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General Finance

The Difference between Startup and Working Capital Loans


Startup capital or loan is the amount that is needed to setup a business operation whereas a Working Capital Loan is the amount needed to run the business.

Companies looking for Startup Capital cannot get finance through invoice factoring because they do not have an open Accounts Receivable. That is the reason these companies require assistance from a government plan, such as the Startup India and Make in India initiatives, or from an Angel Investor.

A Working Capital Loan is different. Your working capital is the amount needed for running your day to day operations in a productive manner. Ideally, a business earns its working capital through daily transactions. However, there are several scenarios under which deriving your working capital funds from the sale of products and services becomes difficult. For example, if your profit margins are not enough to cover other expenses or your organisation suffers from over-employment or there is a considerable delay between the time of sale and time of receiving payments.

Anyhow, such scenarios necessitate applying for a working capital loan.

For Investment in Your Startup

When you seek investment under the government sponsored schemes, you need to satisfy certain conditions set by the policy.  For example, under the Startup India initiative, you need to satisfy up to 6 conditions to just qualify as a startup. After which, you have to go through another process for funds credit.

It is a time-consuming process if you are seeking an immediate access to funds for execution or management of your business goals. On the other hand, if your business has had a successful 6 months run, you can go for a Lendingkart unsecured business loan.

Lendingkart’s collateral-free business loans offer quick short-term finance for your budding venture. These business loans are offered with flexible interest rates to ensure that your re-payment schedule is easily manageable and business friendly.

For Getting Working Capital Loans

Lendingkart Finance offers working capital loans of up to ₹1 crore for small businesses across India. The Lendingkart business loan application process is completely online and can be completed within minutes after signing up.

We require minimal documentation and sanction business loan disbursals within 3 days of document verification. Simply download the Lendingkart app on your smartphone or visit our website to apply for one.
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General Finance

Business Loan Index – Terms used by Lenders

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 instalments 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.

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General Finance

How Business Registration Helps 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.

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Financial Management, General Finance

Small and medium enterprises in India are growing at an exponential rate. The Indian Government has launched several schemes for their benefit. Furthermore, the introduction of GST and online portals has increased the ease of doing business in India. You can now quickly gain approvals for new projects or much needed expansions. However, to get things started you will need ready capital for investment, and at Lendingkart Finance, we do just that for you. Lendingkart offers attractive interest rates in the range of 18-27% for short term SME loans.

With Lendingkart’s unsecured business loans, you can get small-ticket short term investment on-the-go. We have made the process completely online so that you can monitor the progress of your application in real-time. Lendingkart loans are approved for businesses having profitability in 2 previous financial years with a minimum annual turnover of Rs. 6,00,000. Other factors such as applicant’s age, income tax returns, and business stability are also used in determining the loan eligibility.

 

Easily Calculate Your EMIs

We offer a business loan EMI calculator which you can use to get an idea of EMI amounts you will be paying. The EMI is calculated based on the Lendingkart interest rate offered to you, the loan amount and tenure. For example, the EMI payable for a one lakh rupee loan, taken for 12-months at 18% interest per annum, will be Rs. 9,168. In similar scenario, if the interest rate is 27% p.a., then the EMI will be Rs. 9,602.

Attractive interest rates for SME loans. Find yours through the EMI Calculator

 

Needless to say, the higher the amount of your loan, the higher the amount of your EMI. The EMI calculator also helps you in budgeting and adjusting your finances to meet your EMI payment schedules.

 

The benefits of taking a business loan from Lendingkart

 

There are several benefits offered by Lendingkart in comparison to banks providing similar loans.

Attractive Interest Rates from Lendingkart

 

Applying for an SME Loan

Terms

Attractive Interest Rate

18% to 27%*

One time Processing Charge

2% of the Loan amount

Loan Duration

Minimum: 1 month, Maximum: 1 year

Loan Amount (min to max.)

Rs. 50,000 to 1 Crore

Part Prepayment Charges

NA

Pre-closure Charges

Nil**

 

*based on your business’s health and credit score

**Pre-closures are only allowed after the first EMI has been paid in full

 

We have a proprietary method of calculating interest rates which evaluates your loan application using advanced analytics. By enabling technical inputs and outputs we have made the process of calculating interest rates faster and more accurate. The attractive interest rates are calculated by factoring in several things listed below and are different for every partner SME.

