Facing a Temporary Cash Crunch? Get a Short-Term Business Loan

Cash crunches can occur due to unfavorable business environment, changes in government policies (e.g. demonetization and GST) or seasonal shifts in sales. However, with some prudent financial management and the help of FinTech services, you can avoid problems like shortage of working capital loan which are usually associated with a cash crunch.

Here are some ideas to help you manage your finances and get through a cash crunch with relative ease.

Streamlining your Cash Flow

A positive cash flow statement allows you to have ready money when the need arises. Positive cash flow means that the amount of money coming into your business is more than the amount that is going out. Money earned through sale of goods and services and by providing other auxiliary services accounts for the cash that is coming in, while the money you spend on manufacturing, operations, rent etc. is the cash that is going out. Striking a positive balance between the two is not very difficult if you are using data-based metrics to scale your business operations.

Another thing that will help your business in maintaining a positive cash flow is the timely management of your receivables. Most working capital cash crunches arise because of delayed payments from your customers. When you are not getting paid on time for a product or service, you have to rely on alternate finance to run day-to-day operations, which eventually becomes a vicious cycle of debt and revenue shortfalls.

Paying your dues on time is also an important factor that reflects positively or negatively on your cash flow statement. Paying your rent and utility bills, vendor invoices, taxes etc. allows you to avoid penalties and fines, thus saving precious cash resources for business use. However, if you have a habit of missing due dates then it has a negative impact on your cash flow and restricts the amount of ready cash you have.

Getting a Credit Line

A credit line allows you to get a loan from a bank up to a specific limit. However, in this case you pay interest only on the amount you have presently borrowed. For example, if your credit limit is set at ₹ 10 lakh but you have borrowed only ₹ 2 lakh at present, then you will be paying an interest on the borrowed sum only. If you choose to withdraw another ₹ 1 lakh from the bank then your interest payment shifts accordingly to the current outstanding amount i.e. ₹ 3 lakh in this case.

While credit line is a good option for seasoned businesses, there is a downside to it as well. Credit lines are usually extended by traditional banking institutions which require a lot of paperwork and hassle to get one. New and upcoming business usually finds it hard to get a credit line for managing working capital and business expansions.

Using Credit Cards

A credit card issued in the name of your business can also help you overcome a temporary cash crunch. Since, the average repayment period on a credit card is about 21 days after bill generation, you can get up to 50 days of credit by timing your credit card expenses. If you use your business credit card on the first day of the monthly billing period, it gives you enough time to get the money back through revenues and repay it in time.

However, using credit cards also has its risks. If, for some reason, you are unable to repay within the stipulated period, you may find yourself paying a lot of interest.

Apply for a Business Loan

The best way to get your finances in line is by applying for a business loan. Now, a lot of people who own small and medium businesses are wary of getting into a debt trap. But a business loan is totally different than a personal loan or taking money from a private money lender. Business loans tend to have relatively low interest rates and are optimized for a business as per its earnings and expenditure.

If you have a healthy business profile, good credit rating, a reliable supply chain and pay your taxes on time, you can get business loans online from NBFCs like Lendingkart. Online business loans allow you to avoid the bureaucratic hassles of applying for a loan with a bank. They also have a faster processing time. For example, a completed application for business loan can get approved and funded within 3 days’ time by Lendingkart. However, it does require you to have valid proofs of the requisite documents.

Additionally, NBFC loans also come with a renewal facility which lets you borrow the same amount again once you pay off the existing loan. It is better than having a credit line actually, since you also get the facility of flexible EMI payments and increased credit limits. Lendingkart Finance allows you to repay your loan in monthly or bi-weekly payments, letting you adjust your liabilities according to your invoicing cycle. Moreover, as your sales / revenue increases, Lendingkart increases your borrowing limit, giving you access to more funds for working capital management or business expansion. Furthermore, as your relationship with the company matures and your business’s credit score improves, Lendingkart can lower the interest rate on your business loan as well.

NBFCs like Lendingkart are governed by Indian laws and the RBI and come under FinTech services which are especially designed for small and medium businesses. Right now, you can borrow short-term business loans up to ₹ 2 crore from Lendingkart to grow your business.

