Digital Banking in India for Quick Business Loan Approvals

Digital banking is fast becoming the new normal in India. While there is still a lengthy road ahead for total digital integration of the financial sector, at least the ground work is moving apace with latest technologies such as credit cards, net banking, e-wallets and now UPI as well.

Digital banking is also helping businesses manage their finances in a more transparent and accountable manner. Business managers can now assign daily, weekly and monthly working capital to their executives and keep track of the expenditure in real-time through mobile app based ecosystems. Online banking is facilitating on-the-go money transfer for businesses, giving a veritable boost to their operational agility and saving many man-hours worth of productivity.

Going digital also means that all your financials can be verified through online processes, making it easier to get business loan approvals. For example; e-statements of accounts are now accepted by most financial institutions. Non-banking finance companies such as Lendingkart Finance offer online business loans by evaluating your digital bank statements, keeping the whole process of application to approval of a business loan online.

You can also renew your loan upon repayment by simply clicking on the renewal link in your Lendingkart account. You will receive the pre-approved amount without any paperwork or processing fees when you avail this facility. Here are the steps which will help your business in going digital and enable faster loan approvals for you.

  • Link your Aadhar Card Number to all bank accounts, PAN, and company records.
  • Get digital copies of your business incorporation certificate, TAX compliance reports, GST filing and KYC documents. Save these files in a secure cloud service such as DigiLocker.
  • Keep a track of your CIBIL score, and take steps to improve it further. A CIBIL score above 750 evokes a lender’s confidence in your business.
  • Use online business loan platforms such as Lendingkart Finance to obtain faster working capital loans in India.

Lendingkart also has its own Android business loan app. You can simply download it on your smartphone and apply for a loan within minutes. The app also lets you keep track of your loan’s repayment and EMI due dates.

So, digitise your business today and avail all the benefits that come with it. To know more about Lendingkart interest rates and business loans, click here.

Aadhaar and Business Loans – How They are Connected

Aadhaar Card has become one of the most important personal identification document of our time. The government issued ID is regulated by the Aadhaar Act and managed by the Unique Identification Authority of India. Here are some steps taken by the government to make Aadhaar an integral part of the Indian financial system.

  • Mandatory linking of Aadhar number to personal and business bank accounts.
  • Mandatory linking of Aadhar number to the Permanent Account Number (PAN).
  • Mandatory linking of Aadhar number to mobile numbers.
  • Linking Aadhar number with LPG Connection, Ration Card and Voter ID.

The deep integration of Aadhar number with other financial and identification services means that the Aadhar Card has become a one-for-all KYC document. An Aadhar Card contains your official name, date of birth and registered residential address, plus it is linked to your verified mobile number – all of which are details sought by financial institutions when verifying a loan application. When you link all your documents with your Aadhaar number, it becomes very easy for lenders to verify your personal and financial details. This in turn facilitates faster business loan approvals when you submit Aadhar as a KYC document.

Today, you can get a business loan online in India by submitting only a few essential documents, such as your Aadhar Card, Business Registration Certificate, Business Account Statements and Tax Compliance Certificate. Moreover, Non-Banking Financial Institutions such as Lendingkart Finance, offer business loan interest rates which are more flexible than commercial bank rates.

Lendingkart also promises loan amount disbursal within 3 days of document verification, which is incredibly faster than getting a business loan from a bank. To get a Lendingkart Business Loan you have to simply sign-up for a free-account and provide a few details about your business. Lendingkart loan amount calculator and business loan interest rate calculator will then process your details and offer a custom business loan amount, just for you.

Once you confirm the amount, your business loan application will be processed pending document verification. You can simply upload digital copies of your documents in your account and track the entire business loan application online.

Link your Aadhaar to your bank accounts and mobile numbers today, the deadline for doing so has been extended beyond March 31, 2018 for an indefinite period. But the linking is still mandatory and comes with its own benefits.

To apply for a business loan with Lendingkart, click here.

Difference between Working Capital and Startup Loans

Online Lenders – The Better Choice

Small businesses are increasingly moving towards online business loans and finance options for expanding their operations. Online lenders offer several benefits over financing from commercial banks, such as Flexi EMIs and quick short-ticket finance. This has made these non-banking financial institutions the choice of modern MSMEs.