  1. Loan Amount: The amount that you apply for, pending approval, counts towards deciding the interest rate. Generally, the higher the amount of loan, higher the possibility of a lesser interest rate from Lendingkart.
  2. CIBIL Ranking: If your CIBIL score and history are good, the interest rate we charge will be lower and vice versa.
  3. Balance Sheet: If you are earning good margins, we will take that in consideration while deciding interest rates on your loan.
  4. Age of Business: For long running enterprises, we offer special discounted SME loan rates.

Business Friendly Loan Approval and Pre-closure Charges

 

We do not believe in charging extraneous charges and fees from our customers. That’s why we have one of the friendliest pre-closure policies – there are no pre-closure charges. After paying the first EMI, you can prepay the full loan amount, anytime. Added with the benefit of attractive interest rates, it is a great way to finance any short term business requirement.

Also, we only charge 2% of the loan amount plus service tax as processing fee. It’s a one-time fee which you don’t have to pay if you choose to reapply for the same loan amount upon closing.

Minimum documentation and turnaround time

 

When applying for a business loan with Lendingkart, you have to submit only a handful of documents. And we process every loan application within 3 days of document verification.

Documents required by us are:

  1. Address proof (Aadhar Card, Voter ID, Bank Statement, Proof of registration, etc.)
  2. Identity Proof (Passport, Aadhar Card, Driving Licence, PAN, etc.)
  3. Proof of Business (PAN, GST Registration, Trade License, Registration Certificate issued by RBI or SEBI)
  4. Copy of PAN card and Income Tax Returns for last 24 months
  5. Bank Statement of last 12 months

 

To know more about applying for a business loan with Lendingkart, head over to our website and sign-up for a free account.

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Business Strategy, General Finance

As an entrepreneur in today’s times, it is important to understand the value of customer engagement and how it is linked directly to the success of your business. An interactive relationship with your customers helps boost positive brand loyalty and this goes a long way in boosting the overall credibility of your business.

 

The advent and consequently, the rise of social media has led to customers having almost direct access to businesses and brands that they purchase from. Leveraging this channel in the most optimal possible way should be an integral part of your business strategy and planning.

 

While there area number of ways to connect and engage with your customers, social media handles are the most popular and effective. The ease of access and your clientele knowing that they can reach out to you with any sort of comment, suggestion, complaint or idea gives them a feeling of being heard and helps reiterate how important they are to you.

 

Customer engagement through social media can be promoted in many ways:

 

By sharing useful content: Good content is a mix of information, releases, your own product promotions and interesting articles or blogs that generate interesting discussions about your industry. Customers get bored with pages that only highlight their products. Think of variety when posting to sustain interest.

 

Being answerable: This is very critical as a big part of customer engagement includes making sure you reply to any and every comment, rant, review or suggestion that has been posted on your handles. Don’t let this slip and this can really have a negative effect if not taken care of.

 

Regularity: Find the right balance when it comes to posting. Don’t spam but post regularly enough so that your customers do not forget about you. There is a thin line and it is important to have a dedicated resource looking after your social media platforms.

 

Customer engagement helps returns and refunds. Here’s how:

 

Most customers are looking for quick resolution when it comes to returns and refunds. Including this aspect in the customer engagement strategy is a must.

 

Make it easy- Whether it is online or through a customer call, make it easy for your customers to return products and apply for refunds. Positive customers engagement is fuelled by not just the sale but also the returns that needs o be taken care of very sensitively. In fact, this is one thing that can prove to be the Achilles heels of many a businesses.

 

Define the terms clearly: Customers need to know what the terms for refund and returns are and this needs to be very clear, transparent and out there through the entire sales process. Find ways to get the information to your clients in advance so that there are no rude surprises for them. This will count as a credible point when it comes to rating your customer engagement.

 

Staff: Nothing can be more critical to your customer engagement than your staff. And this means both online and offline or via phone. Your staff needs to be knowledgeable about your products and return policies and be able to handle your customers in the utmost polite manner. A bad experience with a staff member can damage the reputation of a business immensely and this is especially true during returns as customers are already on the back foot and anticipating problems. Alternatively, a positive experience here can lead to a very healthy and long customer association.

 

Evidently, customer engagement cannot be treated as a by the way, one the side kind of activity. It has to be a full blown, thought through process that involves methods that are effective, innovative and garner successful results. There is no running away from this. This concludes our series on Customer Engagement. If you haven’t read the previous articles, you can visit Why Customer Engagement Is Important? Part 1 – Rave Reviews and Rants and Why Customer Engagement Is Important? Part 1 – Revenue Impact. We’d love to know your thoughts in the comments.

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