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.
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.
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.
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A wave of change is sweeping across the nation, transforming accessibility of credit at an individual and institutional level. As stated by the World Bank in 2014, nearly 47% of Indian adults are disconnected from formalized financial systems, increasing their dependency on informal credit channels. The nature of these informal channels and the environment fostering their sustenance make these modes of funding exorbitantly expensive. These channels typically provide immediate funding but debilitate the borrower’s sustainability and competitiveness in the long-term. Usurious rates of interest, loans terms disconnected from business fundamentals and delayed-decision making shackle entrepreneurs armed with ambition.
The apprehensions involving credit-access notwithstanding, SMEs find themselves lucratively placed in the timeline of the Indian economy, wherein Governmental and capitalistic forces are aligning in order to further SME progression in the country. Centre-led initiatives and evolutionary processes set up by tactful corporates are becoming building blocks to facilitate economic development through SMEs.
SMEs central to India’s economic development
The Government of India has identified the significant role SMEs play in shaping and developing the economy. The ‘Make in India’ initiative was launched last year to attract foreign and local investment to the country’s manufacturing sector. SMEs are required to participate actively in making this initiative a success. The pro-manufacturing stance of the Government provides these businesses with the opportunity to scale and grow at an accelerated pace.
India destined to become an e-commerce superpower
Similarly, e-commerce companies in India are in the golden phase of technological advancement. According to Goldman Sachs, India’s e-commerce market will cross the $100 billion mark by FY20. A study by PWC indicated that the e-commerce industry is expected to grow from $16.4 billion in 2014 to $21.3 billion in 2015. Alibaba.com, the B2B division of the world’s largest e-retailer Alibaba Group recently announced that India is the second most important market for the company globally . A whopping majority of the e-commerce space presently comprises of e-tailing and e-travel companies. Alibaba is likely to provide B2B companies the much-needed platform to establish their presence.
Credit now just a click away
Several factors could hinder SMEs from expanding at a geometric rate. Possibly the most critical of these is credit. Companies are queuing to alter the perception and approach to credit, with many organisations attempting to transform finance from a function to a service.
A recent article on YourStory mentioned that over 500 financial technology start-ups in India have received $1.4 billion in funding since 2012. These are not merely in the credit services sector but also include companies in the mobile payment services sector. With 90% mobile phone penetration in the country and smartphone sales expected to reach 500 million units in the next five years, digital engagement with consumers will be higher than ever before.
Pioneer with purpose
Capital Float, the pioneer in digital lending for SMEs in India, is spearheading this digital revolution. We understand the crippling effects collateral-based loans have on business progression and the inherent anxiety they cause. Our expertise in big data, decision sciences proficiency and technological prowess gives us the edge to provide specially tailored financial services to small and medium businesses across the country. Competitive interest rates make us relevant and digital platforms increase our reach. Gone are the days when SMEs toiled to acquire credit. Digitized processes have bridged the gap between the borrower and capital, the two now being separated by a few clicks of the mouse.
Digital Lending will gradually replace conventional credit channels. In response to the altering financial landscape, traditional organisations are revisiting their work-flows and are attempting to revitalize processes to become felicitous options.
SMEs are evolving at a rapid rate and it’s not surprising that access to finance too is changing simultaneously.
Author – Rajath Kumar, Marketing Manager, Capital Float.
Oct 24, 2018
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.
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
Businesses need additional finances either for growth in terms of scale or for expansion into newer product categories, or for geographical expansion. Sometimes, additional finances are also required for day-to-day operations. Going the traditional route via banks and financial institutions may not always work, especially for small business that are still in the process of building up their brand and market presence. The merchant can also withdraw from his/ her working capital loan. But, if the working capital limits are reached, and if the bank is unwilling to extend more working capital, then the merchant has to look for funds from other sources.
Fortunately, a whole new option of loans based on card swipes at POS terminals offers a great alternative to traditional finance. “Merchant cash advance” is a form of finance where sales from card machines can be used to raise loans. Merchants who allow their customers to pay with a credit or debit card can avail of such credit advance. Merchant cash advance loans are repaid by the POS partner on behalf of the borrower as a percentage of every sale registered on the POS machine.
When merchants accept credit/debit cards as a form of payment, the cards are swiped on a point-of-sale (PoS) terminal. Once the card and the sale amount is verified, the transaction is completed by entering a PIN number. Such sales are actually credit sales as banks credit the sale amount on the next day, or as decided with the merchant, after they deduct transaction charges.
There are several reasons why merchant cash advance is a great alternative to banks and other traditional lenders. Apart from the lengthy process and paperwork, the terms of traditional credit are much tougher for small businesses that have just set out on their entrepreneurial journey or are about to move into an expansion phase. Here is a quick look at why merchant cash advance loans are a better option for SMEs:
No collateral required
Merchant Cash Advance is a completely unsecured loan. The borrower isn’t required to pledge their property or assets to avail themselves of the loan.
Quick, easy loan disbursal
Merchant cash advance loans are usually disbursed easily and quickly as the onus to repay the amount is with the bank that provides the PoS terminal. Thus, merchant cash advance companies have to only ensure the regularity of the sales and the commitment of the merchant to be in business for the duration of the loan.
The borrower can apply for the loan by using a mobile device or a desktop, as long as the device is connected to the internet. The documents required can be scanned and uploaded at the time of the application. The borrower isn’t required to visit our office. This hassle-free application process provides for a comfortable experience to the borrower.
As the onus to pay the instalment is with the provider of the PoS terminal, which is usually a bank, the merchant cash advance companies are reasonably assured of receiving repayments regularly, provided the merchant’s business has no issues. When the PoS terminal providers credit the merchant’s account with the proceeds of their credit card sales, they transfer a fixed percentage of these proceeds to merchant cash advance companies that have provided the merchant cash advance.
Flexibility of Repayment
The repayment of merchant cash advance loans can be pegged to the sales volumes. As a result, merchant can direct their PoS providers to pay less during low seasons. In the case of merchant cash advance loans, the merchants may also have the flexibility to structure their repayments to suit their ability to pay. Instead of making monthly repayments of the loan, they can opt to repay in weekly or fortnightly instalments as well.
Advance as a multiple of card sales
Merchant cash advance loans are ideal for merchants who have consistent credit/debit card sales. Merchant cash advance companies will first evaluate the credit worthiness of the merchant by verifying their past sales and business performance. Once merchant cash advance companies are satisfied, they will decide the basis of the loan advance and how much they can lend to the merchant. For example, Capital Float uses the monthly card settlement amount as the basis for deciding the loan amount. We lend up to 200% of the monthly sales made by the borrower from card swipes.
No pre-closure charges
Capital Float doesn’t charge the borrower any pre-closure charges if the borrower chooses to close the loan ahead of the agreed upon tenure. Additionally, we maintain complete transparency in fees and charges. The borrower is required to pay up to 2% of the loan amount as processing fees, while applying for the loan.
The usage of PoS terminals has significantly increased after the recent demonetization drive. The Government of India is pushing Indian banks to install PoS terminals so that the nation can progress towards becoming a cashless economy. With cashless transactions set to rise with card swipes and PoS machines, merchant cash advance loans will soon become a popular way of raising short-term funds to finance working capital requirements.
Capital Float is one of the few financial companies in India to offer merchant cash advance loans. We have already tied up with POS terminal vendors like Pine Labs, ICICI Merchant Services, Mswipe, MRL Posnet, Bijlipay, and more. We provide a merchant cash advance up to Rs. 1 crore for a convenient tenure of six months to one year.
Oct 24, 2018