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Business Strategy

Digital Banking in India for Quick Business Loan Approvals

By on

22/05/2018

- Business Strategy

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.

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Business Strategy

Why Online Lenders are a Better Choice

By on

15/03/2018

- Business Strategy

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.
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Business Strategy, Financial Management

Demystifying MSME Loans

By on

19/02/2018

- Business Strategy, Financial Management

MSME Loans – Risky and Profitable Business Types

Micro, Small and Medium Enterprises are the largest employment providers in India. Their contribution to overall employment in the country is pegged at 69%. Also, the MSME sector is responsible for almost 45% of the manufacturing industry and drive 40% of our total exports. These are significant numbers, and therefore, the growth of MSMEs has been a priority of successive Indian governments.

However, for growth, the MSMEs need investment, and the readily available source of investment to them is a business loan. Banks and commercial institutions called non-banking finance companies (NBFCs) are the two main providers of business credit for MSMEs in India. An average Indian MSME needs to pass a number of financial litmus tests before it can get an unsecured business loan or a working capital loan.

Financial institutions give priority to businesses which are considered risk-free and profitable. While it can be argued that every business can be prone to risks, there are a few benchmarks which can assuage the lender’s apprehensions.

A Registered Entity

A registered business entity which complies with the laws of the land establishes a trust in your company on the lender’s part. On the other hand, when a business lacks the necessary statutory paperwork, a lender is right to be apprehensive.

Therefore, getting a business registration will not only get you faster loan approvals, but will also remove any doubts about the legitimacy of your enterprise.

Age of Business

The second factor that distinguishes between a risky and profitable business is its age. While a short-term business idea can also be profitable, the lenders usually require at least 6 months of performance reports before sanctioning a business loan or line of credit.

If you are seeking an MSME loan, then it is better to apply for a loan after completing 6 months or more of operations. Another reason to that is because financial institutions place limits on the period within which you can reapply for a loan. For instance, if you are 5 months into the business and your loan application gets rejected, a lender policy may dictate that you can only apply again after 3 months.

That is another reason why you should never apply for multiple loans from multiple lenders at a time.

Credit History and Profitability

The bank or NBFC that provides unsecured business loans will scrutinize your business account statements to assess the risk or profitability of your venture. If you are unable to maintain a consistent cash flow and retain enough cash at bank to meet your liabilities, the lender will put you in the risky category. In case you are making a good profit, the lender will readily offer loan terms.

Also, if you have a steady cash flow and cash at bank but are not repaying your existing loans on time, it will reflect in your business credit history. Such behavior will lower your credit score and increase the risk factor in a lender’s reckoning.

Type of Business

There are certain types of businesses which are considered risky from an investment point of view. For example, dealing in real-estate, jewelry, precious metals, arms and ammunition, crackers, and other perishable goods involve a high risk-to-return ratio and therefore, given lower preference by a lending firm or bank.

If your business falls into the high-risk category, make sure that you have a solid financial report card to get a business loan.

Getting an MSME Loan for your business

A non-banking financial company is more likely to offer better loan terms for a business because of its in-depth scrutiny and flexible policies towards MSMEs. Lendingkart, a leading NBFC lender in India, offers business loans with customized interest rates along with a flexible EMI schedule.

To know more, visit www.lendingkart.com

 

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Business Strategy, Financial Management

Credit History – How It Gets Better Loan Amounts

By on

09/02/2018

- Business Strategy, Financial Management

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.

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Business Strategy, Financial Management

How to Get a Small Business Loan for a Startup

By on

03/01/2018

- Business Strategy, Financial Management

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:

Going for a bank (most bank offer small business loans these days)
Exploring and applying to non-banking financial institutions
Using alternative methods such as crowd funding
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.
 

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.

Coming to 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:

Slightly more flexible requirements and eligibility criteria
Possibility of applying online very quickly
Quick turnaround time on loan approvals
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!

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.
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