The Role of Textile Sector and How to get loan for textile business

Did you know? India has one of the oldest textile industries in the world. Throughout the course of world history, Indian textiles have remained a fascination in the middle-eastern and western societies. Today, textiles exports contribute almost 11 per cent to the total export by the country and the textiles industry provides employment for millions. Approximately, there are 40 million workers in the textiles industry and another 60 million who are indirectly associated with it.

The textile industry in India has a couple of broad segments. The first is the unorganized segment which includes handloom, handicraft and sericulture. These are operated at smaller levels and often manufactured through traditional tools and methods. Then there is the larger organized segment which includes spinning, apparel and garments manufacturing for local and international clients. Manufacturing in this segment is based on the use of modern machinery and techniques like the economies of scale.

In terms of market size, the Indian textiles industry is worth USD 108 billion, which is expected to reach USD 223 billion by 2021. Apart from providing employment to an estimated 100 million people, the industry contributes almost 5 per cent to the country’s Gross Domestic Product and 14 per cent to the Index of Industrial Production. Currently, the industry is witnessing a growth in investment and market activity. The industry has attracted Foreign Direct Investments to the tune of USD 1.85 billion between April 2000 and March 2016. The Government of India has also come up with several export promotion policies for the industry, allowing up to 100 percent FDI in the sector under the automatic rule. Also, there are plans to set up India’s first integrated textiles city in the state of Andhra Pradesh.

The path ahead for the Indian Small and Medium Enterprises in the Textiles Industry

The future looks bright for the Indian textile industry both for the large-scale and the SME section. There is a marked increase in domestic consumption and export demand also looks strong. As consumerism and disposable income of the middle-class continue to rise, more new international players are expected to enter the market. For example, Marks & Spencer, Guess, and Next have come to India within the last decade. India’s organized apparel segment is expected to grow at a Compound Annual Growth Rate of over 13 percent over a 10-year period. The SME segment, that deals mainly in handloom, handicraft and sericulture, is also benefiting from e-commerce. Several online platforms have come up in the last few years which are promoting the domestic textiles and have helped in expanding their customer reach in India and abroad.

Getting a loan for textile business

If you are a small business owner in the textile industry, you can benefit from a slew of government initiatives, such as:

  • The tie-up between the Department of Handlooms and Textiles has and nine e-commerce players and 70 retailers for increasing the reach of handlooms products. It will generate better prices and continuous business for SMEs in the textiles sector, and facilitate direct access to markets and consumers for small weavers.
  • In addition to the 5 percent interest reimbursement provided for specified technical textile machinery, the Revised Restructured Technology Upgradation Fund Scheme (RRTUFS) now covers manufacturing of major machinery for technical textiles for 5 percent interest reimbursement and 10 percent capital subsidy.
  • The Scheme for Integrated Textile Parks (SITP) provides aid to the extent of 40 percent (with a limit up to ₹ 40 crores) for the creation of infrastructure in the parks.
  • The major machinery for production of technical textiles gets a concessional customs duty of 5 percent.
  • Specified technical textile products are covered under the Focus Product Scheme. The export of these products is entitled to a duty credit scrip equivalent to 2 percent of freight on board (FOB) value.

Apart from these benefits, you can always apply for a small business loan for textile business if you need financial assistance. Nowadays, non-banking financial institutions like Lendingkart Finance are offering instant business loans to the tune of ₹ 2 crores for promising small and medium businesses. As opposed to bank loans, these RBI approved small business loans are faster and easier to obtain. Salient features of these small business loans for textile businesses include,

Features of these small business loans for textile businesses

  • Ticket size of ₹ 50,000 to ₹ 2 crores.
  • Quick turnaround time which can be as low as 3 days.
  • Online application, approval, and tracking.
  • Customized interest rates to match your credit profile.
  • Flexible repayments through monthly or bi-weekly installments.
  • Repayment period of 1 to 24 months.
  • Processing fee of 1 to 2 per cent with no other charges.
  • Zero-prepayment charges.
  • Loan renewal for the same amount upon full repayment.

As you can see, the ticket size and repayment window make these loans ideal for various business activities such as equipment purchase, restocking inventory, working capital management and business expansion. You can use a Lendingkart small business loan to perform any or all of the critical business tasks which require immediate financial attention. The loan application process is quite straightforward and takes only 15 minutes to complete. Simply log in at www.lendingkart.com or download the Lendingkart Finance app on your Android device to get started.

The 9 Best Resources for Startup Loans in India

A new business generally requires some form of business finance to take off from the ground. With the opening up of markets since 1991, the financial services market in India has seen exponential growth in terms of products and services. Nowadays, there are many ways a small business owner can raise capital for his/her enterprise. In today’s post, we are going to review nine such financial vehicles that allow a startup to raise quick business loans.

A line of Credit:

The line of credit is a facility offered by your banking or financial partner, allowing you to withdraw funds as needed up to a limit. So, instead of receiving the full amount as a one-time term loan, you get the funds on a need-to-use basis. One benefit of this mode of startup finance is that the interest is charged only on the balance currently borrowed by you. The line of credit is usually used for short-term working capital to help improve the cash-flow or finance unexpected expenses.

Small Business Credit Cards:

Business credit cards can be a very cost-effective way to finance your startup business as many of these products come with zero per cent APR introductory periods, cashback and rewards programs. These cards can be used for covering immediate expenses while you wait for payments from customers and sometimes help in preserving cash for working capital or other requirements. However, small business credit cards are not ideal for funding large capital investments due to the very short-term nature of the loan and high-interest rates.

Peer-to-peer Lending:

Online P2P platforms connect you directly to individuals and institutions looking for investment. These business loans are generally known as P2P finance and help you reach lots of debt/income investors. The platform charges a processing fee and interest rates on P2P finance can go up to 26% because of the risk involved for the lenders. A good credit score is also a pre-requisite to borrow from a P2P lending site.

