Unsecured small business loans are considered as one of the safest ways to raise short-term finance for meeting the working capital requirements or urgent funding needs of a business. The safety feature is attributable to the fact that these unsecured small business loans do not require any collateral or security in the form of assets of a business. Most small businesses do not have adequate assets to offer as collateral. The elimination of the need for collateral makes it possible for such businesses to raise loans.
Recent years have witnessed the launch of new-age lenders and the introduction of products that have revolutionized unsecured business loans in India. This is not merely via the easy access to funds, but also offering customized solutions for different businesses and tying the repayments to the accounts receivables or inflows from credit card sales of a business.
Ensure uninterrupted business operations
Often small and medium enterprises (SMEs) need funds for their daily operations to ensure the smooth functioning of their business. Funds may be required to purchase raw materials, pay wages and salaries, clear utility bills and meet unexpected expenses. SMEs may also need immediate funds to grab a business opportunity or take advantage of a seasonal upswing in the demand for their products. These funds are required before a business services its customers and raises invoices. The lack of availability of funds at this time can threaten the very survival of a business and, at the least, could throttle any growth opportunities.
This is when unsecured small business loans come to the rescue. SMEs are able to sustain their businesses with the help of such funding options.
The main reason behind the increasing popularity of unsecured small business loans in India is their easy availability. Only a few years back, businesses had no other option but to approach banks and other traditional financial institutions to raise funds. Even if a business could satisfy the stringent eligibility criteria for loans, it could take months before the funds were disbursed.
With the emergence of FinTech lenders, it has become possible to secure funds in a matter of days. Such lenders use the latest technology to assist the loan approval process, making the sanctioning and disbursal of loans swift and easy. Such loans are safe because they are easily available and ideal for preventing any disruption to operations.
Protect Your Bottom-Line
Most SMEs are unable to meet the eligibility criteria put forth by traditional financial institutions. In fact, it was impractical to approach banks for urgent liquidity needs, given their long-drawn approval processes. Thus, most businesses were left to the mercy of unorganized money lenders who would charge steep interest rates.
FinTech lenders now offer loans that are easy to access, with faster approval processes and more affordable interest rates. With these solutions in place, businesses can protect their bottom-line by raising unsecured business loans without paying exorbitant rates of interest charged by unorganized moneylenders.
Flexible Repayment Options
Unsecured business loans come with flexible repayment options. The term of the loan could range from six months to three years. The repayments can be on a daily, weekly, fortnightly or monthly basis. Some products like Capital Float’s Online Seller Finance and Merchant Cash Advances link repayment to the operating cycle or receivables and credit card sales of the business. This flexibility puts a business in a better position to make repayments. Since the repayment is a specific percentage of the monthly sales, there is no added pressure on the borrower to repay the loan. This also ensures that the borrower is not stressed about repayments when business is slow.
No Restriction on Use of Funds
When a business takes an unsecured short-term loan, the lender does not impose any restriction on how the business deploys these funds, unlike in the case of secured loans. The borrower can use the loan amount to fund daily operations, purchase raw materials, pay utility bills or market its business.
Flexible Loan Size
In the case of a secured loan, the amount that a business can borrow is determined by the value of the collateral. In the case of unsecured business loans, the amount can be determined by the need for funds. With Capital Float’s Merchant Cash Advances, a business can borrow any amount ranging between ₹1 lakh and ₹1 crore. Although the amount is correlated to the credit/debit card payments to a business, the loan can be as high as 200% of the monthly card settlement.
Defaulting on Repayment of Unsecured Small Business Loans
Unlike in the case of secured loans, a lender cannot seize any assets of the business in case of a nonpayment of the loan amount. However, defaulting on a loan can have serious consequences. A business may not be able to take another loan once it has defaulted in repaying one. The failure to meet repayment obligations could end in a lawsuit.
Prior to taking such serious measures; however, lenders would offer options to make it easier for a business to repay the loan. If a business is unable to repay a loan as per the scheduled timeline, the best thing to do is to contact the lender to explain the reasons for default and to set a revised repayment plan.
In fact, most experts advise SMEs to build a long-term relationship with the lender. Unsecured loans can be taken on a recurring basis, making money available exactly when a business needs it and planning repayments when the business is expecting an inflow of funds from customers.
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Having got off to a good start, a business typically aims to grow and explore new opportunities. To make this happen, businesses need to move in the right direction. This is especially true for a business in its early days when managing operations efficiently is a challenge, thereby taking precedence over matters of strategic importance such as goal-setting and business development. One way by which you can change gears from the routine rigmarole is making a #BizResolution. These are exactly like making New Year Resolutions, except that these will help you boost business growth in your enterprise.
A business resolution is like a promise or commitment you make to achieve specific objectives in the coming year. Since it involves your enterprise, the level of commitment to making it happen is high.
Here are 5 ways business resolutions can help drive growth in your business. Business resolutions can help:
Set realistic goals: While your company is being steered by a sound business plan, it is critical to break down broad business objectives into achievable goals. So, while your plan projects a specified growth rate, you need to identify smaller goals that will lead to this result. For instance, your #BizResolution could be to “improve relationship with suppliers,” which will have a positive effect on inventory, product availability, and therefore customer satisfaction and higher sales.
Drive business strategy: It is common for new entrepreneurs to get lost in the operational hassles and simply not have the bandwidth to focus on more value adding tasks such as digital marketing or human resources. The urgent matters take precedence over what’s important, and the business slows down for want of strategic inputs. In this case, a #BizResolution can pinpoint to strategic focus areas, thereby helping realign the business priorities for growth.