For example, today, non-banking financial companies like Lendingkart Finance are disbursing working capital loans and unsecured business loans across the country whereas banks are limiting their commercial lending activities.

Here are the reasons why you should apply for a business loan from an NBFC –

Quick Turnaround Time

The one element that defines importance of finance is its timely availability. If you fail to get the requisite funds within the time frame available to you, either the opportunity will be lost or the same activity will cost you more.

Since a majority of small business owners are applying with them, banks take their own time in scrutinizing business loan applications. Thus, the process of loan approvals is slow. NBFCs, on the other hand, specifically cater to the MSME finance. Therefore, they are prompt in completing documentation, verification and disbursals.

E.g., Lendingkart Finance promises loan amount disbursal within 72 hours of documentation.

Completely Online Process

The reason why an NBFC like Lendingkart can approve loans faster is the online only loan application process of the company.

Every modern business has access to digital copies of requisite loan verification documents such as PAN, Aadhar Card, Bank Statements and ITR Certifications. An online lender can thus quickly verify the statutory status of your enterprise and disburse loans where traditional banks continue to struggle with filing and manual paperwork.

Minimal Documentation Required

In an online process, the lender can verify your business and personal information through government’s online portals, hence there is no need for excessive paperwork and documents to be submitted. For example, Lendingkart offers business loans by verifying only the essential documents for identity, address, incorporation and tax compliance of your enterprise.

Flexible Payments and More

The completely online business loan process allows lenders to cut costs associated with manual work, and they are more than happy to pass you the benefits. So, expect lower business loan interest rates, flexible EMI options and reduced processing charges when you get a business loan from an online lender like Lendingkart Finance.

If you are planning a business expansion soon or want to streamline your daily operations with a working capital loan, visit our website; www.lendingkart.com, and sign up for a quick quote.

Why Online Lenders are a Better Choice

Online Lenders – The Better Choice

Small businesses are increasingly moving towards online business loans and finance options for expanding their operations. Online lenders offer several benefits over financing from commercial banks, such as Flexi EMIs and quick short-ticket finance. This has made these non-banking financial institutions the choice of modern MSMEs.

For example, today, non-banking financial companies like Lendingkart Finance are disbursing working capital loans and unsecured business loans across the country whereas banks are limiting their commercial lending activities.

Here are the reasons why you should apply for a business loan from an NBFC –

Quick Turnaround Time

The one element that defines importance of finance is its timely availability. If you fail to get the requisite funds within the time frame available to you, either the opportunity will be lost or the same activity will cost you more.

Since a majority of small business owners are applying with them, banks take their own time in scrutinizing business loan applications. Thus, the process of loan approvals is slow. NBFCs, on the other hand, specifically cater to the MSME finance. Therefore, they are prompt in completing documentation, verification and disbursals.

E.g., Lendingkart Finance promises loan amount disbursal within 72 hours of documentation.

Completely Online Process

The reason why an NBFC like Lendingkart can approve loans faster is the online only loan application process of the company.

Every modern business has access to digital copies of requisite loan verification documents such as PAN, Aadhar Card, Bank Statements and ITR Certifications. An online lender can thus quickly verify the statutory status of your enterprise and disburse loans where traditional banks continue to struggle with filing and manual paperwork.

Minimal Documentation Required

In an online process, the lender can verify your business and personal information through government’s online portals, hence there is no need for excessive paperwork and documents to be submitted. For example, Lendingkart offers business loans by verifying only the essential documents for identity, address, incorporation and tax compliance of your enterprise.

Flexible Payments and More

The completely online business loan process allows lenders to cut costs associated with manual work, and they are more than happy to pass you the benefits. So, expect lower business loan interest rates, flexible EMI options and reduced processing charges when you get a business loan from an online lender like Lendingkart Finance.

If you are planning a business expansion soon or want to streamline your daily operations with a working capital loan, visit our website; www.lendingkart.com, and sign up for a quick quote.

Business Loan Index – What You Need to Know

The rapid growth of MSME sector in India means there is a lot of financial lending activity going on right now. While applying for these unsecured business loans and working capital loans, entrepreneurs are often left asking for explanation of certain banking terms used by the lenders.