Equipment Financing:

You can use equipment financing to purchase equipment, machinery or vehicles for business use. Equipment finance is available through dealerships, banks and online equipment finance providers. Typically, the business loan is given by keeping the purchased equipment, machinery or vehicles as collateral and a processing fee is also charged. The main benefit of equipment finance is that you get the ownership of a valuable asset, the payments for which are spread over a period of time (generally one to five years). Equipment finance is a good choice for startup businesses which rely on equipment or machinery.

Small Business Loans for Startups:

Short-term small business loans are one of the best ways to finance your startup business. These loans are offered by banks and other RBI governed financial service providers. Small business loans from non-banking financial companies like Lendingkart come with features that are optimized for modern enterprises. For example, Lendingkart’s small business loans have a ticket size of ₹ 50,000 to ₹ 2 crores, which can be repaid in monthly or biweekly instalments of up to 24 months. Moreover, these loans come with lower interest rates and zero prepayment penalties. Lendingkart also offers a quick turnaround time for approving and disbursing your small business loan when compared to the time and hassle you face in applying for a business loan with a bank. You can get the money in your bank within 3 days of application if all your information and documents are in order.

The benefit of a small business loan of up to ₹ 2 crores is that it can be utilized for several things simultaneously, such as inventory or equipment purchase, streamlining your working capital and paying off immediate debts. A startup which has been in business for more than 6 months can apply for a small business loan with Lendingkart Finance.

Micro Loans:

These loans are generally given to very small business startups who have a less than ideal credit rating and no assets to collateralize. In India, these loans are offered by government programs like the Mudra Yojna. However, the loan value is often less than ₹ 50,000 which makes these loans not very useful for enterprising individuals. A plus point of microloans is that they are given at lower interest rates and are unsecured.

Crowdfunding:

Online crowdfunding platforms allow you to raise small amounts of money from a large number of people. However, there is a difference between P2P platforms and crowdfunding platforms. In crowdfunding finance, you are not required to pay back the money you get. It is a kind of donation towards your entrepreneurial cause by people interested in your idea. But sometimes, crowdfunding terms may include a provision for equity share if the startup becomes successful. The crowdfunding platforms usually charge a one-time percentage-based fee from the capital you raise.

Angel Investors:

Wealthy individuals who invest in your business in exchange for an ownership stake are often called Angel Investors due to the debt-free nature of the finance. However, money raised from Angel Investors is often less than the money you can raise through venture capital. On the plus side, Angel Investors are less likely to interfere with your role in the organization.

Venture Capital:

Venture capitalists are a group of rich individuals/investors who operate as firm. VCs, give you debt-free finance in exchange for a percentage of equity in the enterprise. However, VCs are more hands-on in their approach and often induce an organizational change in your business to retrieve their investment. Also, funding by venture capitalists is given in several rounds, such as a seed round (generally known as Series A), and subsequent payments upon achievement of growth targets.

So, this concludes our list of financial vehicles you can tap into for getting a startup loan or investment. Our recommendation is in favour of small business loans from NBFCs because of the versatility and flexibility of this particular financial product. And, the unsecured nature of these business loans makes the deal even sweeter for small businesses and startups who lack assets for collateralization.

To know more about small business loans for startups, visit us at www.lendingkart.com.

How a Business Loan Can Keep Your Enterprise out of Trouble?

The biggest question to answer when you apply for a business loan is how that amount is going to be useful for your business. If you do not have a definitive answer to that particular questions, perhaps you should hold-off getting a business loan.

The way a business loan can help your business depends on what type of financing you are considering. It also depends on the type of your business and its overall financial health. To get more insights into the matter of business finance and its impact on your business, let us have a look at the type of business loans which are helpful for your business.

Term Loans

A term loan is the traditional loan which is acquired through a bank or a non-banking financial company to address your capital needs. The loan includes a principal amount and the interest that you will pay-off over a period of time. A term loan is usually given for a period of 1 year to 5 years. Term loans often have lower interest rates than short-term business loans due to the longer repayment cycle and less risk for the lender.

Short-term Business Loans

Next up is the above-mentioned short-term loan which is a condensed version of a term loan. The duration of these loans ranges up to 18 months and they have a slightly higher interest rates due to the reduced repayment window and higher risk involved for the lender. However, short-term loans do give you the advantage of repaying your debt faster and getting more lenient credit terms on your next loan. Short-term finance is also a great way to improve your business credit score quickly.

Equipment Financing

These loans are approved for the purchase of critical equipment for a business. In most cases, the purchased equipment also works as the collateral or security for the amount due. An advantage of equipment financing is that you can secure up to 100% of the equipment value as a loan. Since there is collateral involved, equipment financing also gives you the advantage of lower interest rates on your business loan.

Revolving Credit

Some banks and NBFCs offer their trusted customers with a line of credit. It allows the partner businesses to withdraw sums in excess of their current business account balance. The excess amount, up to a limit, is considered a loan and attracts interest. The facility of credit is restored once the customer repays the overdraft amount with interest. This is quite useful for small businesses who have unstructured cash-flow from invoices.

How these loans help your business?

  • Term loans offer easy repayment and a relaxed repayment period in excess of 1 year. These are high-value loans and hence allow you to make large investments for growing your business.
  • Short-term loans offer quick finance for a limited period of time and are great for smaller expansion plans, streamlining working capital and taking advantage of immediate business opportunities.
  • Equipment financing lowers the cost of upgrading your production lines and hence help you save time, increase the quality and quantity of production and create goodwill for your business.
  • Revolving credit or line of credit is more of a fallback mechanism when your business needs that little bit of extra funding to manage production and sales channels.