Concluding Thoughts

Getting small business finance in India has been a difficult thing for many years. With the traditional banking system leaning towards corporate finance, small and medium business owners often resorted to private finance or utilizing their savings for business use. However, the arrival of Internet of Things, e-commerce, business software and FinTech lending platforms like Lendingkart has made it easier for them to get quick finance with favorable interest rates and repayment terms. These services also help businesses in avoiding the risk associated with credit card finance and private lending, while making them more efficient in working capital management through cash flow control and FinTech lending services.

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.

Small Business Trends to follow in 2018

Every year pans out differently for small business owners. The rapidly changing scenes of our growing digital economy means new trends and practices are getting in and out at regular intervals. Take for example the phase of demonetisation and then the implementation of GST, both of these decisions have had quite an impact on small business owners and influenced their financial, technological, and promotional policies.

Today, we are sharing some trends that a small business owner needs to keep an eye on in 2018.

Moving to the Cloud

Software as a solution (SaaS) and cloud based technologies are taking over the world of small, medium and large scale business owners alike. These technologies have marked quite a discernible shift in IT spending as more companies are now embracing the sharing economy instead of spending incredible amounts on in-house IT development. Digitisation and sharing industry is expected to grow even further down the line and if your small business has an online component, you should start looking for ideal partners to integrate your services with the digital world.

Personalised Marketing

With the rise of Big Data and machine learning AI systems, online marketing has become the hotbed of business activities. The humongous amounts of data coming in from digital devices and platforms and the tremendous power of cloud computing has made personalised marketing possible, where a user sees and consumes high-value personalised content at every step. Modern marketing tools from Google are widely used for identifying target audiences and creating location specific content to generate more leads and conversions.

A major driver of the personalised marketing bandwagon is the smartphone. Mobile Ads are now generating more leads than their desktop counterparts and as a small business owner, a mobile friendly website or app can help you gain crucial advantage over the competition.

Similarly, social media marketing and paid ads on platforms like Facebook and Twitter have also emerged as a leading personalised marketing platforms. With billions of people logged in worldwide, these platforms are yet to witness the long-tail growth in the SMB category and can be your way to success.

Digital Finance

A few years ago, the advent of e-commerce was a new era in the world of business and now that distinction has gone to digital finance. Fintech firms have made it easier to get business loans online by offering quicker approvals, lower interest rates, and flexible EMI schedules. Furthermore, re-approvals of loans once they are repaid is now instantaneous. Such facilities have not only improved the ease of doing business but have also spurred economic investment in the country.

Moreover, Fintech firms like Lendingkart are actively educating small business owners on best business practices to make them more agile and street smart in money management. For example, more small business owners are now aware of keeping their private and business finances separated. Also, the number of business owners applying for small ticket working capital loans has increased in recent years. If you are wondering how that makes a difference then it’s about time you too have a closer look at this financial trend.

Small business owners often make the mistake of using the company’s capital for working capital expenditure. Since the working capital expenditure is a recurring expense (on daily, weekly and monthly basis), eventually the SME owner runs out of money to keep the business afloat and doesn’t have any assets to show for all the trouble. On the other hand, business owners who are utilising working capital loans to run their daily operations while using the company’s capital to invest in equipment and establishment have a two-fold advantage. They are running business operations with a loan that will pay for itself and they are investing in assets which will pay for themselves, thus it’s a win-win for them.

Concluding thoughts

Workplaces are going to change significantly in coming years. Digitisation, e-commerce, automation, cloud computing and online finance are no longer just buzz words but stark realities of our time. As a small business owner, embracing the digital economy is the only way forward for you, and the sooner you do it the better will be the results.

To know more about us, visit www.lendingkart.com

EMI Calculators and Business Loans – Facts and Myths

EMI Calculators and 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 disbursals 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 instalments 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:

  • 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.

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.

Business Loan – Importance of Choosing the Right One

The Importance of Choosing the Right Business Loan

When you are considering taking a business loan, there are a lot of things that you check out, both online and offline. One might check out online EMI calculators, ask friends about online business loans, visit the websites of online loan providers and do a comparison of business loan interest rates. This due diligence is an important part of the loan application process and helps you understand the limitations and opportunities offered by different commercial loans.

At Lendingkart, we believe that choosing the right business loan is very important for MSMEs as it helps them in drawing out the full benefits of a loan. Here, we are sharing the points to look for when applying for a business loan online.