In this post, we are covering the commonly used terms by an online lender or an offline commercial institution, when granting business loans. An understanding of these terms will not only help you make an informed decision in the future but will also help you get loan approvals faster, as you explain your business loan preferences to the lender from the very outset.

Fixed Obligations to Income Ratio (FOIR)

The cumulative total of installments of loans already availed by you and still due in relation to your income.

Annual Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every year.

Monthly Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every month.

Daily Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every day.

*The EMI you pay for a daily reducing rate is less than the one you will pay under a monthly reducing rate. Similarly, annual reducing rates will have the highest EMI.

 

Amortization Schedule

A monthly installment has 2 components; the Interest component and the Principal. Amortization schedule shows the amount of interest and principal you will be repaying with each payment.

Prepayment

It means making an early repayment of the loan to reduce the tenure as well as the interest of the loan. Non-banking financial companies like Lendingkart, do not charge pre-closure fees.

EMI

An equated monthly installment is a fixed payment from the borrower to a lender on a specified date of each calendar month. EMIs are used to pay off both interest and principal (see Amortisation Schedule).

If you are looking for a quick business loan, visit us at www.lendingkart.com or download our app on your smartphone.

Business Registration – Helping in Faster Loan Approvals

When your business model is ready to move from its pilot phase, the first thing to do is to register your company. Business registration in India can be done online through the Ministry of Corporate Affairs portal. Apart from giving legality to your operations, there are numerous reasons why you should register your business.

Get Faster Loan Approvals

Business registration makes it easier to raise money through business loans and to get backing from investors. The lenders, such as banks and non-banking finance companies (NBFCs), are more trustful of a legally registered company or business. Hence, making it easier to get faster business loan approvals.

For example, if your company has been registered and is in business for more than 6 months, you can apply for a business loan from Lendingkart – one of the leading NBFCs in India. Lendingkart promises business loan disbursals up to ₹1 crore within 3 days of your document verification.

 

Minimize Your Personal Liability

If you are a sole trader or running a partnership firm, it makes you liable for all aspects of the business, including the debts and losses. The costs of any accidental product defect or service disruption are to be borne by you, which can be financially risky.

After business registration, a company becomes a separate legal entity and setting up one can help protect your personal assets from a business loss.

Decrease Your Tax Liabilities

Since, your business becomes a separate entity, it also becomes a separate tax payer. Additionally, you can apply for tax rebates and subsidies under various programs, such as “Startup India” and “Skill India”, being run for the promotion of MSMEs by the government.

Streamline Ownership

Business registration helps you clearly define the roles of different founding members and their relative share in the business. It will give the company a steady leadership and help in resolving any future conflicts within the top-level management.

Establish a Brand

Through business registration, you will also can establish a brand image among your customers and suppliers. It will also give you a position of strength when dealing with third parties, as the contracts will be between companies rather than owners.

At Lendingkart, we are always happy to share or experience in the MSME finance to help new companies and entrepreneurs. If you are looking for fast business loans, use our website or download the Lendingkart app from Google Play or App Store to get a quick quote.

Credit History – How It Gets Better Loan Amounts

Credit History and its Importance

When you go for a business loan, the one thing that matters the most is your credit history or business credit score. Credit history is basically a statement of your loans and repayments in the past. Credit rating is assigned by rating agencies such as CIBIL and CRISIL.

Here are the benefits of having a good credit history.

 

Faster and Better Business Loans

 

A good credit score indicates that you have been paying your dues regularly and in a timely manner. This bolsters your business’s standing in the eye of the bank or the NBFC.

When the lenders see that your business is in the green of the credit scale, they will offer better loan terms. You will be able to secure a higher loan amount, a lower rate of interest and flexible repayment options with auto renewal terms.

 

Leasing Premium Office Space

The benefits of credit score are not limited to getting working capital loans or commercial loans only. We all know that a premium location can work wonders for your business operations. Landlords of premium properties also ask for credit reports these days to ensure your business’s ability to pay the (higher) rent.

 

Attracting Investors

Apart from business loans, investments are another source of financial help for budding entrepreneurs. A good credit score indicates healthy business practices and a good ROI. Thus, having a good credit history will build investor confidence in your business.