All-in-one business loans from Lendingkart

Lendingkart Finance offers all-in-one business loans which include the benefits offered by term loans, short-term loans, equipment financing, and revolving credit. Lendingkart offers business loans up to ₹ 1 Crore for a period of up to 1 years for eligible businesses. The loan terms are decided through business analytics, which means that you get the best available rates as per your business type and recent financial performance.

Lendingkart business loans also allow you to select flexible repayment options such as bi-weekly or monthly installments to service your loan. Furthermore, you can choose to repay the entire loan without any prepayment penalties after the payment of first EMI or bi-weekly installment.

Benefits of Lendingkart business loans in comparison to the loan products listed above.

  • High ticket value of up to ₹ 1 Crore with a 1-year repayment window to match the benefits offered by term loans.
  • Ticket value starting at ₹ 50,000 to give MSME borrowers the option of small-ticket short-term finance of 1-12 months. The difference in minimum and maximum ticket size also increases the probability of getting institutional finance for SMEs.
  • Once again, the higher ticket value and unsecured nature of Lendingkart business loans means that your business can acquire costly equipment without the risk that comes with collateralizing your business finance.
  • Auto-renewal of business loan amount upon full-repayment without any additional documentation or processing charges. Meaning, Lendingkart business loans can act as revolving credit, that is higher than an overdraft facility, for your business.

Other benefits of Lendingkart business loans include, online only application and approval process which reduces the turnaround to just 3-days, and minimal processing charges of 1-2% based on the principal amount of your loan. Interested? To apply for a business loan, visit us today, at www.lendingkart.com.

Reasons Why You Might Be Failing At Working Capital Management

Small and medium enterprises are particularly vulnerable to improper management of their assets and liabilities. Most SME assets are in the form of current assets and their current liabilities are often a source of external finance, given the difficulties of getting a business loan for such enterprises. Oftentimes, SMEs have to resort to vendor financing when facing a capital crunch. Therefore, efficient working capital management becomes critical for the success of a small business in India.

Working capital is the difference between your current assets and current liabilities. It is primarily used for supporting the day to day financial operations, such as the purchase of stock, salary and wage payments, and financing credit sales. In essence, working capital is the lifeblood of a business.

Working capital management is the managerial strategy for creating a balance between the two aspects of working capital i.e. current assets and current liabilities. Working capital management ensures that there is enough cash flow for meeting short-term debt and operating expenses. Efficient management of working capital is a part of effective corporate strategies and helps in creating shareholder value. However, maintaining the liquidity of a firm is also an important part of working capital management as increasing profits at the cost of liquidity can also have serious ramifications for an SME. In case, profits are ignored, a firm cannot conduct operations for long, and if liquidity is ignored, the firm may face insolvency. So, working capital management should be given due consideration in strategic management of a company.

If your cash flow is constantly at odds with your working capital requirements, the reason might be a de-synchronization between one or more of working capital determinants. Here is a list of working capital determinants / reasons why your firm is struggling to acquire the necessary working capital buffer for operational expenses and short-term debt obligations.

Nature of business:

The type of business your company is involved in does have an impact on your overall working capital requirements. For example, trading and investment firms very little capital in form of fixed assets but do require larger working capital funds for operation. On the other hand, firms offering public utilities do not have a huge working capital requirement but do need to invest in fixed assets. So, the first thing you need to check is whether the nature of your business is properly aligned with your financial policy for generating the working capital.

Sales and demand:

Working capital also has a relationship with the volume of sales. Again, this relationship varies based on the type of your business but in most cases requires the deployment of fixed assets to spur growth. So, if yours is a growing enterprise, make plans in advance for a continuous change in working capital needs – and how you are going to meet them – as per the existing sales and demand scenario.

Manufacturing technology:

If you are manufacturing products, using the right technology is crucial for better working capital management in your enterprise. Manufacturing has a direct relationship with increase or decrease in working capital funds. The longer the manufacturing cycle, the higher the firm’s working capital requirements. This, pick and choose the right technology to streamline your working capital and manufacturing process.

Credit policy:

If you have a credit policy that differs too much from the norms in your industry, you may find yourself having working capital troubles. It is good to be able to offer better credit terms to your buyers as the part of your customer acquisition strategies, but it is similarly important to limit that flexibility within the constant of industry norms and practices.

Operating efficiency:

Another factor that relates to the delivery of goods and services is the operating efficiency of your business. It has a direct effect on your working capital requirements. Pushing your operating efficiency to the maximum will not only decrease your working capital requirements but also improve your profit margins.

Price Level Changes:

Change in the price of raw materials, packaging for finished goods, transportation and sales costs, can also increase or decrease your working capital requirements. Being able to anticipate and adjust accordingly to these price level changes is a part of effective working capital management. If you are being let down by the volatile price level changes, consider hiring an expert to stabilize your working capital and other financials.

Supplier Credit:

A firm’s working capital requirements are also subject to supplier credit. If your supplier trusts you enough to grant higher credit in lieu of raw or unfinished goods and services, it can reduce your immediate working capital needs. So, cultivate stronger relationships with select suppliers instead of regularly switching from one to other.

Institutional Finance:

Lastly, the type of institute credit available for your business also has an effect on working capital requirements. If you can get business loans easily, your working capital needs will not suffer. But if your business loan applications are continuously being put on hold, it may not bode well for your working capital and cash flow. In such cases, try applying for a business loan with non-banking financial companies offering working capital finance for SMEs. For example, Lendingkart Finance is a FinTech firm that offers business loans up to ₹ 1 crore without any collateral requirements. Lendingkart’s business loan offers include approval and disbursal within 3-days of verification, which makes it instant business loan, faster even then the Indian government’s ‘MSME 59 minutes loan’ offer.

