All You Need To Know About Unsecured Business Loan for Traders

It takes money to make money.” We often hear this adage in the business world, and it does hold true. Even so, maintaining adequate cash reserves to meet the fixed and variable costs can be a real challenge, especially for start-ups and small businesses.

Most of the small and medium enterprises (SMEs) initiate operations with a low level of funds while simultaneously facing competition from established players and dealing with the challenges of seasonal cycles. Consequently, they may not be able to generate the estimated sales volumes.

Even if a venture is performing as per expectations, it may need to make additional investments to hire qualified experts, adopt new technologies and maintain larger stocks of materials/inventory for sustained progress. With experience, SMEs know that a cash cushion is necessary for both survival and growth. An Unsecured Business loan for Traders best offers this advantage.

The Challenge

There are multiple sources of an SME loan for small enterprises, and sincere business borrowers approach a financial institution only when they are confident about and can prove their venture’s ability to pay back in time. Nevertheless, a high number of applications get rejected because these borrowers are unable to pledge financial assets as collateral against a loan.

Not everyone owns huge property. New entrepreneurs often start their operations from rented premises and may not have any significant assets to hypothecate. A secured business loan for traders can also be denied if the lending institution does not deem a particular asset to be valuable enough for the funding.

Solution for Cash Crunch in Business

The Solution

What comes as a relief for business owners is the fact that an unsecured SME/MSME loan is a prominent option for finance, and it comes at significantly more customized terms.

As the digital revolution continues to transform the lending industry, the possibilities of quick funding have only increased for small businesses, and there is an array of SME loan products available to them. A digitally operating FinTech company offers term loans that can be used to buy new premises (shop/showroom/office) or expand the business to new locations. Entrepreneurs can also apply for a working capital loan to continually fuel operations in the low phases of the business cycle.

Moreover, FinTechs offer loan to buy stocks. This facility is particularly helpful for customer-facing ventures such as retail and restaurants.

What is common to all these FinTech credit products is that they are unsecured loans – they can be taken on short notice and without pledging any asset as collateral.

How to apply for a business loan for traders ?

A majority of new-age business managers now understand the lending models of FinTech companies. Those who are still unaware of the concept can always do a quick online search to comprehend it. In brief, a FinTech lending company typically is a non-banking financial company (NBFC) that uses digital technology to make financial solutions quicker to access.

A business loan for traders is highly sought by small enterprises. Any Pvt Ltd (private limited company), LLP (limited liability partnership firm) or Sole Prop (sole proprietary company) can approach FinTech lenders for unsecured business loans.

While the exact eligibility criterion differs as per the kind of SME loan applied for, the principal requirement is the operational business history of at least one year. Pursuant to the rules of the money market, this stipulation is necessary to show that the business owners are genuine and have been running the company for some time.

To qualify for the requested amount, a business with active operations should also show its commitment towards tax compliance. It should also have a precise idea of its loan requirements. This not only helps the borrowing organisation to increase its chances of getting an approval for the credit, but it also makes it convenient to choose the right type and term of the loan.

Anyone applying for a business loan for traders should understand the cost of the loan upfront. When a FinTech is approached for such an investment, this cost includes the interest rate and a nominal processing fee that is usually less than 2% of the borrowed amount.

The application process is entirely digital, and that makes it shorter than the overwhelming procedures of visiting a traditional lender, printing multiple copies of documents and then staying in suspense for weeks to get the required amount.

Applying for a loan from a digital platform takes less than 10 minutes, and the application formats are available on the secure website of the FinTech lender. The application form usually comprises of some basic questions to evaluate the eligibility of the business for a loan. These questions include years in operation, average annual/monthly revenue, tax payments and past credit history, if any. Digital uploads of the relevant documents support the information.

There is no waiting game when a business applies for a loan from a FinTech lending company. As soon as the application is submitted, its evaluation by customised algorithms begins, and it may then be sent for a quick manual review.

FinTechs notify the borrowers of the decision on the application on the same day. If the decision results in an approval, they disburse the total approved amount in the next 2-3 working days. The amount is credited directly to the business bank account, and the SME can withdraw the necessary sums to fund the operations/stock purchases as required.

