Why Fintech Lenders Have Become The Best Choice For Business Finance

As we very well know, the public and private sector banks in the country are burdened by an unprecedented NPA problem at this moment. As a domino effect, correctional measures taken by the banks has made it harder for small and medium enterprises to get business loan approvals. Also, banks in India still lack business specific products and services, which makes loan application a cumbersome and time-consuming process, which is the opposite of what 21st century businesses need.

On the other hand, the Indian economy is booming and there is a start-up boom, which means there is an increased demand for small business finance. This disharmony in demand and supply has given rise to FinTech lending, a new age medium of small business finance.

FinTech lenders like Lendingkart Finance stress on a customer centric business model, where the customer has to make the minimum effort possible to get business finance. The idea is to help business owners focus on growth of their enterprise rather than being burdened by financial worries all the time.

Here are the salient features of FinTech finance which make companies like Lendingkart, the go-to financial solution for small and medium business owners in India.

Minimal documentation

Where banks and traditional financial institutions require a ton of physical documentation before a loan application is put into processing, FinTech firms have a completely online business loan application process. A simple upload of soft copies of essential company documents is all that is required to start a business loan application. Check the KYC documents – what you have and what is needed.

Online application and processing

As mentioned above, the online loan application can be completed in a few simple steps, involving an eligibility check, application submission, evaluation and sanction of loan value, and disbursal. A business owner can track his/her loan application status anytime by logging into the FinTech loan account.

Quick disbursal of funds

Unlike bank loans, FinTech loans are cleared faster due to use of patented big data technologies and a combination of online and offline verification processes which save valuable man-hours. The loan funds are released directly into the business account of borrowers instead of issuing cheques or demand drafts. To give you an example, Lendingkart Finance, one of India’s top FinTech lenders, clears funds within 3 days of application approval.

No penalties or hidden charges

In many instances, a small business may become profitable sooner than original predictions and may want to repay the loan in full. A bank will usually charge a penalty for early repayment of loan to make up for loss of interest. However, FinTech with its cost advantage has no such provision. A borrower can prepay the loan in full with no extra charges. Furthermore, traditional banks and NBFCs generally have an array of hidden costs and charges that are deducted from the principal amount, leaving a small business owner well-short of the funds he/she expected. FinTech lenders on the other hand only have a provision for 2% as processing fees and no other charges to be deducted at all.

So, it is no surprise at all that business owners are moving towards FinTech lending to get working capital loans and business expansion loans, as these new-age lenders offer faster and more reliable business loans and services for the digitally connected businesses of the 21st century.

Why you Should Choose a Business Bank Account for Working Capital

In recent years, the government’s push for going digital has gained traction in both private and public centre enterprises. The financial system, be it securities exchange or taxation or transactional exchange, has come under increased legal scrutiny due to digitisation. In essence, it is a noble venture that aims to do away with age-old methods of paper banking and physical verifications, but as early adopters, many small business owners are finding it a difficult transition. One of the main reasons behind these difficulties is the single-use bank accounts for personal and professional income.

In some cases, the tax authorities and banks have opened inquiries due to a mismatch between an individual’s declared incomes and actual account activity. However, later realizing that most of these account holders are small business owners using savings accounts for their professional use. So, if you are a small business owner who is yet to segregate his/her personal and professional incomes, the time to do so is quite at hand. Also, there are several other benefits of having a business bank account than simply the convenience of avoiding unnecessary legal scrutiny.

One such advantage is having access to quick finance. SMEs in India can use a current account facility for business transactions. These accounts do not generate any interest but do give selective access to working capital finance, albeit with a catch. An business has to pledge an asset as collateral before the funds are credited to its current account. So, in most cases where an SME does not have the assets to secure a working capital loan from a bank, the owner ends up using a personal account for professional use, because there is no perceived need for him to get a current account.

However, the advent of Fintech firms like Lendingkart has changed that perception by offering unsecured business loans for small and medium businesses. Business owners can now have both a current account and an access to working capital finance without pledging company assets. Plus, these loans are offered at relaxed terms and with easy repayment schedules to ease the financial burden on SME owners.

Given this change, the banks too have adapted their current accounts divisions by creating sub-categories that cater to specific business needs. Here are some of the things that are made simpler with a business account for your SME.

