Coronavirus pandemic has impacted millions of people around the world. The virus has also affected lakhs of people in India, leading to several lockdowns to curtail the transmission of the virus.
These lockdowns have severely affected various sectors throughout India, chief among these being the restaurant industry. If the coronavirus pandemic lasts for a long period, people may get habituated with the idea of not dining out, which will inevitably take the industry longer to recover.
In India, the restaurant industry has faced numerous challenges because of the COVID-19 outbreak: the end of group dining at restaurants, protecting the health of both the employees and the customers, following the safety regulations laid down by the Government, working with a limited number of workers, running expenditure without revenues to match, etc.
Restaurants can address these challenges by actioning the following:
- Focus on takeaways: Group dining has become a thing of the past due to the coronavirus pandemic. In this situation, focusing on building the business via takeaways would be a wise decision. This would promote social distancing and would prevent the virus from spreading while ensuring operations are sustained.
- Collaboration: Restaurants can collaborate to benefit from each other’s strengths. This would not only reduce cost but also increase the number of customers (combining the customers of both the restaurants). The merged restaurant can prepare their best dishes (for which they are famous) and focus their efforts on selling these (which would also result in zero wastage). Collaboration would also help in merging the workforce and have more people available for extensive cleaning and door-to-door delivery.
- Social media marketing: With the onset of COVID-19, traditional marketing wouldn’t prove to be fruitful. On the contrary, it will be expensive. Owing to the lockdowns, people are getting time to surf on social media. Thus, social media marketing would catch their attention. Restaurants will also be able to connect directly with their customers to build effective customer relationships.
- Opt for online food ordering: Since people cannot go to restaurants, the only way for these businesses to operate would be through food delivery. They can list themselves on Swiggy, Zomato or other food delivery aggregators to increase sales. They can even opt for food orders placed directly through phone calls. This would reduce costs and create a revenue stream.
- Create a social awareness program: The restaurants can create a social awareness program around frontline healthcare workers of COVID-19 by supplying them food. Apart from the element of social service, this can also be marketed or advertised on social media and other digital platforms to create goodwill amongst customers.
- Follow the norms laid down by WHO on hygiene: There are operational challenges in the wake of the pandemic. To overcome those, restaurants should maintain hygiene by extensively using hand sanitizers. They should bear in mind that food safety should be their priority. The working stations should be wiped down at regular intervals using a bleach solution. The executives and valets should be cautious during food delivery and opt for contactless payments.
More Related Posts
Achieving growth is a dream for every business, more so if it is a small or medium enterprise. Who doesn’t like expanding their production and also the revenue of their business? While business expansion is necessary, one thing which is primarily required for business growth is finance (with acumen being the second important ingredient). How does one secure business finance?
Banks and financial institutions provide the solution – business loans.
Business loans are the perfect solutions to financing which enables business growth. Banks and financial institutions lend the much-required business finance in India to business enterprises. This finance comes in two variants – secured loans and unsecured loans. Do you know what they are and how they are different?
Secured business loans
Secured business loans are also called asset-backed loans. These loans are granted on the value of an asset which is pledged as collateral for the loan. These loans are risk-free from the lender’s perspective as in the case of default by the borrower, the asset which is pledged is possessed by the bank to fulfill the loan liability.
Unsecured business loans
Unsecured loans, on the contrary, do not require any collateral or security. The loan is granted on the repayment capacity of the business which is indicated by the enterprise’s creditworthiness. These loans are granted as short-term loans which also have short repayment tenure.
Difference between the two
Both secured and unsecured business loans are fundamentally different and their differences are as follows:
|Secured Loans||Unsecured Loans|
|They require a security against the value of the loan||These loans are granted without the requirement of any collateral|
|The interest rate is low||Interest rate is high|
|The amount of loan depends on the value of the asset pledged for the loan||The amount of loan depends on the repayment capacity and creditworthiness of the enterprise|
Do unsecured loans help in business growth?
Unsecured loans are very easily available and do not require any collateral. They thus have various advantages which make them an ideal solution for quick financing. But do such loans also enable business growth? Let’s find out:
No asset backing required
Secured loans are limiting in the sense that they require business assets to be pledged as collateral. Unsecured loans are easily available and they do not require any business assets to be secured. As such these loans are not restricting. If your business is small and does not have many assets, it becomes a problem to avail a secured loan. This hinders the growth of business. Unsecured loans, on the other hand, can be availed without any assets.
The quantum of loan is not limited
Suppose you require a loan worth Rs.50 lakhs but the value of assets which are to be pledged is limited to Rs.40 lakhs. Would you be able to acquire the desired loan? Secured loans allow loans limited to the value of the asset pledged. Even in this case, the total value of asset is not allowed as loan as a margin is retained by the lender. So, if you have an asset worth Rs.20 lakhs and want a loan of Rs.20 lakhs, you would be able to avail only 80% to 90% of the value of your asset (Rs.20 lakhs in this case) as loan (i.e. Rs.16 lakhs or Rs.18 lakhs). In case of unsecured loans, the loan is granted on the business potential and creditworthiness and not limited by the value of any asset. Thus, businesses can avail an unsecured loan as per their requirement for aiding growth.