We hope, these pointers for identifying working capital issues will help you manage your organisation better and grow organically. To know more about working capital finance and how you can get small ticket short-term finance for your growing business, email us at info@lendingkart.com or call us on 0124-3864889.

Finding the Best Option for Refinancing Your Business Loan

Business loans allow a small or medium enterprise to expand its operations, streamline working capital, and boost manufacturing. In India, both banks and non-banking financial companies offer business loans and loan refinancing for SMEs. Loan refinancing can help a business save more money in repayments of an existing loan. However, selecting the right lending partner is crucial for a loan refinancing to be of benefit for your enterprise.

Deciding if loan refinancing is right for your business or not

Most businesses apply for business loan refinancing because they wish to save money by getting better interest rates for the remaining principal amount of an existing business loan. Obtaining a loan refinancing deal at lower interest rates is possible in two scenarios. Number one, the market interest rates for business loans have dropped due to government and RBI policies. Number two, your business situation has improved, meaning your income / sales are higher and your company’s credit rating has improved, since taking the business loan.

Other reasons why businesses apply for loan refinancing are, moving from a variable rate loan to a fixed rate loan or accessing equity in a commercial property with a cash-out refinance.

Loan refinancing also allows businesses to move from one financing class to another. For example, recovering a collateralized asset through an unsecured business loan, paying off construction debt with permanent financing, or replacing a long-term loan with more flexible, renewable working capital loan.

The thing to know about loan financing is that there are as many options as there are debts. Ultimately, determining whether you need business loan financing depends on your business goals.

Basic requirements for refinancing a business loan

Different lenders will have different turnover, documentation and verification requirements for refinancing business loans. Where traditional lenders like banks tend to have an extensive documentation policy, instant business loan providers like Lendingkart only ask for the bare-essentials for approving loans and loan refinancing. In general, lenders require profit and loss statements, balance sheets, and tax returns for multiple periods to assess the financing risk and approve refinancing terms accordingly.

Eligibility requirements for a loan refinancing can depend on the type of your existing financing vehicle. For example, if you are looking for invoice factoring, the lender may not ask for your credit score at all because you are simply collateralising the accounts receivables. In this case, a lender maybe more interested in the credit worthiness of your commercial clients.

Helpful tips for refinancing your business loan

There are some things which should be kept in mind before applying for a business loan refinancing. These prudent measures can help you in assessing the true value and benefits of refinancing your business debt.

  • Start with a clear goal that you wish to achieve by refinancing the debt. Sometimes, the right financial product for your need may be different from the one you select for recovering an asset or lowering your interest rates. This means, by selecting the wrong financial product, you may end up losing more money.
  • Evaluate your existing loan, the amount and tenure left, and the interest you will be paying. Compare these things with the principal amount of your new loan, the tenor and interest payments for the refinanced loan, adding prepayment penalties and new loan processing charges to the total cost. This will give you a definitive picture of the financial vehicle’s viability.
  • If you are servicing parallel business loans and are considering business loan consolidation, then do the above mentioned calculations for all loans before making a decision. The advantage of consolidating business loans is that you need to pay a single EMI instead of several fractured transactions every month. However, missing critical financial details such as tenor and interest rates alignment can lead to a significant increase in the monthly EMI amount. Read more about EMIs on EMI Calculators and Business Loans – Facts and Myths.
  • Look for loan refinancing deals online. Have a closer look at the payment terms, minimum interest rates, collateral requirements, processing charges and prepayment process of the lender before applying for loan refinancing.

At the end of the day, loan refinancing is just like all other financial products and services which promise to unburden your financials. When done right, refinancing can bring huge benefits for your business. But if done wrong, it can also alter your financial wherewithal and disrupt operational readiness.

Get in touch with Lendingkart

Lendingkart is a leading NBFC in India, offering small-ticket finance of up to ₹ 2 crore for SME owners and startups. We have expert advisors in our employ who can assist you in selecting the right loan refinancing vehicle for your commercial debt. Moreover, you can also avail renewable business loans at competitive interest rates for a period of up to 2 years from Lendingkart. We disburse funds within 3 days of approval and verification of your business and personal information.

To apply for a small business loan, you can either visit our website at www.lendingkart.com or download the Lendingkart mobile app for your Android. To know more about business loans and related topics, follow our blog.

MSME Loans Within 59 Minutes: is it really possible?

The government announced a new scheme for small and medium business owners as a festive gift, ‘business loans / MSME loans within 59 minutes. The announcement had the business world buzzing with excitement as the scheme promises business loans up to `1 Crore. However, little else was clear about the due process to be followed for getting these quick business loans. In this post, we analyze the feasibility of the latest scheme and the hurdles one might face during the loan approval process. Furthermore, we will also have a look at other government initiatives for funding MSMEs and startups, and compare their performance to NBFC loans in India.

Details of the ‘59 Minutes Loan’

The loan being offered under the government scheme is mainly a working capital loan of ₹ 10 lakh up to 1 Crore. The minimum business loan rate of interest offered is 8% but it may vary based on the applicant’s credit score, business activities and other factors that determine the financial health of an MSME. There are no collateral requirements for this loan, hence making it an unsecured business loan – similar to the working capital loans offered by NBFCs like Lendingkart. Processing fees and charges are pegged at ₹ 1000 plus applicable taxes for borrowers who are accepted for lending.

Now, coming to the main highlight of the ‘59 Minutes Loan’ scheme. Participating banks offering products under the scheme are required to provide approval in principle to the borrowers whose proposal matches their product. While this approval will be given within 59 minutes, the actual disbursal of the loan will still take 7-8 working days.

