WHAT DATES ARE CHANGED FOR ITR FILING THIS YEAR?

The COVID-19 pandemic is an unforeseen shock for the Indian economy. The country is expected to experience a lengthy economic recession with extended lockdowns in several states. Due to the Coronavirus outbreak,  the global economic crisis, and subsequent instability in production and supply chains is also likely to be perpetuated.

How are the people of India affected?

Coronavirus has disrupted the lives of millions of Indians. Incomes have reduced and several people are experiencing a financial crunch, and as a result, it has become challenging for households as well. Many people have lost their jobs; many others are struggling to run their businesses.

Has the Government extended dates for filing ITR?

In the context of COVID-19 and to provide the people with immediate relief, the Government, in a press conference on May 13, 2020, has announced that the Income Tax Return (ITR) filing deadline has been extended to November 30, 2020 for the financial year 2019-20. Earlier, it was decided that the deadline would be 31st July 2020. But, looking at the condition of the economy, the Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman decided to extend the date of the deadline for filing of ITR even further to November 30.

The Government has not only extended the date for ITR filing but has also extended the tax audit from September 30, 2020 to October 31, 2020. The TDS and TCS rates were reduced by 25% to provide more funds to the taxpayers for the period between 14 May to 31 March. Furthermore, in April 2020, they announced that the pending income tax refunds up to INR five lakhs would be released to the taxpayers to benefit them in these times of crisis.

The Government has authorized certain financial measures to increase the liquidity of tax paying individuals in India. Prudent decision-making and personal financial management will be key to ensuring that funds are available to run households for the foreseeable future and in case of contingencies.

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How Short Term Loans Helps Small Businesses in India

A competitive environment works as a catalyst for growth for businesses, large, medium or small. Small businesses in India have been flourishing in a disorganized market for a while now, capitalizing on trends and changing consumer preferences. Yet one of the challenges they have to deal with is the lack of timely funds, whether by way of short-term business finance or investment in technology or infrastructure for scaling up. The struggle to get affordable financing has resulted in many Small and Medium Enterprises (SMEs) failing to realize their full potential.

This scenario is changing for the better. Term loans offered by online finance companies like Capital Float are your new-age finance options for seizing business opportunities that come your way. A trust-worthy financial partner that you can rely on, Capital Float has helped  enterprises boost their profit margins with convenient short-term business finance options. While some businesses require high liquidity, some may not; but no enterprise can work effectively without adequate cash flows. Restrictive lending policies, inflexible collateral requirements and slow disbursement times offered by formal financiers are of no help to SMEs.

Term loans from online lenders offer a way out of crippling interest rates and the chronic cycle of debt. Read on to find out why it makes sense to seek short-term loans in India.

Easy application procedure

As compared to traditional banks, online lenders such as Capital Float offer the convenience of filling out a 10-minute application form from anywhere, anytime. Digitally uploading required documents translates into an easy and hassle-free process. Given this day and age of instant connectivity, this isn’t a tough task; but going through the multiple layers of process at a conventional bank is.

Prompt approval

Apart from a laborious process of submitting umpteen documents and heavy paperwork, it is likely that a conventional lender will keep a small business owner waiting for loan approval. Compare this to a situation where applicants receive instant approval in minutes. Short loans are the lifeblood for a business. Meeting a smooth supply chain, daily payments, urgent expenses and several other unforeseen expenditures are part and parcel of business operations. Thus lack of liquidity can have ripple effects on many aspects of a business. Through quick approvals for term loans, online lenders ensure SMEs avert such crises with short-term business finance, available practically at their fingertips.

Not just fast, friendly too

Unless SMEs have some collateral to offer, turning to conventional lenders for term loans might be futile. Traditional banks are highly inflexible when it comes to scanning an applicant for short loans. Public Sector banks require a business to be running for at least three to five years to be eligible for a loan. The same holds true for private banks, traditional NBFCs and moneylenders. This is where new-age fintech lenders make a difference. Far more customer-friendly, and digitally enabled, lenders such as Capital Float provide Small and Medium Enterprises even as young as one year old with short term business finance. Aspiring entrepreneurs need some handholding when it comes to finances. These digital lenders are here to do just that.