  • Digital Banking Services are a part of the current account. These personalized services ensure that you can access your working capital funds anytime, anywhere. Digital banking is also a more transparent way of conducting business than the usual exchange of cash. Incidentally, a lender is also more likely to trust your business credentials if you have a well-maintained current account for your business with digital transactions enabled.
  • Salary Remittance to Employees is also simplified by using a business bank account with facilities like digital approval of paychecks and invoices and real-time transfer of funds to dedicated salary accounts.
  • Checks Payable at Par is another of business bank account advantages that can help in streamlining your financial transactions across state borders.
  • Personalized Forex Rates for businesses who have clientele outside the country are offered by several banks. This facility helps in seamless international exchange of monies.
  • Interest Earnings, while not a traditional feature of current accounts, is also being explored by several public and private sector banks to market themselves as more business savvy alternatives.

So, we hope these are reasons enough for you to switch your business dealings to a current account and reap the benefits for your SME. In case you need a quick business loan you can always apply for one with Lendingkart by visiting our website at Lendingkart.com or downloading the Lendingkart Finance app on your Android device. We offer business loans at lower interest rates without requiring any collateral and disburse funds within 3 days of document verification.

Best Small Business Practices to Adopt in a New Financial Year

A small business owner is always striving to give his/her business the right environment to thrive. Here, environment implies having a good workplace, hiring efficient employees, getting the right equipment, developing fruitful relationships and most important of all, gaining access to proper financing and working capital. The last point is most important because every business needs money to operate and without a proper inflow and outflow of cash, any business will eventually suffer. Incidentally, inadequate access to working capital is the reason behind failure of most small business enterprises in the country and the world today.

In this post, we are sharing some tips that will help you enact financial discipline for your SME. To tip you off, these pointers explain the advantages of good accounting practices that keep your finances streamlined and readily available for use.

  1. Practice Strict Bookkeeping: The cardinal rule for running a successful business is to keep accurate records of all the transactions happening on a day-to-day basis. Financial records give you an accurate picture of your income and expenditure, debts, and, accounts receivables. Which in turn help you in tracking income, paying liabilities, and filing tax returns on time.
  2. Deploy Integrated Accounting Systems: The reach of technology is extending every day and a small business owner will do well to embrace a modern accounting system to integrate his/her small business with the digital economy. Accounting software are in use by most large scale businesses toady and their benefits are time tested. As a small business owner you can also utilise these systems to save accounting costs, improve financial accuracy, and reduce the chances of theft and fraud.
  3. Track your Invoices: Getting paid for the work you have done is all that matters at the end of each day as a small business owner. If you are not getting paid on time, your employees are not getting paid on time, your equipment is not being serviced on time, your rental and utility bills are not paid on time and so on and so forth. Therefore, it is important to have an active invoice tracking system in place. Moreover, generate your invoices as soon as your product or service is delivered instead of waiting till the end of month, this will speed up your invoice clearances significantly and give your working capital a boost.
  4. Follow Generally Accepted Accounting Principles: GAAP are accounting techniques that are pursued by leading accounting and auditing firms and are accepted as a standard procedure in the financial world. By following these principles on reporting and disclosure of financial statements you will not only be able to draw quicker financial decisions but will also instil confidence in a lender or investor for raising funds.
  5. Use Small Ticket Finance for Working Capital: As enumerated at the beginning of this post, having enough money to run daily business is one of the primary concerns of a small business owner. It is quite possible that your business will run into temporary working capital difficulties at the beginning. In such scenarios, never dip your hands into the capital earmarked for equipment or assets to use as working capital. This a vicious cycle which may never end and cause your business to lose precious competitive edge as you fail to invest in proper assets because you used up that capital as working capital. Instead, apply for a working capital loan to finance your short term needs. There are many fintech firms like Lendingkart who offer working capital loans at low interest rates in India. These business loans are short-term, typically one year in duration, and have flexible EMI options to make repayment easier.

In conclusion, financial discipline is necessary if you want your small business to be profitable. The online world offers a lot of tools that you can utilise to bring in transparency and accountability for your small business. Furthermore, online financing options have made it way easier to get working capital loans for a small business and you should utilise these opportunities pro-actively for sustained success in your venture.

To know how to apply for a small business loan from Lendingkart, click here.

5 Tax Saving Tips for Small Business Owners in India

For running your own business in India you require a string of statutory compliances and remember to pay the attached fees and taxes. Even after the implementation of GST last year, the Indian taxation system remains complex as ever and your business ends up paying a significant amount in taxes to the government.

Today, we are sharing 5 tax saving tips for Indian business owners, including best practices to help you earn more from your business venture.

Claiming  benefits on a housing loan

If you have an active home loan, you can claim its interest to be a deduction from house property and claim the principal as deduction under Section 80C (limited to a maximum of Rs. 150,000).  This will effectively reduce your overall taxable income by reducing your ‘income from house property’ in ITR.