Documentation required for the ‘59 Minutes Loan’

  • Last 6-month bank statement in PDF format for all business-related accounts.
  • e-KYC paper i.e. a digital version of know your customer paper.
  • Income tax returns for the last 3 years in XML format including income tax codes and e-filing details.
  • GST certification is necessary and the borrower has to provide his / her GST ID and password.
  • Ownership certificates / details of current ventures of the applicant.
  • Personal and educational details of the applicant.

The application process for ‘59 Minutes Loan’

The application starts with a ‘new user’ registration on the official website, https://www.psbloansin59minutes.com/home.

  • Step 1: Complete the sign-up process by entering your name, email and mobile number. Click on ‘get OTP’ to verify your credentials.
  • Step 2: Enter the OTP received on your phone and agree to the terms and conditions before clicking on ‘Proceed’.
  • Step 3: The next screen will ask a few basic questions which you need to answer in ‘yes’ or ‘no’ by selecting the corresponding radio selection box. Click proceed again to continue to the next step.
  • Step 4: Now, you will be asked to input your GST details, such as GST number and password, followed by income tax information. Here, you can either upload the statements in XML format or login with your ITR details such as PAN and date of incorporation.
  • Step 5: This step involves the upload of your past 6-month bank statements in PDF format. You can also login with your net banking credentials and allow the lenders to access the financial statements.
  • Step 6: Here, you provide the details of directors, proprietor and company address.
  • Step 7: Now select the purpose of your loan and provide the details of any previous / existing loans taken by your business.
  • Step 8: Select the bank through which you want your loan to be processed. The interest amount may vary from bank to bank.
  • Step 9: Pay the ₹ 1000 convenience fee, plus taxes for approval.
  • Step 10: Download your approval letter, pending further due diligence by the loan providing bank.

Potential pitfalls to be faced by the ‘59 Minutes Loan’ scheme

The thing to note here is that the ‘59 Minute Loan’ scheme is not the first initiative by the current government to ease business finance. A similar fast track business loan scheme called the Pradhan Mantri Mudra Yojna (PMMY) is already in place. The PMMY is also backed by the public sector banks and offers loans up to ₹ 10 lakh to MSMEs and startups. However, a closer analysis of the scheme reveals some major bottlenecks and drawbacks of government run financial schemes for small businesses in India.

For exahttps://www.lendingkart.com/blog/5-tax-saving-tips-for-small-business-owners-in-india/mple, since the Mudra program was started in 2015-2016, a whopping ₹ 4.68 lakh crore have been disbursed to 9.9 crore loan applicants. While the sum of loans given is impressive, simple math tells us that the average amount per application is just ₹ 47,249. So, the question that needs asking is, can anyone setup a successful enterprise with less than ₹ 50,000?

While someone may be able to setup a shop or similar retail business for that amount, keeping it up and running is not possible without some minimum working capital expenditure. Thus, the amount of money offered under the Mudra program is not sufficient for startups and MSME funding at all.

Moreover, the CBI is already investigating a senior Punjab National Bank Official for fraud after his PNB branch approved ₹ 62 lakh in lieu of 26 loan applications under the Mudra program. The charges as quoted in the CBI complaint are “without conducting meaningful pre-inspection or physical verification of spot of business or residence and without ascertaining end use of the loan amount or creation of assets from the loan amount”.

Now, isn’t that the Mudra program? The PMMY was meant for offering quick business loans without collateral requirements and stringent check and balances. Which in turn makes the ‘59 Minutes Loan’ scheme susceptible to unforeseen hindrances. Since the new scheme offers unsecured business loans up to ₹ 1 crore, bank officials are going to be even more cautious in scrutinizing loan applications. Also, similar to the Mudra scheme which was a refinancing scheme, for which the funds were provided by banks, NBFCs and MFIs under pressure from the government, the new scheme also adds the burden of funding loans on public sector banks (PSBs). Thus, given the NPA crisis faced by almost all PSBs, the 7-8 days loan disbursal policy also seems a little far-fetched right now.

Comparing the ‘59 Minutes Loan’ scheme with NBFC loans

The concept of fast business loans is not a new one and the latest government scheme is just an extension of same-day loan approvals being given by NBFCs like Lendingkart, albeit with some sugar-coating. Some of the features being touted by the new loan scheme, such as online portal for loan application and digital submission and verification of documents, are already in use by NBFCs like Lendingkart. Moreover, the simplicity and steps involved in loan application process are also fewer for NBFC business loans.

Here are some of the key differences between the ‘59 Minutes Loan’ scheme and NBFC business loans.

  • Application Process: Both use online application process, needing users to register with name, email and phone numbers.
  • Documentation: The government’s business loan scheme requires the submission of 6-month bank statement, 3-year income tax filings, GST details (including your password) and incorporation certificates along with personal, educational and financial details of the owner / partners / directors. On the other hand, Lendingkart offers loans based on 6-month bank statements and 2-year ITR returns if your revenue is less than 60 lakhs. It is not mandatory to have net banking and Lendingkart does not ask for ITR and GST in case of Green Zone.
  • Loan Amount: The ‘59 Minutes Loan’ scheme offers loans from ₹ 10 lakh up to ₹ 1 crore whereas Lendingkart has a wider scope in terms of funding with business loans ranging between ₹ 50,000 to ₹ 1 crore.
  • Loan Disbursal: If all details check out, the government’s loan scheme offers business loans within 7-8 days, which is not a lot quicker than the existing loan products offered by banks. On the other hand, Lendingkart promises the disbursal of loan funds within 3-days’ time once your application is verified.
  • Additional Features: Both, the government’s MSME loan scheme and NBFC loans are unsecured business loans. However, Lendingkart offers several additional advantages such as top-up loan, renewal upon full repayment, zero evaluation charges and no pre-closure charges. Furthermore, Lendingkart also has a dedicated mobile app, customer support and social media presence to assist customers in real-time.
Particulars NBFC Loans 59 Minutes Loan Difference
Time for Approval Same Day Approvals Within 59 Minutes Same concept
Time for Disbursal Within 3 Days 8-10 Days NBFC loans are faster by almost a week
Loan Amount ₹ 50,000 to ₹ 1 Crore ₹ 10 Lakhs to ₹ 1 Crore NBFC loans have a wider window that increases the possibility of getting a business loan
Documentation Minimal Documentation Personal, Educational and Financial documentation required NBFC business loans are easier to get
Process FinTech process Bureaucratic process NBFCs use IoT technologies to minimise delays in loan disbursals
Funding Self-funded Available from selected public sector banks NBFCs have ready cash available for disbursals whereas PSBs are already burdened by an NPA crisis
Flexible EMIs Yes As per bank rules NBFC loans come with bi-weekly and monthly EMI options for faster and easier repayment
Prepayment Policy No Charges As per bank rules NBFC loans offer hassle-free early repayment in full
Auto-renewal Available Not available NBFC business loans offer better revolving credit facility than bank loans


