5 Practices Business Owners Can Adopt at the Beginning of a Financial Year

The start of a brand new financial year is filled with several emotions for SME owners, ranging from relief after the intense pressure of March, anticipations and excitement for the year ahead. Amidst these, business owners often don’t find the opportunity to celebrate the year that has gone by and the new financial year up ahead.

The new financial year is the only occasion that is of sole significance to an SME, whereas every other event, festival or celebration involves friends and family. It is that time when the SME can celebrate with their team the previous fiscal year that was full of learnings, experiences, peaks and troughs. The beginning of a financial year also presents a unique prospect to start over; SMEs can renew their enthusiasm and vigor as they make new business decisions.

Indeed, celebrating the new financial year can become an ongoing ritual for SMEs as it also helps establish a stronger workforce with a refined drive towards the company’s vision. To gain an advantageous start, here are some practices to ease you into the new fiscal year, so that you can look forward to bigger success celebrations at the end of it.

1. Set financial goals
Whether your financial goals are numerical or tangible, they should be defined in a manner that lets you evaluate if they can be achieved or not. These can be long-term, such as profitability, margins, sustained cash flows, etc. that may not be accomplished over the span of the financial year ahead or specific goals that are short-term.

For example, a retail store that has rented a space might learn that the building owner plans to sell the building eventually, and intends to acquire the space for further expansion. For a smooth sale without depleting the working capital, the retailer should have a clear sense of the cost of down payment, mortgage and additional costs. Based on this, they can create a strict budget for the year and stick to it. Another option is to avail collateral-free finance options such as Term Finance or Merchant Cash Advance that offers flexible modes for repayment.

2. Evaluate the scope of debts
The beginning of the year is the best time to assess the debts that you might have accumulated over the past years. Start by weighing each of your existing loans based on its cost, interest rate and other subsidiary factors such as prepayment penalty. Always ensure that the loan with the highest ticket size is repaid first.

Business finance is not often a liability-encountering measure, but also an instrument for growth, expansion and diversification of your business. If you have a promising business opportunity at hand and are reluctant to accept it due to a shortage of funds, this is when you should consider availing business finance. To determine the customized credit solution that best suits your business, check out Our Products.

3. Improve book-keeping
Unorganized compilation of financial records is the most recurrent theme for SMEs who let go of trickling financial losses, only to discover a gaping hole in its wake. Unexpected, unrecorded cash expenses often eat their way into the profitability of a business, resulting in a long-lasting impact that might take several years to recover from.

It is integral to maintain records of operational and financial performance, and the method you adopt to maintain these play a major role in determining the accuracy of the data. If you have been managing business accounts on your own, it is advised that you hire an experienced tax accountant or opt for an enhanced accounting software this fiscal year. This will keep you free to focus on other tasks, with the assurance that you one step closer to higher profits.

4. Plan for new partnerships
Large corporations can perform the role of different stakeholders to an SME; they can assume roles as business partners, product distributors or customers. Contrary to conventional belief, small businesses have much to gain by associating with bigger businesses that operate differently from the way the SMEs function. This ensures that the partnership remains fruitful for both the entities involved, and avoids situations where they find themselves competing with each other If you feel that your enterprise will benefit from such a collaboration to supplement time, logistical organization and resources, this new financial year is when you can make that move.

5. Identify a new customer base
For any SME, extending the outreach of your brand to a wide demography of consumers is instrumental to evolve into a larger organisation. If you envision a steady rate of growth, what best time to target a brand new audience than the start of the financial year? You can also think of ways to improvise your product or service for a high-potential customer segment that is less exposed to competition. At the end of the day, this is an exercise that promotes out-of-the-box thinking.

A sound financial budget prepared with the above points in mind ensures that you are better prepared to face the new fiscal year. Also, it gives you an edge over your competitors on several fronts, and getting a business finance partner for your needs becomes much simpler when you are armed with a well-calculated plan.

