What Are the Documents Required to Get a Business Loan?

An organisation planning to apply for a business loan must be thoroughly aware of the general application process and the documents that need to be provided to the lender. Security is a top concern for any business today, and no enterprise will want to give copies of their ID and financial papers to questionable entities.

Even when they choose to borrow from familiar banks, the hassles of printing and photocopying documents, submitting them to a branch personally or through a reliable employee and then awaiting approval of their SME loan can be tedious. It discourages many MSMEs from approaching traditional financial institutions for funds. “How to get fastest business loan” while also following a secure procedure is a priority for SME and MSME borrowers.

Fortunately, the expectation of getting a quick business loan can now be fulfilled by FinTech lenders. These digitally active NBFCs have an abridged and systematic online application process, and funds on approved applications are provided in less than a week. Furthermore, they offer loans without requiring the borrowers to pledge any security.

FinTechs do need some documents to sanction any loan. However, businesses only need to submit the soft copies with their digital application. The primary documents required for an unsecured working capital loan or any other SME/MSME loan include:

KYC Documents of Business Owner(s) – PAN Card, passport copy or a copy of any other Photo ID that is recognised by the Government of India

Income Tax Returns (ITR) – The processed ITR document copies for the last two years

Goods and Service Tax (GST) Returns – Processed returns for the past year

Bank Statements – For the previous six months

For some particular loans taken to finance the operations of schools, medical clinics, restaurants, franchises, logistics companies and e-commerce sites, the FinTech lender may need documents specific to these verticals.

As an example, a Pvt Ltd company or LLP that seeks merchant cash finance based on the payments made through cards should also submit its card settlement statements for three months preceding the loan application. On the other hand, sole proprietors (Prop) running their own shops, salons or small restaurants can directly submit their KYC documents, IT returns, bank statements and papers that corroborate the identity of their business.

What then, about the security factor here? That indeed is important – a business loan application should only be sent from a secure website that encrypts all information loaded on its servers. FinTech companies with website domain having a lock symbol and https:// prefix are authentic lenders in the credit market.

If your business has been successfully running for almost three years, and you have been complying with the tax laws of India, your chances of fulfilling other eligibility requirements for an unsecured business loan by Capital Float are high. Just gather the soft copies of documents relevant to your enterprise, and by spending less than 15 minutes on the digital application, you can send a request for the loan. You will also be notified of the approval on the same day, and the funds reach your bank account in the next 72 hours.

Apply for Unsecured Business loan

To know more about our loan granting process, feel free to call at 1860 419 0999.

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Oct 24, 2018

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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.

Oct 24, 2018

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Everybody thought we were nuts – TOI

Written by Shilpa Phadnis. 

When Stanford MBA graduates Sashank Rishyasringa and Gaurav Hinduja started online lending startup Capital Float, it was counter-consensus. All around them they had naysayers, including investors who they had approached early on.

“You guys must be nuts -lending is not a business for you.” “It’s an offline business. You guys have to set up branches.” “Why don’t you guys start an e-commerce or a big data company.” These were some of the comments, recalls Sashank. About the only ones who believed in their idea were their parents.

The two worked with Baba Shiv, professor of marketing at the Stanford Graduate School of Business, to shape their idea of democratizing access to capital. “We wanted small and medium businesses to have access to credit on collateral-free terms.People needed loans against their business health and not against personal property,” Sashank says.

Capital Float started in 2013 and is the trade name of Zen Lefin, a non-banking finance company (NBFC) registered with the RBI.

Sashank, who was passionate about policy and development, was an engagement manager with McKinsey & Co in New York and India before he teamed up with Hinduja to start Capital Float. He graduated in economics from Princeton Uni versity and did an MBA from Stanford. Hinduja was the head of operations at Gokaldas Exports, overseeing one of the country’s largest apparel manufacturers.

 Banks, Sashank says, follow a cookie-cutter approach in assessing SMEs.Their lending policies are restrictive, collateral re quirements are inflexible and disbursements take up to 60 days. There are over 3 crore registered SMEs in the country and around Rs 7 lakh crore of loans have been disbursed through banks to them. But estimates show that the unmet demand is over Rs 9 lakh crore. “We wanted to use tech to bring agility to lending, become a lender as fast and flexible as a family member, but do it in a formal way ,” Sashank says.
Capital Float created flexible credit products that have helped SMEs get out of the clutches of informal sector financiers who charge high interest rates. One of the early customers was a mobile phone vendor from Bhilwara in Rajasthan. “He had pledged his house to get seed capital to start his business. He sold mobile phones on Snapdeal and had a great track record. From Rs 5 lakh a year back, he runs a Rs 50 lakh credit line with us today ,” Sashank says.
Capital Float has partnered with e-commerce marketplaces like Snapdeal, Flipkart, Amazon and Paytm to finance small merchants selling online. “We give an in-principle approval in 10-15 minutes after assessing the credit risk. Borrowers can apply online in minutes, select desired repayment terms and receive funds in their bank accounts in seven days with minimal hassle. We want to benchmark lending to the ecommerce experience,” Sashank says.
The company uses proprietary algorithms to check fraud and repayment history , and uses psychometrics to assess entrepreneurs’ payment ability . “We have taken the human bias out of financing and lowered the cost of lending,” Sashank says.

Now, with Rs 200 crore of loans disbursed, and $17 million raised from investors including SAIF Partners and Aspada, the early scepticism around their venture has more or less vanished.

News piece sourced from the Times of India. Read the original article here

Oct 24, 2018