Advantages of NBFC business loans

In its current form, the new scheme by government is a tough sell once you go beyond the face value. Here are some of the things which an NBFC business loan still does better than the ‘59 Minutes Loan’ scheme.

  • NBFC loans are self-funded whereas the government’s scheme relies on SIDBI and PSU banks – State Bank of India, Bank of Baroda, Punjab National Bank, Vijaya Bank and Indian Bank. Hence, the NBFC business loans retain the advantage of being fast and free from bureaucratic delays.
  • The starting value of ₹ 50,000 gives NBFC business loans another advantage as it increases the probability of getting a small business loan for an applicant who may not be able to service a loan worth ₹ 10 lakh, which is the minimum under the government’s proposal.
  • In essence, the 59 minutes loan approval time is similar to same day loan approvals, as the condition of ‘pending verification’ applies in both cases. However, where NBFC business loans from Lendingkart are disbursed within 3 days of verification with attractive interest rates, the same process takes 7-8 working days under the government scheme.
  • NBFC loans offer the facility of revolving capital through products like business loan renewal and zero pre-payment charges, making them more suited for working capital finance. On the other hand, fresh loans under the government scheme will have to follow the same application, approval, processing and disbursal cycle all over again.
  • NBFCs like Lendingkart also offer monthly and bi-weekly EMIs to help businesses with extended invoicing cycles. This flexible EMI feature may not be a part of the government’s MSME finance scheme from the onset.
  • The questionable success of previous government financing schemes also puts NBFC loans in perspective, where companies like Lendingkart Finance are now offering business loans across India.

Concluding thoughts

While we should laud the government’s efforts to make India more business-friendly, only time and numbers will tell the real story here. The political detractors of the government were quick to point out that the new MSME finance scheme has all the trappings of a same-day approval loan and that it is merely a pre-poll sop. Even several bankers have questioned the feasibility of the ‘approval within 59 minutes’ approach as the public sector banks which are expected to shoulder the burden are still reeling from a bad loan crisis and the shadow effects of demonetization. The most concerning part of the scheme remain the actual turnaround time for the business loan. The disbursal time of 7-8 working days can easily stretch up to 8-12 days when you count weekend holidays and public holidays. So, in reality, getting a business loan from the bank will still remain a cumbersome task.

On the other hand, NBFCs are offering a wider range of loan options and complementary products and services like auto-renewals and zero penalty pre-closures, which are hard to ignore. Add to that the possibility of getting a business loan within 72 hours and the government’s proposal loses some of its sheen. So, when compared head on, NBFCs like Lendingkart are still offering better value to their customers until the time the government scheme matures.

So, in the end, answering the question ‘is it really possible to get a business loan within 59 minutes?’. Unfortunately, the answer is no. You can get a business loan approval within 59 minutes, but all it means is that the banks refinancing the government’s scheme will follow their usual application and verification process after that. The actual loan will only be given after the process is complete, which can take up to 12 days. You can, however, get a business loan within 3-days by signing-up on Lendingkart’s website or mobile app.

Warning Signs That State Your Business Is in Big Trouble

Most of the times, businesses that go into insolvency are taken by surprise on the suddenness of the event. It happens because most small and medium businesses are focused on day-to-day operations and fail to realize that there is something wrong with the larger picture. So, when the hammer finally falls, everyone is surprised and of course devastated by the blow.

While all business owners face challenges at one stage or another in their career, there are some telltale signs that can alert you about big financial troubles. Recognizing these signs also allows them to take corrective actions in time to salvage the situation. In this post, we are sharing the six things that can be a warning that your business might be in trouble.