Unsecured loans are easily available as the funds are sanctioned within days of the loan application being done. As such, these loans provide the necessary funding to businesses in a short span of time which can be used to increase business profitability and boost business growth. These loans come in handy when the business is poised to grow following a surge in demand. As the loan is easily available, high demand can be met by increasing production. High demand yields better revenue for the business and enables it to grow.
Ideal for young businesses
Businesses which are still in their nascent stage require funding to expand and grow. This funding can be easily secured through an unsecured loan as it does not require any collateral, which is hard to source for budding businesses. Thus, the growth of these young enterprises is dependent on unsecured business loans.
Unsecured business loans, therefore, play an important part in the growth of businesses. Though long term secured loans are essential for long-term finance, short-term unsecured loans help businesses meet their more immediate requirements, which has a direct bearing on their growth.
NBFCs offer unsecured business loans which are also called as business installment loans or term finance. This loan offers the following benefits to businesses:
1. A loan of Rs.1 lakh to Rs.1 crore can be availed by businesses for any of their requirements.
2. There are no hidden or additional charges under the loan. Applicants are required to pay only a small processing fee of 2% of the loan amount borrowed. Apart from this there are no foreclosure or part-prepayment charges incurred on the loan.
3. Certain NBFCs use customized credit criteria while underwriting customers. The credit offering is tailored as per the applicant’s requirement.
4. The loan is sanctioned within 3 days of successful application thus providing the funds at the earliest.
5. No collateral security is required for the loan.
6. Application for the loan can be done quickly through the online medium which reduces unnecessary hassles.
Unsecured loans sometimes prove to be that important source of funding without which businesses couldn’t have grown and achieved enhanced profitability. If you are also looking for a business loan for your business growth avail an unsecured loan today!
Oct 24, 2018
With a dream to revolutionize business lending in India, Capital Float provides loans to small businesses – YourStory
Written by Pardeep Goyal
The Indian business environment is exciting especially now, where every bright idea is turning into a business, big or small. There are over 30 million SMEs in India. Small businesses are run by passionate entrepreneurs, but unlike digital startups, venture capital money is not accessible to them. Despite efforts, some of these businesses are losing out on growth or shut shop due to lack of working capital.
With a dream to revolutionise business lending in India, Gaurav Hinduja and Shashank Rishyasringa are changing the business of money lending with Capital Float.
Initially, Shashank was an engagement manager at McKinsey & Company, where he advised several leading financial institutions, investment funds, governments and foundations on business strategy, governance, operations and risk management. Co-founder Gaurav was running operations at India’s big apparel manufacturer Gokaldas Exports with over 40,000 people and USD 250 million in revenues.
The duo were at Stanford together before they co-founded Capital Float. They considered various business ideas but doing something related to capital was a natural inclination for them. So they decided to take on the money lending problem for small businesses.
How Capital Float works?
According to Gaurav, Capital Float works in three basic steps:
- Customer has to apply online,
- Submit documents,
- He/she gets a loan if eligible in about three days.
Yes, just three days for loan!
He adds, “We make sure to go through as many data points as available, including external data sources to determine credit worthiness. Once we have established that, we have been able to disburse a loan in under three days and in a lot of cases where the loan is small, it happens instantaneously. In the future, we hope to reduce that time for disbursal even further.”
Team Capital Float understands the importance of friendly capital, and is quick to deliver that much-needed finance to promising businesses that approach them. It is rare in India that a small business can get a loan in such a short time from any traditional finance company. Gaurav says, “Besides the swiftness and hassle-free nature of our service, one of the key USP is that we do not charge a prepayment penalty and our products have dynamic tenures that suit our customer’s needs.”
Key Challenges and Motivation
Starting up always comes with its set of challenges. At Capital Float, they went through the motions like everyone else: from the initial days of hiring the right team to defining clear goals, to ensuring compliance.
For startups, challenges are part of the larger scheme of things to survive and grow. Capital Float is an RBI-certified NBFC but registration was not an easy task. “At one point, we almost quit and took a break for a couple of months. But we understood regulation is very important in a complex market like India and we got back on track and persisted with our goals”, says Gaurav.
Gaurav shares how the company started conversations with their customers in the early days: “Most traditional loan providers find reasons to say ‘no’ to an entrepreneur looking for capital, but we look for a reason to say yes.”
The company has come a long way now; it is serving in major cities like Delhi, Mumbai, Bengaluru and Chennai and has testimonials from CFO of Zovi and other big brands.
According to Gaurav, today’s SMEs will drive tomorrow’s billion dreams. “But we need to ask ourselves who the driving and supporting force behind such SMEs are today,” he adds. The dream to revolutionise business lending in the country has kept Gaurav and Shashank going. “The fact that we get close to a hundred applications a day vindicates our belief in what we set out to do: create a capital revolution in India,” says Gaurav.
Being an entrepreneur himself in the fin-tech domain, Gaurav believes that entrepreneurs form the backbone of the Indian economy as the creators of the largest number of jobs and biggest contributors to the GDP. A significant hurdle for most of them is timely access to appropriate finance.
