Considerations for educational trusts to keep in mind while availing finance

To upgrade the quality of education delivered in their school, authorities running the institution may occasionally need to apply for loans. The first thought that strikes while contemplating Indian school finance is one of approaching a bank. The low rate of interest and general trust in the banking system draws many private schools to these established lenders.

Although banks offer loans to businesses and other organisations, when it comes to financing educational institutions, things can be rather challenging, and it may take long before the school actually receives the requested amount for use. The reason for this is complex eligibility criteria and the long list of documents necessary to get the loan application approved.

School finance in India is granted to institutions that are backed by promoters or a trust. While applying for the loan, a copy of the trust deed or memorandum of association needs to be submitted to the lender. However, when the loan is being applied through a public sector or private bank, it may also ask for hard copies of several additional documents such as three to four years of financial statements along with their audit report, three to four years of income tax returns submitted by the school, bank statements and multiple KYC documents.

With such requirements, if the school has been running for just two years, it may not be able to get the loan. In addition to a pile of printed copies, the legal restrictions for funding educational trusts may also compel the bank to ask for collateral security or involvement of a guarantor. This is considered to be the hardest part as not many schools can afford to hypothecate a valuable financial asset to the lender.

Is there any other alternative for private school financing? Can these institutions securely apply for their loan and get the amount in minimum time without going through the hassles of submitting numerous documents and arranging for collateral? The answer, fortunately, is ‘Yes’.

Keeping up with the plans of promoting quality education in India, digitally operating non-banking finance companies (NBFCs) called FinTech companies have come up with a borrower-friendly lending model. They provide school finance on easy terms and conditions that merely require the borrowing institution to:

  • Be a private school with fully functional classes from LKG to VIII/X/XII grade
  • Be run by promoters or a trust
  • Have an annual fee collection of more than Rs. 75 lakhs
  • Have the school building on its own property

Since the application process is digital, the school needs to upload only soft copies of the documents proving its eligibility. Moreover, financial/bank statements are required for just two years. There is no need to provide any security or guarantor promises: FinTech loans are collateral-free.

If you have plans to construct a new building in your school, stock up the library, refurbish the labs or add any other facility to enhance the education service, the answer on how to finance a school improvement plan lies in an unsecured loan from a FinTech.

Apply for Unsecured school loan

Capital Float is a leading school finance provider in the Indian FinTech industry. We offer quick loans of up to 50 lakhs to fund school development. To know more about our finance options, call us at 1860 419 0999.

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As an organization, we are out to ‘Break Limits’. We have arrived at the august club of ‘fastest growing financial services organizations’ in the shortest possible time, but that hasn’t been down to all work and no play. We have taken a ‘human first’ approach —we have a fun, personal side that we often tap into to unleash energies that are waiting to find expression.

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Held in Delhi and Chennai, the Capital Float Cookout was a food fiesta sprinkled with healthy doses of competition, cooperation, fun and, of course, food. Our Delhi office saw a “fireless cooking competition”, which involved 15 minutes of introduction, 45 minutes of cooking and 15 minutes of evaluation. It takes a lot of creativity and courage to cook up dishes that haven’t seen “fire”. The session in Chennai was colourful with a lot of variety. The Chennai office fielded five teams of seven members each and cooked up a storm of three to four dishes per team. The top three earned compliments, culinary fans and Amazon gift vouchers.

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Language barriers, functions, departments and designations all melted in the cooking pot, creating a cohesive team. And when a bunch of individuals come together as a team, there’s seldom any competition within. In the process, the team’s human side stands out—a sense of humour here; a deft salad chef there; an unexpected leader, musician and dancer. Interesting stories about each person emerge and amalgamate to create our unique culture – a culture of togetherness.

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Working Capital Financing: Why It Is Essential For The Success Of a Business

India is on the path of robust economic growth. According to official figures, the economy was valued at $2.2 trillion in 2016, making it the world’s seventh largest economy in terms of nominal GDP. The Indian economy is expected to reach the $5 trillion mark by 2025, according to a report published by Morgan Stanley in February 2017. India seems to have all the right ingredients in place to achieve this phenomenal growth; the country’s millennial population is massive, there’s availability of cheap labor, the government’s policies are favorable, Indians have exhibited high adoption of the latest technological advancements and the SME segment is growing at a fairly healthy rate.

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Enhances Solvency: Working capital aids a business to operate smoothly and meet all its short-term expenses, including purchasing raw materials, payment of salaries and meeting overhead expenses. Some of these payments cannot be delayed. Having sufficient liquidity helps the uninterrupted flow of production; thus, maintaining the solvency of a business.

Increased Goodwill: When a business is able to promptly meet its regular expenses and pay salaries on time, it generates goodwill, not just internally with employees but also with suppliers and distributors.

Uninterrupted Supply of Raw Materials: Quick payments ensure regular supply of raw materials. Suppliers of raw materials are usually apprehensive about small businesses being able to make the payments and do not offer a suitable credit period. The inability to pay suppliers can result in production coming to a standstill.

Improved Ability to Face Any Crisis: Apart from the smooth functioning of business operations, working capital ensures that any financial emergency can be handled with ease. Sometimes businesses face an unforeseen event, like an order being rejected, unfavorable weather conditions or the unavailability of a particular resource. A business that has sufficient liquidity can cushion itself against such situations. Thus, the financing of working capital defines the financial health of a business and how smoothly it can operate under different circumstances.

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Term Finance: This is ideal for SMEs particularly in the manufacturing and distribution space that need funds to meet operational needs or to expand and diversify the business.

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Pay Later Finance: This product offers a credit facility and suits SMEs that have to regularly replenish their inventory. This revolving credit facility enables a borrower to make timely supplier payments from a predetermined credit amount. This amount can be reset upon repayment and is made available for further use.

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