  1. Difficulties in raising a new business loan: One of the very first indicator of upcoming financial trouble is the failure to secure a loan or fresh round of financing. If your latest business loan application has taken way too long in processing and eventually gets denied, it is time for some introspection at your SME. Lenders have pretty stringent due diligence processes and may be able to see the problems which you might have overlooked. Sometimes a lender, such as a bank, may tell you that everything is fine and to apply for a business loan again after a while. This happens because the lender does not want to push away a potential customer in hopes that you may be able to sort out the business troubles and will then apply for a fresh loan. So, never take such verbal communication for granted as it is still not a firm commitment.
  2. Lack of investors or buyers for your company: If you have been trying to sell your business through equity or direct buyouts and fail to find potential buyers, again it is a sign of troubles in your financial and operational situation. Just like financing, potential buyers also have stringent due diligence and value a business based on parameters which may not match with your internal estimations. Furthermore, sometimes a business owner in search for a buyer ends up neglecting the running of the business in the short-term. Which can significantly damage the immediate prospects of a sale and also brings down the value of the business.
  3. Frequently missing major milestones: As mentioned earlier in the article, every business has its problems and hiccups at some point, but if problems have become a norm at your establishment, it is time for checks and balances. Taking a look at the last one or two years of operations and doing a fair analysis of where you should be versus where you are may help in identifying problems in sales, product development, supply chain, working capital finance, etc. Whatever it may be, you must come up with a steady plan to overcome the problem because investors, lenders and buyers are seldom interested in excuses.
  4. Discord at the top-tier of management: The C-suite as it is generally called, is the top rung of your establishment. It is here where all the planning and overseeing happens. Sometimes, discord amongst the C-suite employees or surprise departures may also be a sign of things not going well at the company. Someone might have figured out that all is not well and has simply abandoned the ship as it begins to sink. So, whenever you lose a high-ranking employee do not just get into hiring mode, look for the reasons behind the exit as well.
  5. Accounts payable are way above normal: Accounts payables are one of the best ways to determine your company’s financial and operational health. Your accounts payable let you know about the state of your cash flow. If they keep stacking up, it means you are not generating enough inflow to be able to pay-off the debts, which is never a good sign.
  6. Very short operational runway: Lastly, most companies overestimate the time that they have got to sort out things. If your operational runway has less than six months remaining, it is a huge red flag and might even be a point of no return for your business. Having six months of cash runway is the minimum you need to get things to work again, if the cash stock falls below that, it is time to weigh your options seriously.

Moving quickly to resolve a financial crisis

If your business displays any of these warning signs, moving as quickly as possible towards a backup strategy should become your focus. If the problems are in operations or supply chain, it is time to give your teams a rap on the knuckles. Streamline your operations by cutting down manufacturing, downsizing or hiring experts. If the problems are with financing and you are having trouble raising fresh finance from the banking system, perhaps it is time to look at the ways of alternate finance for small and medium businesses available in the market.

For example, FinTech lenders like Lendingkart Finance offer short-term business loans to help businesses in managing their working capital. By applying for a working capital loan for your business you will be able to free up the cash at bank for capital investment and restructuring of your enterprise. Hence, taking correctional measures and day-to-day operations can go on simultaneously. So, consider taking a business loan from non-banking financial companies if your regular lenders are showing reluctance. Non-banking financial companies like Lendingkart also offer several other benefits like lower interest rates, flexible EMIs, zero-prepayment charges, and instant loan renewals that will help you get back on your feet.

So, do not wait before it is too late, if your business is showing the signs of trouble, take corrective steps now.

Fintech Advances Are Creating New Opportunities For Micro-Businesses In India

Traditionally, small and micro-business owners face a lot of hurdles when trying to raise cash from banks and other public institutions of finance. The bureaucratic and risk averse mentality of these institutions makes borrowing money difficult for upcoming businesses even if they have their finances in order. In such cases, a small business owner usually ends up selling some assets or private property to fund business growth.

While a bank’s unwillingness to lend to a new and upcoming business is understandable in these times of financial turmoil and growing NPAs, it does hurt small businesses with potential for growth. The situation, however, has improved markedly in the last decade as non-banking financial companies have emerged as a source of alternative finance for small and medium enterprises. Nowadays, micro-businesses are also benefiting from short term, small ticket finance offered by these companies.

Also known as FinTech, the NBFCs use a mix of financial products and IoT technologies to speed up the process of business loan approvals. FinTech solutions today are benefit ting a growing number of small business owners, startups and freelancers in India and the world. Here are the things that make FinTech finance a veritable alternative to getting small business loans from a bank.

Diversified Products and Services

Where banks generally have a limited number of products and services and operate on the principle of ‘one size fits all’, FinTech lenders are doing things a little differently. They are not only offering money that you can use to expand your business but also provide business consulting, foreign exchange services and have different types of business loans and services to best match your needs. Unlike traditional banks, the products and services of FinTech lenders do not focus on large corporations and rather are meant for SMEs.

FinTech products like small ticket working capital loans are helping small business owners fill the gaps in their cash inflow and outflow. This has helped small business owners in taking advantage of sudden business opportunities that come their way. A report from the World Economic Forum has lauded FinTech as the enablers of global business environment for small businesses in developing economies like India.

Unsecured Small Business Loans

FinTech lenders are the first to realize that most small business owners are unable to get loans because of the collateral requirements of traditional lenders. A person who has just started a new venture is unlikely to have high-value assets to secure a business loan, which in turn limits his ability for growth. Also, spoiled by lending to larger companies, banks often do not see any benefit in small-ticket loans and categorically deny loan applications which do not meet their policy parameters. Here, FinTech lenders have come up with the concept of small ticket, short-term unsecured business loans.

Now, small business owners can get short term business loans as per their own requirements instead of borrowing according to the lender’s perspective. For example, if a bank’s policy is to only approve business loans above Rs 5 Lakh, a small business owner with a requirement of just Rs 3 Lakh may also end up applying for a loan of Rs 5 Lakh. Which then he will have trouble repaying due to high EMIs. On the other hand, FinTech finance providers like Lendingkart are offering business loans starting from Rs 50,000 up to Rs 1 Crore for eligible loan accounts. Hence, providing flexibility and need-based financial services desired by small business owners.

Easy and Flexible Repayments

Loan amounts are not the only thing flexible about FinTech finance. Borrowing from an NBFC also gives business owners the freedom to choose their preferred EMI schedule or prepay the loan without hefty penalties. This makes renewing loan cycles easier and makes FinTech credit a type of revolving finance for working capital needs and capital expansion. On the other hand, banks usually have a fixed repayment cycle that disregards invoicing and sales cycle of a small business.