Therefore, it is quite important for a modern business to retain a healthy credit score. There are several things that can help you achieve that such as financial prudence, asset and liability management techniques and business loans.

 

How a business loan can help you maintain a good credit history?

Getting a loan and repaying it in a timely manner will build up your credit history. However, you must be very careful with the terms and conditions for your first business loan.

It might be that the interest rates for your first business loan are on a higher side but flexible repayment terms can offset that disadvantage. For example, Lendingkart Finance offers unsecured business loans up to ₹1 crore with options to repay in fortnightly or monthly instalments. If you want to pre-close your business loan after the first EMI, there are no pre-closure charges as well.

Such loan terms make it easier to repay your working capital loans and get a higher credit score for your business. To know more, visit us at www.lendingkart.com or download the Lendingkart smartphone app.

EMI Calculators and Business Loans – Facts and Myths

When you search the internet for getting a small business loan for your enterprise, a number of business loan EMI calculators and loan offerings pop up in your search results. For a person applying for their first commercial loan, it might get confusing. This post helps you in understanding the formula used by an online EMI calculator to calculate the monthly instalment for your MSME loan. Furthermore, we try to dispel some common myths associated with business loans.

How EMI Calculators Work?

EMI means Equated Monthly Instalment. It is basically the amount you pay every month until the loan is paid in full to the lending institution. Every EMI has two components, principal and interest. Both components are paid off with every consecutive EMI payment.

Here is the formula used for calculating an EMI –

emi calculators formula

Using the formula, you can self determine your monthly EMI on a business loan. Lending institutions such as banks and NBFCs charge a minimum processing fees and other charges for disbursal which are generally deducted from your total loan amount.

Benefits of Business Loans

Unsecured business loans let businesses fund their exigencies and can be used for expansion or to meet working capital requirements. Also, unsecured business loans are one of the quickest ways to raise liquid capital without putting up a collateral or security.

NBFCs such as Lendingkart offer quick renewal of loans upon repayment without any extra charge, which means you can easily maintain your working capital in-flow indefinitely.

Myths Associated with Small Business Loans

There are several rumours and myths that float around the web and in business circles about getting a business loan from an NBFC or banks. However, not everything you see or hear online is true.

Myth 1: Getting a business is the hardest thing to do

Obtaining a business loan is not an insurmountable task. You can reduce a lot of frustration by doing some due diligence before applying for a small business loan. With your documents and eligibility requirements in order, you can easily get an unsecured business loan from an NBFC or a bank.

Lendingkart promises loan amount disbursal’s within 3 days of document verification. What’s more? The process is completely online. You can simply login on the Lendingkart website or mobile app to apply for a business loan.

Myth 2: A Perfect Credit Score is Required for Getting a Business Loan

While your CIBIL score will be taken into account by the lending agency, it does not have to be perfect. A good CIBIL score that is more than 700 is mostly enough to qualify for a business loan. There are a number of other factors such as your business’s health, years of operation and profit margins, which are considered by the lenders.

Myth 3: The Best Way for Getting a Business Loan is Through a Bank

Well, this is no longer true because banks have a very narrow product portfolio considering the flexible credit requirements of modern MSMEs. Therefore, Non Banking Financial Companies are a much better choice for availing quick working capital loans and unsecured business loans.

Along with fast processing times for MSME loans, NBFCs also offer the ease of renewal and waiver of pre-closure charges.

Concluding Thoughts

As the digital reforms to our economy take off, getting online finance for business is going to become even more easier. At Lendingkart, we have already limited the process of getting business loans to a few simple steps. You can use our online EMI calculator to plan and manage your monthly installments as well.

To apply for a business loan, click here.

How to Get a Small Business Loan for a Startup

Small Business Loan to Start a Business

For a new entrepreneur, one of the biggest hurdles to resolve and overcome is the need for capital. Funds are critical to any business venture. Finding ways to raise money can sometimes become a full-time occupation for a business owner. A business loan can be a very important supplement to the life blood of a company.

There are many ways that startup capital can be raised. There is the option of:

  1. Going for a bank (most bank offer small business loans these days)
  2. Exploring and applying to non-banking financial institutions
  3. Using alternative methods such as crowd funding
  4. Approaching angel investors and venture capitalists

For most new businesses the preferred method, out of above, is to apply for loans with banks and other alternative lending institutions.