How to pay back the borrowed amount ?

Most loans are paid through equated monthly instalments (EMIs), and the same method can be used to repay a FinTech SME loan. To make this process more convenient for their borrowers, some companies give them the flexibility to vary the instalment amount when required. As soon as the business records reflect better revenues than the estimations, it can pay off the loan in full and save the trouble of managing EMIs for the complete schedule. The prepayment penalty charged by a FinTech is still less than that of banks and traditional NBFCs.

Is your business facing a cash crunch? Do you want to move to the next level of growth or invest funds to start operations at a new location? Capital Float is a friendly FinTech lender that is trusted by businesses in multiple industries. From term loans and working capital loans to funds for specific domains such as medical practice and online selling, we provide an array of credit products tailored to the needs of business owners and self-employed professionals.

Growth of revenue for traders

 

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To know all about the loan that you seek and the amount that you can borrow, feel free to call us at 1860 419 0999.

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How to cater and scale technology for a start-up in rapid growth

There are multiple stages in a start-up. At an early stage, most tech start-ups usually include two founding members – a business head and a tech head leading the validation efforts. Further down the line, we notice parallel and vertical streams of teams leading the initial growth of the company. It’s usually at this stage or after this stage, where the business has some solidarity to it and the focus on building tech for a large and scalable model begins. The following points made in this post have been laid out in view of a mature start-up.

Be Agile

Following an agile methodology for development is a no-brainer for any start-up. The environment is fast paced, catering to a dynamic business where release cycles are frequent. Often, the common pitfalls of this method also show a lack of emphasis on planning and documentation while customer expectations sometimes are not clear. To mitigate this, a hybrid of agile and waterfall approaches enables start-ups to move towards a mature business. To do so, the start-up must;

– Identify problems of the business

– Prioritize the need of the hour for the business

– Allow for high level architected solutions for each problem

– Build feature specs

– Execute in sprints (ideally 2 weeks) for maximum output to customers

Extensibility

Your business logic and data is your Intellectual Property. As a Fintech company, this becomes the most critical piece of software development. It is important to protect your data while also facilitating growth with the exact same data. How do you draw this balance?

Build your logic and algorithmic layer around your data and an external layer that does not directly interact with your data set. This permits external endpoints to be consumed by growth partners as well as reduces development efforts for building tech for internal teams.

Micro-services

Enterprise applications are often built using a monolithic approach or as a single unit. Although it’s a natural approach to development, it can be frustrating because of multiple dependencies on modular structure and deployment to the cloud also becomes a challenge.

In contrast, Micro-services architecture equips you to independently deploy services or pieces of software without large dependencies on other services. These services or pieces of software ultimately add up to become a single application while running its own suite of processes and mechanisms.

Additionally, in a Fintech setup, technology is built to cater multiple teams – both internal and external and having a micro-services architecture easily allows horizontal scaling.

Reusable code

In a start-up, it’s a good idea to prototype development. Prototyping facilitates quick delivery of a piece of software and a better understanding of future product development.

Post prototyping, it’s important to pick the right framework for a full-fledged and scaled application. This is where building code that can be re-used in multiple services becomes a factor of efficiency in development. Building custom libraries (back-end or front-end) and even choosing the right frameworks ensure ease of development across resources and knowledge transfer. A choice of using AngularJS as a front-end framework allows for creating directives specific to custom applications and promotes reusable components.

Build vs Buy

A classic point of debate and contention is always build versus buy. There are multiple points to consider while making such decisions in a growth stage start up to create a fine balance between the two.

Often, out of the box or integrated solutions provide quick solutions for increased productivity to a business need but come at several costs, such as pricing and rigidity of use. Sometimes these solutions are not compatible with existing software or custom solutions.

Custom-built solutions provide competitive advantages, builds intellectual property and fit a specific business need but also comes at several costs, such as time for development and uncertainty in product definition.

A hybrid approach can be an effective way of mitigating the disadvantages of build or buy approaches. At times, building on top of or integrating an existing product into your custom built solution adds greater value to the overall business product. An example of such a solution can be integrating a good workflow management tool into your custom CRM application.

