GIFF – Redefining Business Finance for SMEs

A global economy is characterised not only by the free movement of goods and services but, more importantly, by the free movement of ideas and of capital.”     ~ George Soros

As a fully digitized lending platform, Capital Float provides flexible credit products to small and medium enterprises that are working towards achieving business growth. The Great Indian Finance Festival (GIFF) has been initiated to add further impetus to this objective. Organised in the Q2 of every financial year, this exclusive SME loan carnival brings opportunities for SMEs to get Capital Float’s business loans at reduced interest rates. This helps SMEs in procuring adequate capital to prepare for the festive season in India when the retail industry has maximum revenue-generating opportunities.

GIFF is driven by the vision that in a huge and culturally-diverse country like India, it is significant to fuel growth and entrepreneurship by providing access to finance to high potential, but traditionally under-served SMEs.

Building on Government initiatives

The launch of government-backed schemes such as Pradhan Mantri Jan-Dhan Yojana led to a considerable increase in the number of bank accounts, but reportedly only about 15% of adult customers used these accounts to receive or make payments. Furthermore, as per a study by the Ministry of Micro, Small & Medium Enterprises, only 6% of small businesses obtain finance from organised lenders, hinting at the challenges for SMEs in getting loans¹. To sustain an economic growth rate of 7% to 8% per annum, there has to be a focus on widening the scope of financial institutions.

A survey involving 540 SMEs by the Firstbiz and Greyhound Knowledge Group in 2016 revealed that over 90% of the SMEs in India found ‘lack of easy finance and credit instruments’ to be their most critical challenge.

With a deep understanding of the market, Capital Float has consistently worked to provide easier access to loans to SMEs when compared to traditional banking channels. We bring you customized working capital solutions, borrower experience enhanced by technology and convenient processes to power your journey. Our objective is to enable SMEs in India to #BreakLimits and realize their true business potential.

The Indian SME is becoming a digital entity

A big change in the credit market comes from the digital lifestyle of Indian consumers. Currently, India is the second largest smartphone market with a user base of over 230 million. Moreover, an increasing number of SMEs are operating online by partnering with ecosystem juggernauts like Amazon, Flipkart, Alibaba, etc. Post demonetization in November 2016, a significant number of enterprises installed POS terminals at their stores, through which consumers could engage in cashless transactions. The Government has digitized data through initiatives like AADHAAR and GSTN, which can be used by Fintech lenders like Capital Float to assess and underwrite borrowers with higher levels of accuracy.

Capital Float has emerged a market leader in this environment by establishing itself as an online lending platform that offers customized working capital solutions. We have tailored a wide SME loan portfolio to ensure that we have a loan for every kind of SME and micro-entrepreneur in the country. For instance, we provide Online Seller Finance for e-commerce sellers operation on leading online marketplaces, and also service retailers using POS machines from the likes of Pine Labs, Mswipe, ICICI Merchant Cash Services, etc.

By using Capital Float services during GIFF, business credit seekers can get loans from ₹1 lakh to ₹100 lakhs starting from 16%. This is coupled with our BAU processes to enhance borrower experience in the form of live chats, knowledge centres and means to track loan application status online.

Conclusion

GIFF welcomes businesses from across the country to empower their journey for the festive season in 2017. Capital Float is ready to take quick and accurate lending decisions for them. We have comprehensive credit packages unfettered by restrictive lending policies, inflexible collateral requirements and slow disbursals times. SMEs can apply for loans online in ten minutes, upload the documentation required and receive funds in their account within three days.

In a phase where banks have tightened their purse strings to deal with bad loans, NBFCs are coming up with new strategies to spark up the investment drive. Capital Float is leading the initiative through GIFF, thereby contributing to the growth of SMEs in India. Providing cutting-edge working capital solutions for the SME sector is our organisation’s raison d’etre, and we have planned our policies accordingly.

Know more about the Great Indian Finance Festival 2017 at https://www.capitalfloat.com/giff

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Top 10 Time Management Tips for Small Business Owners

Time is money. No phrase proves this statement better than when you own a growing business.

As you strive to achieve your business aspirations, juggling responsibilities and managing activities end-to-end sums up a typical work day. You simply cannot afford to compromise on any of the processes at hand, because it might have a profound impact on the growth of your venture. The trick is to focus your productivity on the limited resources you have in a time-efficient manner till you can confidently handover the heavy lifting to experts. Successful businessmen will tell you the same, but in two words: time management.

Here are our favorite tried-and-tested time management tips for small business owners to save you time and make running your business easier.

1. Fix a Schedule and Stick to it

The best way to accomplish a productive day is to show up at work with a clearly defined set of goals and tasks, preferably hand-written. A disorganized schedule leads to ineptness and wasted hours, eventually leading to a loss of focus on business objectives. Account for every hour of the day, from the time needed for meetings and document review to travel and shopping. Create your schedule with three categories- one for the responsibilities that need to be completed that day, another for those activities that require your attention but can be put on hold and a third with minor tasks that you can work on if you have extra time. Know your downtime- you can use this for short breaks.

2. Focus on ONE Task at a Time

Multitasking might seem like a clever way to do many things within a short amount of time, but it divides your attention among the responsibilities at hand. Being a budding enterprise, this is not a risk that you want to take now. Instead, you can try the ‘Pomodoro technique’. This involves setting your timer for a specified time and focusing wholly on one task before the timer goes off. Repeat this after taking short breaks of 5 minutes between tasks. An efficient way to structure your time, this technique ensures that you devote time for a specific activity regularly.