Easier on the pocket

Term loans acquired through traditional means dig deep into your pockets. But, those availed of online are far easier for a number of reasons, including.

  • Pre closure penalties go up to 5% of the loan. This isn’t the case if you choose to get short-term business finance from Capital Float. We levy no such charges on clients if they wish to close the loan ahead of the term.
  • The processing fees for a short loan offered by traditional lenders start from 2% and in many cases go up to 3%. Financing through Capital Float means SMEs only have to bear a fee of up to 2% in processing fees.
  • An online lending platform offers small business applicants the flexibility of loan tenure— they can choose from anywhere between 1 month to 12 months. Conventional lenders and most private banks don’t offer term loans for that short a period.
  • Short-term business finance procured from PSUs, private banks and traditional NBFCs carry a hidden charge. SMEs don’t have to worry about that when they approach Capital Float for a short loan.
  • Strict repayment options are one of the characteristics of a term loan procured through traditional means. These work on an EMI-only basis. Would it not be far more convenient to have a choice of flexible repayment? All of Capital Floats’ financial products come with easy repayment options. All loan products are offered at a reasonable interest rate.

Variety of loan products

At Capital Float, we understand that every SME works in an unique environment and has particular working capital needs. Keeping this crucial fact in mind, the company offers innovative and flexible credit products to meet a variety of financial needs. Delivered in an efficient and customer-friendly manner, our short-term business finance is here to help SMEs meet their credit requirement anytime.

SMEs can choose from a host of short loan products that best match their business needs. These include Term Finance, Online Seller Finance, Pay Later Finance, Merchant Cash Advance, Supply Chain Finance and Taxi Finance. Capital Float believes in being transparent in its business transactions and boasts of a wide customer base. B2B service providers, manufacturers, traders, distributors, and aspirational taxi or kirana storeowners are part of Capital Float’s customer base, as its products have helped all these businesses bridge the credit gap comfortably.

There has been a steady growth in the number of small and medium enterprises in the country over the past five years. More interesting, the sector is opening up avenues for tech-driven innovation. However, this flourishing sector still requires substantial monetary support in order to improve its higher global competitiveness over the next five years. Conducive governmental policies along with easy access to finance will greatly enable ease of doing business. In addition, short-term loans for businesses in India, sought through fast, friendly and affordable means, are what will nurture India’s entrepreneurial spirit.

Oct 24, 2018

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Importance of Working Capital for Businesses

What is Working Capital?

Working capital is the difference between the total number of assets and the total number of liabilities in a company. This amount is spent on executing day-to-day operations in a business. As a result, it is used as an index to measure the health of a company. Enterprises with high working capital are often strong businesses.

What are the Uses of Working Capital?

In most situations, working capital is used to run operations. A well-managed business will also use it’s working capital to achieve growth. For instance, an online seller would spend to add a new type of product to his portfolio. A retailer may liquidate funds to increase his store size by adding a new section to his outlet.
Other uses of working capital include:
• Equipment and inventory purchases
• Hiring, salary payments and employee training
• Unforeseen expenses

What are the Outcomes of Low Working Capital?
Responsible financial management may help companies secure higher levels of working capital. On the contrary, poor management of capital could result in the following issues:

• Bankruptcy risk: In the case of negative working capital, SMEs use money received from creditors to finance business operations. Businesses run the risk of bankruptcy due to the lack of sufficient income to counterbalance the expenditure.

• Lack of investment opportunities: Investors are less likely to consider companies which regularly have low or negative working capital. This demonstrates that the company is not being run effectively.

• Missed growth opportunities: With large amounts of positive working capital, businesses will have money to spend on pursuing growth. With negative or low working capital, businesses may find it difficult to capitalize on investment opportunities. Low working capital could have stifling effects on the ambitions of any businessman.

• Trade discounts: Many suppliers will offer substantial discounts if they are paid on time. Low or negative working capital can make it difficult to meet payment obligations which, effectively, increases the cost of inventory.

What are the Ways of Accessing Working Capital Finance with Capital Float?

