiness. Unlike banks that use only income statements and formal credit history, a FinTech company gathers substantial data through social media and big data. What’s more, with a strong use of technology in lending, the focus on safety is also uncompromising. There are adequate measures to keep the customer details encrypted and secure. Moreover, they also facilitate tailored finance products keeping in mind the varying needs of different industry segments.
The underlying objective is to support promising entrepreneurs in getting quick funds and realise their new business ideas. Capital Float believes that SMEs can grow consistently if they have secure and quick access to funds. As the government continues to promote digital transactions through e-wallets, mobile-driven point of sale (POS) and Internet banking, the financial structure must also be modernised to give a further impetus to entrepreneurship and the ‘Make in India’ vision.
As a FinTech company, Capital Float has created a business model that is not limited by structural formalities surrounding banks and traditional lending agencies. Our aim is to serve client needs efficiently and help promising businesses flourish progressively.
Oct 24, 2018
There has probably never been a better time to start a business in India. Multiple positive developments in the recent past have laid the foundation for a thriving entrepreneurial ecosystem for years to come. Some Governmental initiatives such as “Make in India”, “Startup India” etc., have indicated that at the highest level of policy-making, there is now a strong desire to support new businesses. Increasing digitization and improving infrastructure means that even the youngest of businesses can now reach out to millions of potential customers. The brightest minds in the country are now being drawn away from previously coveted corporate jobs and are opening up to the challenge of executing an indigenous endeavour from ground-up. These are exciting times.
These young businesses can bring significant value to the Indian economy. At their helm are smart, passionate entrepreneurs with products or services which cater to tangible demands in the market. With the right support and nurturing, many of these ventures can grow into successful businesses. However, far too often, we see many of these budding entrepreneurs failing to realize their true potential. While there can be many reasons why a young business fails to scale up, research globally has identified a clear obstacle – lack of appropriate and timely credit.
The problem of the “Missing Middle” in developing economies is well documented. Such economies have a large number of micro-firms, some large firms but very few medium-sized firms. The absence or the paucity of medium-sized enterprises isn’t because these businesses lack the potential to be profitable, but because access to finance is traditionally a cumbersome process. In India, less than 1/4th of the financing demand of SMEs is met by formal institutional supply. Small businesses fail to benefit from the leverage which debt financing provides and is essential for propelling growth. As a consequence, SMEs contribute to only 8% of the Indian GDP – a stark contrast with the 40%+ contribution made by small businesses in developed economies.
This is not to say that the financing needs of SMEs are being completely ignored. For more than two decades lending to small businesses has been a priority agenda item for policy makers and regulatory bodies. A host of initiatives have been launched but on-ground progress has been slow. A key bottleneck is that these small-medium sized businesses are unable to furnish adequate credit history.
In a country like India, with a thriving informal finance ecosystem, most small businesses do not build credit records in their initial days as they can access finance through informal lending channels. As the size of their operation increases, so does their financial need. At this point, they are unable to turn to formal means of credit supply due to the lack of universally recognized documentation. At this stage, their growth is stunted as the informal market is unable to provide required financing at reasonable rates. It is a perfect Catch 22 scenario – to get credit you need to have prior history but to have prior history you need to secure credit!
Building credit history with a bureau, e.g. CIBIL, takes time. Start small, be patient and build it over time. In India we now have personal as well as business credit scores available separately, though the former continues to be the more dominant decision input to most underwriting models. The credit worthiness of the promoter of a small business is crucial since the fortunes of the business are so closely entwined with his personal credit standing. It is thus vital to establish and grow your personal credit score. Start with small loans and service them in a timely fashion. If you are unable to get unsecured financing (e.g. a credit card), you can potentially start with a secured loan (e.g. auto loan) or a loan which is backed by a guarantor. Do not over-leverage your self – having multiple loans outstanding and/or high utilization on your existing limits negatively affect your score. Avoid such credit behaviour. Most of these points apply to business credit scores as well – start small and diligently service re-payments.
The entrepreneurial journey can be a deeply rewarding one. Focus on building your credit history along the way to help achieve your goals.
Vaibhav has over seven years of experience in the financial services industry across analytics, sales and trading. He has worked across major financial centres in Asia managing equity portfolios of large institutional investors across the region. In his last role prior to joining CF, he was a member of the Program Trading desk at Deutsche Bank’s Sydney office. He holds a Bachelor’s and Master’s degree from IIT Kharagpur in Electronics Engineering and is a CFA Charterholder.
Vaibhav heads Business Development at Capital Float.
Oct 24, 2018