Type of Business loan

Before we being, let us have a look at the two types of business loans that you can take from marketplace lenders and banks.

Secured Business Loans: These loans are given in lieu of a collateral from the borrower. So, even if the business is unable to pay the loan amount back, a lender can recover the money by selling or auctioning the asset taken as collateral. The drawback for first-time business loan seekers and startups is that generally, they do not have an asset of value to get a loan. Moreover, even if a new business has an asset of value, taking a loan against it doubles the risk for them.

Unsecured Business Loans: These are business loans without security or collateral. Here, the risk is borne by the lender. However, unsecured business loans do have slightly higher interest rates than secured business loans but not overly so. Unsecured business loans are best suited for small business owners who do not want to risk their personal assets. Moreover, with a good credit rating and financial report, a business can get unsecured business loans at lower interest rates as well.

Review Your Business Loan Requirement

Another thing that you should note before applying for a business loan is the actual requirement of capital for your business. Here’s why –

  • If you apply for a business loan in excess of the actual requirements, it may lead to wastefulness. Also, the higher the amount the greater the EMI and interest repayment. So, while you will be able to fulfill the purpose of your business loan, you will also be generating unnecessary financial strain on your company by taking an excess business loan.
  • On the other hand, applying for a business loan below the actual requirement is also detrimental for your enterprise. One, your need for investment will not be met and you will have to apply for a second business loan or you will be borrowing money at higher interest rates from a private lender. Two, by not generating the cash in time you may lose a business opportunity for which you took the loan and the whole exercise will become a lost cause.

Fulfilling the Basic Criteria

It is very important to apply for business loans that your company can easily service. When you apply for a loan, a hard query is sent to the credit rating agencies. Too many hard queries can bring down your overall credit score. Therefore, applying for a business loan for which your company is completely eligible is quite important. It will not only ensure quick disbursals but will also help you build your credit rating further up.

Getting the EMI Calculations Right

Another important factor when taking a business loan is calculating the EMIs and planning your repayments accordingly. Sometimes you might end up taking a business loan which your business can easily repay and yet miss out on EMI payments. This happens when you do not calculate the EMIs correctly.

For example, you apply for a business loan of ₹10,00,000, which your business can easily repay in 12 months. However, you erroneously opt for an 8-month EMI schedule, which stretches your resources, wasting the benefits of the loan or even leading to missed EMI payments.

Selecting the Right Lending Partner

While banks are a common source of medium and small business loans for entrepreneurs in India, opting for a modern business financing institution might be a better idea for getting working capital finance. Non Banking Financial Companies offer several benefits such as low processing fees, short turnaround times, and easy business loan renewals.

At Lendingkart, we have simplified the loan application process by making it completely online. Lendingkart interest rates are customized based on business prospects of every individual applicant, thus making it easier to get a quick personalized business loan online.

Business Loan Processing Time

The processing time or business loan turnaround time is one of the most important factors to consider when taking a business loan. Banks often have a long process for approval and disbursal of funds. Moreover, banks are still stuck in the age-old methods of filings and paperwork which delays things even more. For example, upon approval of a business loan, the bank will issue a draft in your firm’s name which you will have to deposit in your business account and wait for the credit. So. if you are looking for an instant business loan, applying with a bank may not serve your purpose. Here, selecting a lending partner which can disburse funds electronically via bank transfers will save you both time and money. For example, Lendingkart Finance disburses business loans online within 3-Days of loan application and approval.

Flexibility in Repayments

A business loan offered with the option of a flexible payment schedule is a boon for MSME loan applicants. A commercial loan that lets you choose from a variety of repayment schedules gives you the freedom to focus on business development rather than on payment due dates.

Lendingkart Finance lets you choose a customized repayment schedule so that you can repay your business loan comfortably. If you are doing great in your business, you can even prepay the full loan amount without any pre-closure charges.

Concluding Thoughts

A business takes a loan to invest in its growth, therefore selecting the right business financing product remains critical to a business’s success. Today, there are a variety of online tools which help you assess the various loan products available online and make an informed decision regarding a new business loan. Also, by selecting the right financial partner, you can grow your business exponentially.

Visit our website www.lendingkart.com for a quick unsecured working capital loan quote.