Upgrade skills: Running a successful business is a constant learning process, which involves learning from competition, adopting best practices, upgrading skills and so on. This is a must in today’s rapidly changing environment, which demands that companies constantly innovate. Yet, somewhere in this quest for efficiency, the learning element takes a backseat. Having a skillset-oriented business resolution can help foster a culture of continuous learning and skill upgradation.
Focus on expansion: A high-growth focus is what most investors look for before investing in a new business. To expand, you need capital for which enterprises usually need investors or lenders. Hence, you must assess the potential for new markets, new partnerships, complimentary product categories (upselling and cross-selling), new channels (online), and new customer segments. Making such growth-centric business resolutions will keep you firmly on the road to expansion and success.
Develop a niche product: A niche product builds on the premise that certain small market segments are typically underserved. Find your blue ocean strategy and explore a better chance to grow. Make a #BizResolution to invest time and effort into a promising, niche product, which allows you to differentiate your offerings and create an uncontested market space.
Business resolutions need not be yearlong commitments. Periodically assess your product or solution with respect to the industry environment and change tack—set new objectives or redraft your existing ones. The idea is to stay in tune with emerging opportunities and align your company with market needs to make the most of growth prospects.
Create your #BizResolution today and share it with us to stand a chance to win exclusive prizes such as: Exclusive tickets to a T20 cricket match in your city Amazon vouchers Click here to get started.
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Oct 24, 2018
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Oct 24, 2018
We understand your working capital needs as an SME, and hence bring you the best of credit products in a comprehensive finance bonanza that extends from July 1 to September 30. Capital Float’s Great Indian Finance Festival or ‘GIFF’ offers you a one-stop shop for your working capital needs where you can choose loans with easy terms in an informed and beneficial way.
Taking a loan can be a stressful and arduous process for small business owners—from lengthy applications to intense verification and delayed disbursals. We at Capital Float know that timing makes all the difference. We wish to empower you to do what you do best—focus on your business. So let us take care of all the funding issues. You can focus on fuelling your ambitious plans while we power your growth engine by offering you the best of credit lines.
Here’s What You Gain
Not only does the Great Indian Finance Festival mean ease and speed of credit, it translates to something much more. It makes life easier for the growing pool of SMEs we engage with.
Gold: Avail a loan in the Flash Sale, and walk away with gold worth up to ₹10,000, depending on the loan amount borrowed.
Plummeting interest rate: It’s time to rejoice and tap into a great opportunity. Interest rates will be as low as 16%. A great boost for your business at a super-affordable rate is waiting round the corner!
Speedy application process: Now, there’s no need to wait in long queues at the bank. If you have an Internet connection, you can avail the best loan for your business on your smartphone, tablet, or from the comfort of your desktop. It takes less than 10 minutes to apply, and our cutting-edge processes help us disburse your loan in less than 3 days.
Let’s Celebrate Credit
We have already devised credit products that are attuned to the needs of small and medium enterprises. Here is what we have curated for the three-month online finance bonanza:
Merchant Cash Advance: Whether you are a restaurateur or a retail owner, there’s a high chance a majority of your revenue comes from clients’ card payments. You may then need to have consistent card settlements and short-term investments to meet your working capital needs. Merchant Cash Advance is your go-to loan, allowing you to access quick finance of up to Rs 1 crore, depending on your monthly card settlements. What’s more, you can avail of a loan that’s up to 200% of your monthly sales from card payment machines. In addition, the loan tenure ranges from 6 months to a year, on flexible payment terms. Fill out an application form in 10 minutes, get it verified within hours and get funds in as little as 3 days! All this happens thanks to our trusted partnerships with point-of-sale card machine vendors such as Pine Labs, Mswipe, ICICI Merchant Services, MRL Posnet and Bijlipay.
Unsecured Business / Term Loans: Business is about passion, but you may not always have received the backing so far. Our Term Loans and Unsecured Business Loans are tailor-made for you. We understand the worthiness of a positive cash flow and, based on this, are willing to lend you the short-term funds you need to grow and diversify. Our Term Finance helps you meet your working capital needs from Rs 1 lakh up to Rs 50 lakh over a tenure of 6 months to 3 years. Moreover, you don’t need to pledge collateral to get the loan.
Online Seller Finance: We understand the competitive world of e-commerce— the shrinking lead times, fluctuating levels of inventory, constantly changing pricing decisions and sky-high customer expectations. Our Online Seller Finance loans are designed for eCommerce merchants operating on online marketplaces. The funds received can be used to expand to other product segments, increase inventory or pay suppliers. We have partnered with leading online portals like Amazon, PayTM, Myntra, Shopclues eBay, etc. to service merchants like you operating on these marketplaces. We customise this credit line to your unique business needs, by analysing your monthly sales, projected revenue and other factors.We provide an unsecured loan up to Rs 1 crore or up to twice your monthly sales which mean that you no longer have to worry about expensive collateral to build your business online. No pre-closure charges and flexible repayment terms like fortnightly repayment will take your mind off financial burdens and let you focus on business growth. With the right documents and data, our Online Seller Finance can be disbursed within 3 working days.
Each of these credit offerings will run under Flash Sales, so watch out for announcements on the site. Each Flash Sale will run for 3 days and you can win exciting prizes apart from big discounts. So gear up to catch the right moment, and the right loan offer.
Clearly, GIFF is a goldmine of opportunities designed to serve SMEs across India. We will go along with you every step of the way, to help you realise your business ambitions! Visit www.capitalfloat.com/giff to know more.
Oct 24, 2018