At Capital Float, we offer a wide range of financing options for small and medium scale businesses. By providing quick and easier access to funds and with flexible repayment options, we can give businesses the right financial support to help them achieve their next milestone.

We offer Online Seller Finance to e-commerce sellers who operate on online marketplaces. Through a simple online process, the seller can apply for a loan and receive funds in three days. The loan tenure ranges between 90-180 days and is repaid on a biweekly basis. This loan is ideal for sellers who are looking at expanding into other marketplaces, increasing their product portfolio or purchasing higher volumes of stock.

Term Finance is applicable for traditional businesses that have been operating for three years. The loan tenure varies between six months to three years. Small scale manufacturers, retailers and distributors can use this loan to meet short-term investment requirements and finance inventory purchases.

Invoice Finance helps SMEs convert their invoices into cash, that can be channeled into financing business operations. This loan product has an exclusive feature of one-time bullet repayment mode, which might suit the cash-flow needs of several SMEs.

We also provide Merchant Cash Advance which will interest vendors using point-of-sale machines with consistent card settlements. Merchants can receive working capital finance of up to 150% of their monthly card swipes within three days of the loan application.

Our unique product called ‘Pay Later’ is a rolling credit facility, that enables the borrower to make multiple drawdowns within a predefined credit limit. The borrower pays interest on the utilized amount and not on the entire limit. By repaying the amount utilized, the borrower resets the credit limit, thereby instantly availing the facility in whole. Click here to read more about ‘Pay Later’. You could read about the product features by clicking here.

At Capital Float, we have working capital finance options for SMEs across all segments. Visit our website to know more about all our products. Click here to apply now.

Oct 24, 2018

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Practical Implications of Asset Allocation

Asset allocation, despite its importance in portfolio management, is perhaps the last thing on the mind of the novice investor. Before regaling the virtues of asset allocation, a layman’s definition of asset allocation is perhaps warranted, so here goes: asset allocation is a process by which an investor aims to enhance the risk-reward ratio of a portfolio of risky assets. It is important to stress upon two things here: (1) asset allocation is not a one-time exercise, it is an ongoing process; and (2) the use of multiple asset classes to convert a portfolio of risky assets into a benign money-making machine.

Equipped with a basic understanding of the theory behind asset allocation what is stopping the novice investor from going ahead and enhancing portfolio returns? The reason is that the effect of asset of allocation rests largely on finding asset classes whose returns are uncorrelated with one another – the lower the correlation, the better. For instance, it is popular belief that gold is a hedge against inflation i.e. gold prices and inflation rates move in tandem. Therefore, what one loses in purchasing power is compensated by an increase in gold prices. This, however, is a long term phenomenon i.e. one may witness large deviations in the short term.

The key to benefiting from asset allocation, therefore, is to periodically tweak the portfolio for changes in correlations between asset classes and include new ones with the overall objective of enhancing the risk-reward ratio of a given portfolio. Although this may seem like too onerous a task, the novice investor need not worry. A certain level of diversification via asset allocation can be achieved by following the below steps:

  1. Ascertain whether you have surplus money to invest – a simple equation of income less expenses. The figure you ascertain will comprise your overall pie available for asset allocation.
  2. Understand your needs as defined by three key parameters viz. risk appetite, return requirements and time constraints. Your needs are a function of your age, marital status, number of dependants etc.
  3. Identify avenues to invest in the broadest categories of asset classes viz. equity, debt, commodities, real estate and alternative asset classes.
  4. Steps 2 and 3 will require a bit of periodic back and forth because the asset class(es) you choose will depend on your needs. E.g. someone with a higher risk appetite may have a higher percentage of equities in the pie than someone with a lower risk appetite. The latter investor may lean towards debt investments.

In summary, the age-old adage of not putting all of one’s eggs in one’s basket applies here. A systematic approach to asset allocation with disciplined and timely execution can ensure that investors, novice and otherwise, hold well-constructed portfolios and therefore benefit from asset allocation.

Vinay Basavaraj

Vinay boasts of a decade of experience working in both large and small organizations. His roles have ranged from sales to operations and even a stint in academia. He currently manages affairs in capital markets in Capital Float.

Oct 24, 2018