Capital Float exists to serve the unique business aspirations of ambitious SMEs like you. With a growing base of 80,000 customers in over 300 cities across India, we provide customized credit solutions for the diverse needs that you might have. Paperless loan application, minimal documentation requirement and quick processing ensure that you receive funds when you need it. Choose from our new, innovative financial solutions for FY 18-19 and get ready to #BreakLimits!

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What can a School do with a 50 Lakhs Unsecured Loan

In their endeavour to provide quality education and enable all-round development of students through extra-curricular activities, schools in India often need to make some investments. The authorities have to ensure that classrooms are well furnished, there is quality sports kit in the games room, labs have the proper equipment for demonstrations and practical experiments and all essential amenities vital to a respectable educational service are available. To finance such facilities, they may at times seek school loans.

How to get loan for school?” is the first question that comes to mind in such a scenario. Thanks to the digital lending solutions offered by FinTech companies today, recognised schools with classes up to VIII/X/XII standard could easily get collateral-free school loans of up to Rs 50 lakhs.

For what purposes can a school get such an amount? Let’s look at the common reasons that prompt schools to apply for quick loans:

Construct a school building

With a 50 lakh loan for construction of school building, the borrowing institution can build new classrooms to accommodate more students. The amount can also be used to construct a spacious staffroom or for any other structure that the school campus needs. With regular revenue through their monthly fee from students, running schools can afford to pay back the loan amount in EMIs.

Buy school furniture

The furniture used in classrooms and other areas of the school building can seem expensive to buy at short notice. However, quick funding by a FinTech company offering school loans enables the institution to make the purchase conveniently. Like other funds, the amount approved on loan for buying school furniture is credited into the bank account of the borrower within 2-3 days of the application approval and can then be used to purchase the required furniture items.

Build school laboratories

An amount of up to Rs 50 lakhs is usually adequate as a loan for building school laboratory. Schools that have recently advanced their classrooms to X or XII standard may not have science labs for the practical sessions required by the students of these grades. With an unsecured loan from a FinTech lender, they can finance the construction of such facilities. Institutions can also apply for loans to enlarge or refurbish the labs that they already have.

Facilitate transportation

Parents expect safe transport facilities from a school, especially for their younger children. A van, minibus and larger buses can cost anywhere between Rs 7 lakh and Rs 50 lakh depending on its size, brand and age – new/used. Schools that want to buy their own vehicles or enlarge the existing fleet can use FinTech collateral-free loans available for such purposes.

Buy new teaching devices

A quick school loan is the best resort when the school needs to have better teaching devices installed in its classrooms and labs. These could be computers, whiteboards, overhead projectors and other hardware especially commissioned for education purposes. FinTech companies lend up to Rs 50 lakh for such teaching aids.

Develop the school campus

An unsecured loan of Rs 50 lakhs can be used for any other productive purpose that contributes towards the development of school and helps it become a more valuable education service provider. The institution simply needs to state the objective clearly in the loan application and provide the required documents authenticating its eligibility for the fund. It can also arrange for a flexible repayment structure when a FinTech lender disburses the loan for school development.

Apply for Unsecured school loan

As a trusted FinTech company providing loans to schools, Capital Float has customised credit products to support educational institutions across India. To talk about your school loans requirements, feel free to call on 1860 419 0999.

Oct 24, 2018

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Features of Pay Later: A collateral free loan with multiple drawdowns

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.

Related: How to Get Collateral Free SME Loans for Your Business in India

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’.

Oct 24, 2018

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Three Ways to Improve Your Business Credit Score

Small business owners often have to go an extra mile to ensure the consistent growth and success of their ventures. They must work hard in dealing with their customers and suppliers. They also need to come up with innovative ways to market their products and services. In their efforts to polish the customer-facing, technical and marketing aspects, small and medium enterprises (SMEs) often overlook the attention that their creditworthiness requires, which is vital to their chances of getting business loans.