Eligibility for Startup Business Loan:

While a business loan can be applied for with a government or private bank or with non-banking financial companies, there are some basic eligibility requirements which need to be met. These requirements vary from institution to institution. For example, government loan schemes often have stringent requirements and do no offer the best business loans for new businesses. Since these schemes are typically refinanced by public and private sector banks, the process is slow and full of hassles. On the other hand, NBFCs have startup loan schemes which offer instant business loans with personalized terms. To get a startup business loan from an NBFC like Lendingkart, you need to meet the following eligibility requirements.

  • An established business that has been running for more than 6 months.
  • A minimum turnover of ₹ 90,000 or more in the past 3 months.
  • The type of business should not be categorized under the blacklisted/excluded list for SBA finance.
  • The physical location of the enterprise should not be in the negative location list.
  • The business should not be a trust, NGO or charitable institution.

How to Get a Small Business Loan to Start a Business

As a startup or a business idea in a nascent stage, the best bet to raise funds lies in non-banking financial institutions. It’s recommended to direct one’s energies towards acquiring capital from alternative lenders rather than traditional banks.

Most banks prefer to give loans to small businesses that are already in existence as opposed to someone who is just starting out. Banks prefer to cover risk and it’s for this reason that the documentation and evaluation processes are long drawn and rather stringent. For a new business, sometimes it can be difficult to meet all requirements. This greatly affects the chances of getting the loan approved.

Startup Business Loan Interest Rate

Interest rates are one of the major concerns for a small business owner applying for a business loan. Higher interest rates can raise Both the total repayable amount and the money you pay in each EMI. Since most small businesses are operating at very thin to non-existent margins, high interest rates on business loans can be a major deterring factor for them. In extreme cases, not having access to institutional finance can ultimately cause a startup to cease operations.

Now it is an established fact that startup business loans without collateral have higher interest rates due to the increased risk of default for a lender. However, not every startup owner has significant personal or business assets to collateralize. In such cases, FinTech lenders like Lendingkart Finance can help a startup to lower interest rates on a business loan. Since, FinTech firms operate online, they are able to save money that would go in man-hours. These savings are passed onto the customers in the form of lower interest rates. With Lendingkart, you can get interest rates which are customized for your business’s financial profile.

Document & Requirements for Startup Business Loan

The documents required for getting a loan for startup business also vary from lender to lender. Where a traditional bank or government business loan scheme relies heavily on documentation, a FinTech lender relies on the relevant business and KYC documents instead of asking for unnecessary paperwork. Here again, citing the example of the NBFC, Lendingkart Finance, we are sharing a basic list of documents required for startup loans.

  • Bank statement for the last 6 to 12 months.
  • Proof of business registration such as business registration certificate, GST filing, Gumastadhara, trade license, drug license, TIN or VAT registration.
  • Copy of proprietor’s PAN Card.
  • Copy of proprietor’s Aadhar Card.
  • Copy of the Partnership Deed (if applicable).
  • Copy of the company PAN Card.

All these documents are required in the digital format as Lendingkart’s business loan application process in online ‘only’.

Coming to the benefits of applying for business loans with alternative lenders. They make the process rather hassle-free and easy to get through. Some of the advantages that non-financial banking institutions offer are:

  1. Slightly more flexible requirements and eligibility criteria
  2. Possibility of applying online very quickly
  3. Quick turnaround time on loan approvals
  4. Instant loan disbursement after approvals

Amongst all these the leniency on the eligibility criteria as well as requirements are the most beneficial.

It is helpful to have lenders who will be willing to consider giving out money to owners who may not have a detailed and long credit history. Your top pick should be lenders who focus on your business idea and go-to-market strategy rather than those who focus on cash flow history. Armed with a solid a dynamic business plan, the loan can be applied for still.

Process to get a Small Business Loan to Start a Business

There are different types of business loans available and depending upon the requirement of the business, a relevant one can be sought and applied for. Some popular options of business loan include working capital loans, startup loans, cash advance loans etc.

The first step is to determine how much money is needed and what it is needed for. This will go into the business plan that will be evaluated during the loan approval process.