Electronic payment of municipal taxes

You can also claim the taxes paid to your municipal corporation or municipality as deductions under income from house property. You simply need to keep a record of the payments and copy of receipts. Electronic payment of municipal taxes ensures that your bank account have the necessary proof in case you damage or lose the receipts.

Switch to smart and efficient accounting

Since most small businesses in India are labour intensive enterprises, they are used to pay wages in cash. Sometimes, as much as 40% of a small business’s manufacturing expenses may be going into direct and indirect wages. If your business fails to keep track of these expenses, then your profit margins increase because of unrecorded entries in your expenses account and you are liable to pay more taxes. So if you have been neglecting bookkeeping for a while now, it is time to take a closer look at the state of affairs in your accounts department. You can also take help of a free accounting software to make matters easier.

Claiming Additional Depreciation

The Income Tax Act allows a claim of additional 20% depreciation on new machinery installed during the year. The provision meant for the benefit of certain notified industries under the Section 35AD and it is only applicable for the first year of a new machine or equipment’s operation. By claiming the additional depreciation @20% you can claim save that amount as expenses incurred.

Deducting TDS

There are certain transactions which require you to deduct the tax at source, such as payments made as commission to your business agent or a freelance employee. If you fail to deduct the TDS the whole amount becomes inadmissible for claiming tax rebates. So make sure that you keep track of all such transactions and deduct tax @10% for them.

So these are some tips / best business practices which will allow you to save more by reducing your tax burden. In case you have been a little less prudent with accounts management in the past, it is never too late to adopt these practices. In the meanwhile, you can also apply for short term business loans to get out of current financial troubles and start your business’s recovery. To know more about fast business loans, click here.

Grow Your Business with Quick Small Business Loans

Every business follows a different approach towards loans and institutional finance. As an independent business owner you may or may not have borrowed money in the past to achieve your business goals. If you have not taken a business loan in the past, it is but natural to be a little averse to taking up a liability, however, sometimes a loan is a risk worth taking.

By utilising the loan funds for the right reasons, at the right time, you can give your business a veritable boost. Here are a few reasons for taking a business loan that you should consider

Expanding your facility or getting a second site: If your business has been growing year on year, expansion is a logical step to consider. You can utilise business loan funds for restructuring and expanding the original site or expand your venture to a second or even third site.
Improving your credit ranking: Borrowing loans and timely repaying them opens the path for larger institutional finance in the future. As good repayment record will have a positive effect on your credit rating, establishing you as a bona fide borrower. This in-turn will allow larger borrowings two or three years down the line, when your business needs another round of funding.
Buying specialised tools and equipment: If you already have ample space at the existing site, then you can also consider using the funds from your business loan for purchasing new stock or equipment. Sometimes using latest technology for production and management of your business can result in huge cost savings.
Taking advantage of a golden opportunity: Well a good opportunity seldom knocks twice, so if an amazing idea or opportunity comes your way which requires fast funds, a business loan can help you capitalise on it.
Hiring and talent acquisition: Every successful business needs talented hands and business owners agree unanimously on the fact that their people are the greatest business assets for them. So, don’t lose your best employees for the want of funds. Business loans also allow you to hire new talent and expand your enterprise.
Loans for working capital management: A business can still sustain itself in face of a temporary lack of profits but lack of working capital may force you to pull down the shutters. Cover the shortfall in your working capital with an unsecured business loan to get out of temporary sticky situations.

Where can you apply for unsecured small business loans?

Small businesses often turn to banks for unsecured business loans. But banks have a slow and bureaucratic system for application, verification and approval of small business loans. It may take as many as 20 days for a bank to process and approve your business loan application.

An alternative is provided by new lending products like Lendingkart for business loans in India. A business loan application with Lendingkart can get approved within 24 hours if all your documents and financial details are in order, giving you immediate access to the funds you need.

Furthermore, the application process is completely online which Lendingkart is able to save money on manual labour and in turn transfers the benefits to customers in the form of low interest rate on small business loans. As a borrower, it is a win-win for you.

The best thing about getting a business loan from Lendingkart

Lendingkart offers unsecured business loans.

When you take a loan from a bank, it is a secured business loan, which means you have to give the bank an asset of equal or more value as a collateral. In case you are unable to repay the loan timely, the bank can take over the asset and recover its costs.

An unsecured business loan doesn’t require any collateral, which is what Lendingkart offers. Thus, your capital is not at risk when you take a business loan from Lendingkart.

You can now apply for a business loan from the Lendingkart smartphone app. To know more and apply for Lendingkart business loans, click here.