Dev Pathi

Dev has been involved with startups for the past 5 years since he returned from US. He has launched several mobile apps that have been well accepted in the Indian startup scene.

In New York, he worked with Conde Nast helping them move their web infrastructure from an enterprise setup to an open source setup.
Dev manages the technology development initiatives at Capital Float.

Oct 24, 2018

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Improving the Profitability of Private Schools

Intimidated by the long-drawn process of getting a loan approved from conventional sources such as banks and traditional NBFCs, schools in India often discard the idea of borrowing funds for improvements on their campus. They try to make the most of their limited available funds, even if it means some degree of compromise on the quality of upgrades they had planned for the school.

Such an approach does not bring any benefits in the long term. In some cases, it may even backfire. For instance, if a school purchases low-quality furniture due to inadequate funds, which causes discomfort to students/staff using it for 6-7 hours every day, it may not only tarnish the school’s reputation but also cause serious health problems for the users.

What comes as a relief is that school loans are available on easy terms from FinTech companies that are essentially NBFCs but have a streamlined digital lending model for quick disbursal of funds. From a loan for buying school furniture to any other loan for school development, they can provide funds within a week of application receipt. The application needs to be substantiated by only the soft copies of a few documents verifying the credibility of the school.

So what are the benefits of leveraging a quick school loan from such a source? Does it lead to more profitability for the educational institution?

Here’s how the benefits of these loans unfold:

Enable improvements in infrastructure and purchase of new teaching equipment

FinTechs can provide a loan for school construction which helps the borrowing institution to divide students of the same class into different sections. With this, teachers can give more attention to each student, and the quality of teaching improves. The building structure can also be expanded when a school decides to admit more students or has to advance its existing classes to higher grades.

Schools can also take a loan for smart class facilities that are sought in every private school today and have become significant for a generation growing in the digital age. Other areas where a school loan can be used include furbishing of labs and computer rooms, purchase of games supplies and investment in vehicles for transportation services.

Invigorate interest in admissions

The most direct impact of bringing improvements in school facilities is a rise in the number of students who want to be a part of the institution. While senior students can understand the benefits of moving to an optimally planned school on their own, the parents of younger children who join an academy from kindergarten will also try to place their children in such a school. Provision of excellent facilities and keeping pace with new techniques that transform the learning environment is a natural incentive for more admissions in a school.

The good repute of a school can instantly attract students who move to the city due to their parents’ job transfers and have to find an educational institution in minimum time to avoid loss of studies in an ongoing academic session.

Collection of more fees

More admissions imply higher fee collection, and constant increase in this amount eventually leads to increased profitability for schools. A school loan taken to add new facilities and create better learning experiences has multiple benefits for schools that aim to be the leaders in delivering quality education services. Evidently, the increase in their earnings also helps them to repay the borrowed fund.

Whether you need a small loan for school furniture or up to Rs. 50 lakh to finance any development process in your school, Capital Float ensures that you get it most conveniently. Visit https://www.capitalfloat.com/school-finance to apply for your fund today.

Oct 24, 2018

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Online Seller Finance – working capital loans for e-commerce merchants

The fact that ecommerce is growing exponentially all over the world is undeniable. Entrepreneurs everywhere are competing with each other to get a piece of this lucrative pie. Definitely, starting a business in the virtual world entails much less costs, making it easier for more and more people to fulfill their dreams of running their own enterprise.

However, even with ecommerce, there are some things that do need to get taken care. For instance, you will need an impactful website that stands out among the crowd and you will need products and/or services that the market is currently looking for. You will also need to identify a network of suppliers that you can work with and hire employees to take care of the day-to-day activities as well.

Most importantly, you require capital to keep the business running and leverage business opportunities. This is where Capital Float’s Online Seller Finance comes to the rescue. If you, as a new entrepreneur, were to approach a bank or NBFC for a loan, you will be faced with difficult terms and conditions, the least of which is proving that you’ve run the business successfully for at least a year.

On the other hand, with the flexibility, ease of processing and convenience of accessing working capital even an amount as low as ₹1 lakh to as high as ₹3 crores, Online Seller Finance, specifically designed for ecommerce businesses, is the way to go.