Once the amount has been determined, the next step is to do some research and seek out the available options in terms of lenders in the market. Choosing a lender is also a process that requires time and effort. Things like credibility of the lender (reputation in the market), interest rate being offered, support system on offer, options of how loans can be re-paid, process of loan application etc. need to be factored in before choosing the one(s) which would be applied for.

Once identified, the next step is to get all the required documentation ready and up to the mark. A great business plan which details out information about the business idea, the profitability of the idea, the scaling plan, the vision behind the idea, projections regarding staff and infrastructure as well as the marketing strategy. A clear and transparent business plan goes a long way in putting the odds in the favorable position.

The final step is to apply and go through the process.

As mentioned, the turnaround time with non-banking financial institutions is rather quick and if all is okay, the loan should come through within a fortnight or less.

Of course, if you have a business that is already 6 months old or more and has a revenue of INR 12 lakhs or more, you can always apply for a working capital loan at Lendingkart! They have a minimum turnaround time of 3 days for eligible businesses.

How to use a Startup Business Loan

The benefits of getting a startup business loans are numerous. You can utilize the money for purposes like business expansion, restocking inventory, working capital management etc.

Startup business loans from NBFCs like Lendingkart give you enough money to invest in multiple things in one go. They have a ticket value which can go up to ₹ 2 crore, helping you launch projects at a faster pace and get into the profit zone.

However, it is also important to remember that you should use the loan funds expressly for the purpose defined in your planning. Spending the loan money unwisely can result into a debt trap for your fledgling business.

What do you think about this article? Please let us know in the comments. If you need to know more about how important it is to choose the right business loan, you can read our article here. We have also written in detail about small business financing options in India and you can read about it here.

Business Loan Interest Rates – Factors and Features to Getting an Optimal Rate

 

How Business Loan Interest Rates Work

 

Ever wonder why business loan interest rates vary from lender to lender? There are several factors based on which every financial lender such as a bank or an NBFC determines the interest rate for any loan. The same holds true for a business loan as well. The more you satisfy these factors the lower your interest rate and accordingly, a higher interest rate is the result of such criteria not being satisfactorily met.

Here are the factors which are considered by banks and NBFCs for determining the interest rate for your business loan application.

Credit Score

 

The most talked about of all factors which determine your eligibility for a business loan and hence your interest rate, is credit score of your organisation. Some financial institutions also account for the credit score of the business owners to gauge their temperament for repaying loans. While having a healthy credit score helps in making the loan process smoother, you can get a business loan with an average credit score if you get the other variables right. The norm is to have a credit score more than 700 to be considered eligible and more than 750 to be favourable.

Age of Your Business

 

If your business is relatively young/new, lenders will consider your business loan as a high-risk entity, and charge you a higher rate of interest. Then again, having a long-running business does not guarantee a lower interest rates, as is covered in the following point.

Profitability of Your Business

 

Everyone likes a profitable business. That is especially true when it comes to lenders. If you are running an efficient organisation with large profit margins, lending institutions will most likely discount your business loan interest rates for it.

Volatility of Your Industry

 

Another important factor considered by lenders while calculating the interest rate for a business loan is the prevailing market conditions in a certain industry. If the market is excessively volatile, the interest rates go up, and if there is a projection of short or long-term stability, the interest rates are likewise relaxed.

Assets and Infrastructure

 

While unsecured business loans do not require a collateral, having a sound infrastructure and assets help if you are applying for loans in the range of six-digit figures.

Small Business Loan Interest Rates – Fixed vs. Variable

 

Based on the above factors, a lender will offer you an interest rate on the loan amount. The rate can be fixed or may fluctuate based on a market model that dictates variable interest rates. Although most people prefer a fixed interest over a variable interest rate, both have their advantages. If the market prospects are looking good, a borrower can save on interest payments by opting for a variable interest rate.

Lendingkart Business Loan Interest Rates

 

At Lendingkart, we understand the needs of our customers and therefore have devised a smart system based on analytics and machine learning. The system allows us to offer customized interest rates to our customer, thus ensuring that every loan application is sanctioned with the lowest possible interest rate. Thus, relieving MSME loan applicants from the dilemma of choosing between fixed and variable interest rates and giving them the best of both worlds.

If you are looking for an online business loan, visit our website to get a quick quote and apply for a business loan in a few simple steps.