If all goes well for the business and it is able to get a constant stream of customers, its position in the industry will be strengthened. This, in turn, opens doors for business finance from banks, conventional non-banking finance companies (NBFCs) and the new age NBFCs in the form of FinTech lenders. However, a few clever methods help in improving the prospects for business funding.

If you are an entrepreneur with a promising business idea that is backed by adequate possibilities for success, you must take it forward. To improve your chances of getting a loan for business expansion, here are the three points that you can pay heed to:

1- Make timely payments on your bills and clear outstanding credit 

Financial discipline is the key to success when you are managing a commercially motivated organisation. In business, you may have to make regular payments to your suppliers and vendors. These ought to be made on time.

With frequent delays on the payment of your outstanding invoices, you may hurt your prospects for being qualified for business loans. A late payment on bills can damage your financial records, particularly if it gets reported to business credit scores rating agencies such as CIBIL.

If you had missed a couple of payments, but later managed to catch up with the regular cycle, the delayed payments may have had some adverse impact on your credit ratings. However, the damage is not permanent. As credit scores are a reflection of activities over a period, it can take some time for the new data to set in and replace the older information. The credit score will gradually improve to reflect your eligibility for business finance.

The focus should be on making payments on bills before they are due. This is not only a good habit that will help your business get higher credit ratings, but will also improve your relationships with the suppliers and vendors. If you have severe financial constraints, you can use strategies such as invoice financing. (Link to relevant product page can be placed here)

In addition to the bills raised by entities dealing with your company, payments on credit cards and existing loans should also be made on time. Most importantly, keep all the receipts against payment safely in your records.

2- Use credit prudently

The FinTech revolution has given access to fast business loans and has made it convenient for SMEs to expand their presence in the market. If you can demonstrate the ability to use your loan for business wisely, it will only improve your business credit rating and will help you borrow bigger amounts in future.

Funds must be used for the purpose that was stated to procure them. If you have taken a loan for business activities – such as paying a vendor, buying raw material or inventory, refurbishing a storefront – it must be used accordingly. Do not use business finance for personal expenses. The mixing of personal funds with those for business can happen unknowingly at times, especially for start-ups and sole proprietorships, but the two should be separated as soon as possible. This helps in improving the credit history records considerably.

Another point to understand here is – if your business has credit accounts in good standing, but you barely use them, do not be tempted to close such accounts. They may come to the rescue of your business plans in future. What is more, the closure of any account trims down the total amount of credit that may be available for your company, and conversely, increases the ratio of credit utilisation stats – this change of numbers will negatively impact the credit score.

When the debt load is haphazardly scattered in multiple accounts, you should work on reordering it so that there are smaller balances on different accounts. Once you are able to make regular payments on them, it will gain you credit for paying off more than one outstanding balance.

3- Avoid taking hasty or risky decisions 

When you are managing a business and dealing with people from different fields every day, you will have your own experiences and learn to do things differently. Keep a vigil on the financial situation of your organisation even if you have hired accountants to manage your finances. Decide upon the figures that you aim to achieve and know what it will imply for the health, bottom line and future prospects of your business. This helps to maintain focus and financial discipline.

Avoid the risks that can affect your business credit scores. Some activities such as dealing with other companies of dubious nature not only harm your brand image, but also deter your business finance providers. Keep away from inherently risky operations that can cause financial stress in future.

Lastly, if you spot any mistake in your credit history records, do not hesitate to get it amended or inform your prospective lender. If you had paid off a bill in time but it was shown to be outstanding by the concerned entity, divulge the receipts to make corrections and prove your point. As a FinTech company offering quick loans to small and medium enterprises, Capital Float is on a mission to promote the spirit of entrepreneurship in India. Our process of evaluating the creditworthiness of a business is concise, lucid and clear-cut. It enables a high number of businesses to get timely funds. Capital Float also guides start-ups and growing companies in improving their prospects for bigger loans in future. Visit our website to find the best product that suits your business need.

Oct 24, 2018