He shares some advice for entrepreneurs working in the financial domain and other budding startups:
- Compliance is key; never ignore it
- You should choose investors who share your vision
- Don’t give up easily; starting up can initially wear you out but it should not bring you down
- Don’t always hire for skills. Sometimes it’s important to hire for values
- Don’t make promises to the customer that you cannot deliver on
- Don’t launch your product in too many markets at once. Have a soft launch first, test it, tweak it and then re-launch the revised product
Gaurav adds, “There are many banks and NBFCs which provide loans to businesses, but you need to become a partner to your customer, not a lender. Use technology and big data to improve your customer’s experience. Understand how different customers use your products in different markets so that you can customise your product to meet their needs.”
Piece sourced from YourStory. You can read the full piece here.
Oct 24, 2018
To sustain their business growth, small and medium enterprises (SMEs) sometimes need additional working capital, and the most direct way of getting it is to apply for a loan.
With business loans coming from banks, non-banking finance companies (NBFCs) and private money lenders, SMEs have multiple sources to get funding for their operations and expansion. However, these credit options have their pros and cons and should be understood to choose the most helpful alternative.
Secured vs Unsecured Business Loan
Most companies are familiar with the idea of a secured business loan that requires them to offer the lender some collateral as a security against the funding provided. The credit here is issued when the borrower hypothecates a financial asset to the lender. The hypothecation ends only when the entire principal, together with interest and any other associated charges, is fully paid off.
Banks and most other conventional sources of finance are more willing to offer secured loans because from the lender’s point of view, these carry less risk than unsecured funding.
The main advantage for a borrower taking a secured business loan is that the interest on such credit is lower since a guarantee of their asset backs the loan.
Conversely, the challenge is that lenders, particularly banks, accept only selective assets as collateral. They need to ascertain that such an asset can be liquidated in minimum time in case the lender defaults on payment. Due to this condition, many SMEs find it difficult to get secured loans. They may not have assets that are considered as relevant or sufficiently valuable by the lender.
An unsecured business loan, on the other hand, is granted without any collateral. A non-banking finance company with a digital lending model offers such loans based on the creditworthiness of borrowers. If a business has a successful operational history of at least one year, and there are no blots on its previous credit history, it is eligible to get its unsecured business loan from a digitally operating NBFC, also known as a FinTech company.
For an enterprise that has no collateral for business loans, it is natural to opt for an unsecured loan even though the interest charged on this is slightly higher than on secured loans. However, some FinTech companies have created additional benefits with their policies that make unsecured business loan better than secured loans on multiple fronts.
While looking at secured vs unsecured business loan, these are some of the advantages that make the latter more valuable for start-ups and SMEs:
- An unsecured business loan is available for short terms – borrowers can take a working capital loan for a tenure of less than one year and thus avoid the burden of debt on long term.
- A FinTech lending company usually has a fully digital application process for its unsecured loans – it takes less than 10 minutes to complete the application and the documents to verify the information therein can also be uploaded online.
- The time taken to receive funds from a FinTech in the business bank account is less than a week – the application is usually reviewed on the same day when it is submitted, and, if approved, the sum is disbursed in the next 2-3 business days.
- A loan processing fee of up to 2% and the interest rate are usually the only charges on a FinTech company’s unsecured business loan – the borrowers do not have to pay any documentation fee, loan insurance premium, legal fee and other hidden charges.
- The repayment options are more flexible for unsecured loans issued by FinTechs – the borrowers can pay off the loan sooner than the predetermined schedule, and maybe charged a nominal pre-closure charge for making the payment.
For an SME that does not have financial assets to hypothecate and needs faster access to cash, will find unsecured business loan better than secured funding.
Here is a summarised view of the features for Secured Vs Unsecured Business Loan:
|Secured Business loans from Institutional lenders||Unsecured business loans from FinTech companies|
|Collateral required||Backed by a financial asset for collateral||No collateral / Security|
|Advertised interest rate (annual)||Between 12% and 24%||Between 18% and 24%|
|Loan processing fee||>= 2%||<= 2%|
|Extra charges||May have extra charges for documentation, loan insurance and other statutory requirements||No extra or hidden charges|
|Time to get funds into account||1 to 6 weeks||72 hours|
|Loan application process||Digital and paper-based, document-intensive loan application||Fully digitalised loan application and document submission|
|Repayment of loan||Only through EMIs||Flexible repayment options|
Capital Float is a leading FinTech company that asks for no collateral for business loans. We have customised our loans for a variety of business purposes and working capital needs. Our short-term unsecured business loans are issued purely on the creditworthiness of the borrowers and the potential of an organisation to pay back in time. We evaluate every loan application within minutes of its submission to provide the decision on the same day.
[maxbutton id=”5″ url=”https://safe.capitalfloat.com/cf/default/register?utm_source=blog&utm_medium=web” text=”Apply for unsecured business loan” ]
If you have an attractive business opportunity to capitalise upon, do not put off your plans. Talk to a representative in our customer service team at 1860 419 0999 and avail yourself of the benefits of a loan without collateral.
Oct 24, 2018