Features 

1) Loan range from 1 lakh to 3 crores

We cater to a wide range of e-commerce merchants. Each merchant has a different capital requirement based on their business need or opportunity. With our wide ticket range, we cater to practically any working capital requirement of the online seller segment. These funds could be used for a variety of purposes such as making supplier payments, adding inventory during peak seasons or diversifying into new product categories.

2) Customized credit criteria

We acknowledge that each merchant is inherently different and must be treated individually. Unlike many traditional financial institutions, we don’t follow a cookie-cutter method to underwrite our customers. By leveraging Big Data & Analytics, we are able to underwrite each customer on the merit of their business performance and offer a tailored credit product. For example, the merchant is offered a specific loan amount basis their monthly sales on the marketplace and projected revenue.

3) Quick, online application process

We are a digital finance company and believe in limited paperwork. We offer the convenience of technology to our customers right from the start of the relationship. Borrowers can apply online using their mobile devices, as long as they are connected to the internet. The 10-minute application is very simple, quick and entirely hassle-free. The borrower can upload their documents online and need not visit a physical office for presenting the documents.

4) No pre-closure charges

Borrowers can close their loan by repaying the balance amount before the end of the agreed tenure. We offer the feature of ‘no pre-closure charges’, which means that the borrower will not be liable to pay any extra charges for closing the loan ahead of time.

5) Get up to 2x credit based on your marketplace sales

Online merchants applying for ‘Online Seller Finance’ can avail up to twice the amount of sales they make on e-commerce marketplaces. For example, if the seller makes ₹10 lakhs in sales per month, the seller can receive working capital funds of up to ₹20 lakhs. These funds can fuel growth on the marketplaces, helping the seller to increase their business geometrically. Higher the sales, the higher the eligible loan amount, higher the chances of leveraging business opportunities.

Benefits

1) Collateral-free

Our Online Seller Finance credit product is an unsecured working capital loan. The borrower need not pledge any security or asset as collateral to avail this loan. Funds are approved on the merit of the borrower’s business performance on the marketplace and not on their assets. Merchants can avail funds and operate without the anxiety of conceding their securities.

2) Funds in 3 days

Our technology and Big Data capabilities help us speed up the underwriting process. We understand that ‘timing makes all the difference’ to online merchants, given how dynamic the business is. Payments can’t be delayed and opportunities must be seized immediately. Bearing this in mind, we disburse loans to the borrower in less than 72 hours of the loan application.

3) Flexible repayment terms

Banks and other NBFCs typically function using the model of EMIs, or easy-monthly-installments. ‘Online Seller Finance’ allows you to repay the installment on a fortnightly basis. As a result, the installment is smaller in amount and is less burdensome to repay when compared to a monthly installment, which would typically be twice the sum. This way, your cash flows remain unaffected and you have more funds to deploy into your business.

4) Ideal for expanding your business

Financing the online seller segment is relatively new in the lending space. Not many financial institutions have fully understood this segment, which has caused several e-commerce sellers to return empty handed from formal lenders. Capital Float was the pioneer in digital lending to e-commerce sellers. Therefore, we’ve made it a lot easier for online merchants to avail finance for their business. Our partnerships with leading marketplaces like Amazon, PayTM, Snapdeal, Myntra, Shopclues, eBay, Craftsvilla, etc. has enabled us to reach to a wide range of sellers. Merchants on these platforms can avail easy funding and expand their business on the platform.

Eligibility and Documents

To qualify for ‘Online Seller Finance’ you must comply with the following parameters.

Eligibility

1) Applicant’s business must have minimum operational history of 1 year

2) Applicant’s partnership minimum vintage should be between 3-6 months

3) Minimum quarterly sales of ₹25,000

Documents

1) Bank statements for the last six months

2) KYC documents of the applicant and the organization

Fee and Charges

At Capital Float, we conduct business in the most transparent manner. This means, you’re only obligated to pay a processing fee of up to 2% for the loan. There are no hidden or pre-closure penalties during or after your application procedure.

Oct 24, 2018