3. Delegate Work

All small businesses are a one-man army early into their business operations. But your growth journey to becoming a larger enterprise begins when you start delegating responsibilities to expert personnel. Hire people who are dependable to manage tasks you don’t have time for or you are not suitably skilled for. This will give you more time to work on things that you are best at and need your personal attention. Keeping in mind that most growing enterprises might not be sufficiently funded to hire the right people, Capital Float offers Unsecured Business Loans to support the recruitment needs of these businesses.

4. Avoid Distractions

Any means of distraction is harmful for the growth of your business, as the work you do is very different compared to those of your employees. If you think your team members are wasting time on social media, set up a URL blocker on your system. You can forward calls, set up caps on answering emails or designate others to perform repeated tasks, if these are causing you to deviate from your daily schedule.

As you get busier, more people demand your time. Reducing distractions implies training the people around you to respect your time. Your employees tend to consume your time with constant problems or through attempts to garner your attention. Take steps to identify the major time-wasters and keep them at bay.

5. Prioritize difficult tasks

An effective time management hack is to start your work hours with the most challenging task at hand. Despite varying individual notions of productivity, mornings are accepted as the time of the day when you are at your optimum performance levels. This leaves the rest of the day to handle repercussions or developments, and you can work on other priorities with a relaxed frame of mind.

6. Watch out for ‘Shiny Objects’

Many a small business that has just entered the economic space face the ‘shiny object syndrome’ early into their growth phase. Shiny objects, or seemingly bright opportunities, keeping popping up from time to time and they tend to distract you from your business objectives. You can eliminate such time-wasters by asking for agendas before attending any business proposition and comparing new prospects with the value of opportunities at hand.

7. Organize your Work Space

There is no bigger demotivating factor than coming to a cluttered workspace every morning. Not only does it create an unorganized mental space, but according to recent surveys, makes you stay at office longer. Documents categorized into inbound and outbound piles, color-coded filing cabinets, scanning forms onto Outlook, and similar techniques will save you the trouble of rifling through scores of paperwork to find information.

8. Evaluate and Improvise Consistently

The worst thing to do to your business is to continue implementing processes that do not benefit your cause. Most small business owners might be busy with specific projects to spend time analyzing their business models. This is where a quarterly evaluation becomes the most significant of time management tips and strategies. A quarter, or three months, is relevantly sufficient amount of time required to determine the effectiveness of a strategy or a business relationship. Carrying out evaluations at the end of every quarter gives ambitious entrepreneurs better process insights and a chance to move in the right direction.

9. Measure Big Successes & Failures

One of the critical time management skills that a small business owner must possess is goal setting. Define scalable weekly business goals with an emphasis on a particular aspect of your business that you want to focus on, and evaluate the big wins and losses at the end of the week. What makes this strategy so productive is that here, failures are treated as important as successes, as early analysis saves the time that your team might have continued working on them.

10. Leverage Technology

Most small business owners spend more time running a business than growing it. Tasks like staff rotas, invoicing, payroll and tax consume more than 30 hours of productive time every month. With the infinite number of apps and services available online, technology can be used to fill the gap in your current business processes. Automating repetitive tasks such as these will help you save a lot of time to focus on activities that directly impact the growth of your business.

Oct 24, 2018

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Capital Float partners with Payworld to boost business of kirana stores in India

Capital Float, the largest digital lender in India, has partnered with Payworld to provide kirana store owners with convenient financing options, enabling them to expand business operations. Small retailers are often underserved by traditional financial institutions because of their limited credit history. These retailers can now avail hassle-free working capital from Capital Float, which will help them manage inventory and cash flows with added scalability.

There are more than 12 million small retailers in India. Many of these businessmen put decision-making on hold because of traditional credit barriers. Through this partnership, Capital Float will provide small retailers with collateral-free loans, which will help to exponentially increase their capacity to do business on the Payworld platform. Once the loan is approved, the retailer can request for funds using the Capital Float mobile app and the funds are disbursed within 10 minutes.

“Due to the lack of established lending norms and consequent delay in financing activity, existing and new players in the retail space have lesser access to credit, which affects their growth and expansion plans”, said Gaurav Hinduja, Co-Founder, Capital Float. “With Payworld, we have simplified the lending process so that neighbourhood kirana stores are able to fulfil their financial needs and better service their customers,” he added.

With India becoming digital, Payworld helps customers in remote locations with limited access to electronic payment methods, perform daily transactions like booking bus tickets or paying mobile bills via Payworld’s network of retail points, which includes kirana stores. A proprietary algorithm developed by Capital Float uses non-traditional, surrogate data sources, including each retailer’s performance on the Payworld platform, to build a personalized credit profile and provide customized finance options to the retailer. In the long term, this will also develop an official credit profile for these retailers, thereby increasing their chances of availing credit products from traditional financiers.

“In keeping with our business philosophy of ‘Making Life Simple’, we have partnered with Capital Float to provide the retailers in our network the support they require to boost their business. This is critical in building retailer loyalty to our platform, giving them the confidence to increase the number of transactions, positively impacting revenues for them and us” said Praveen Dhabhai, COO , Payworld.

Click here to read the full press release on The Economic Times

Oct 24, 2018

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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