Once again, a small business is better off borrowing from FinTech lenders like Lendingkart Finance who offer bi-weekly and monthly EMI schedules. Moreover, Lendingkart completely waives off prepayment charges if you decide to settle your loan in full.

Re-borrow the Money

The advantage of FinTech finance does not end at the repayment of an existing loan. A business can re-apply for a business loan upon full payment of the existing loan and get an instant approval for the previously approved amount. This is one of the best ways to get small business loans time and again and not only helps your business growth but also contributes to a significant increase in your business credit score.

In Conclusion

There is no doubt that FinTech is one of the most transforming platforms for small business owners in the 21st century. By enabling quicker and easier credit, FinTech has provided much-warranted relief to SMEs from their age-old financing problems. FinTech has also helped cut down the informal credit market where private lenders are used to charging exorbitant interest rates (sometimes up to 36% to 48%) from unsuspecting borrowers, trapping them in vicious credit loops. The lower interest rate business loans and reasonable repayment time windows have helped many a small business owner in breaking out and earning their way to success.

Ultimately, FinTech has become an important pillar of nation building in India where 45% of the GDP contribution comes from small and medium business industries. Due to its digital nature, it is a very transparent medium of finance as well, which has helped small businesses join the mainstream and become tax compliant.

If you are looking for an Instant business loan or wish to know more about FinTech finance, visit us at www.lendingkart.com and have a look at our FAQs section. You can also contact us by dropping a mail at info@lendingkart.com. To apply for a business loan, simply check your eligibility and create a Lendingkart account to begin your loan application.

Here’s How to Secure Collateral-free Working Capital Loan up to ₹ 1 Crore

Small business loans are both hard and easy to get. If your business has a verifiable history and you adhere to the tax and policy guidelines laid by the government, then it is easy to secure a business loan. And if, your papers are out of order, then it is a little harder to get one. Still, small business owners who are careful in managing their income and expenditure, and regularly pay due tax, can also find it hard to secure institutional finance in the current economic environment.

The banking sector in India is facing an unprecedented rise in non-performing assets a.k.a. NPAs. This has put pressure on most public and private sector banks to lend prudently. While the additional measures of scrutiny are the need of the hour, they are definitely affecting the investment environment in the country. Also, since the Indian economy is the fastest growing major economy in the world at the moment, a lack of investment doesn’t bode well for small and medium enterprises which contribute over 45% to the GDP growth.

Fortunately, the alternate finance industry has taken the mantle for providing working capital finance for SMEs of India. Non-banking financial companies like Lendingkart Finance are leading traditional banks in terms of funding and nurturing SMEs. There are several benefits of FinTech finance as it is popularly known because of its reliance on Big Data and Internet of Things.

Faster Business Loans: FinTech companies like Lendingkart are offering small business loans with a minimum turnaround time of 72 hours. This has been made possible by switching to online application, documentation and verification of loan requirements. Since, the government has also emphasized digitization in its schemes and policies, it has become easier to verify most of the financial information online.

Unsecured Business Loans: NBFCs are not only offering business loans faster but are also offering them without any collateral i.e. putting an asset up as security for the loan amount. Thus, removing one of the biggest problems faced by small and medium enterprises when applying for a business loan.

Lower Interest Rates: By eliminating manual work hours in loan processing, NBFCs are saving more in terms of operational costs. The benefits of which are then passed on to the borrowers in form of lowered interest rates on small business loans. With a good credit score and healthy balance sheet you can secure a business loan at half the rate of private money lenders.

Flexible Monthly Installments: NBFC loans are also quite business friendly as they offer multiple repayment options in comparison to bank loans which have fixed EMI schedules. For example, Lendingkart Finance gives you an option to repay your business loan in bi-weekly or monthly installments. So, if you are confident of generating revenues faster, you can also repay your loan faster. Otherwise, you can opt for a more relaxed repayment plan.

Waiver of Fees and Charges: Another benefit of FinTech business loans being online is that you pay minimal processing charges. Lendingkart has a processing fee of just 2% to 4% (depending on sanctioned loan amount), which is several notches lower than that of a bank. Furthermore, NBFCs are also waving of prepayment charges / penalties if you decide to repay your loan early.

Renewable Business Loans: A huge benefit of taking a small business loan from an NBFC like Lendingkart is that you can easily renew your sanctioned loan amount upon repayment. So, it is a kind of revolving finance facility that you are getting for managing your working capital.

Credit Score Improvement: Last but not the least, NBFCs also report your transactions to the credit rating agencies, which in turn helps in raising your credit score. So, by getting a small ticket business loan from an NBFC, you are inadvertently opening the doors to larger financial investments for your SME.

Applying for a Business Loan with Lendingkart

Lendingkart is one of the leading business loan providers in India, offering short-term working capital finance up to ₹ 1 crore for SMEs. To get a business loan you simply need to follow the following steps.

Getting your Documents in Order: Before applying for a business loan with Lendingkart, make sure that you have the digital copies of following documents handy.

  • Business registration / incorporation certificate and Company PAN Card
  • Bank account statements of all business-related accounts for the past 1 year
  • Personal / partner / director identification such as Aadhar and PAN Card

Assessing your Loan Requirements: Another thing to keep in mind when applying for a business loan with Lendingkart is that you should do a realistic analysis of your financial needs. Applying for an overly ambitious loan amount may see your application rejected whereas under applying may not fulfill the purpose for which you are taking a business loan.

Improving your Credit Rating: This is a one-off step for companies with a less than ideal credit rating. We recommend that you take steps to improve your credit rating by repaying existing debt and streamlining your finances before applying for a business loan to get the maximum benefit in terms of loan amount sanction and interest rates.

Now that you are ready to apply for a business loan, head over to the Lendingkart website or download the Lendingkart app on your Android or iOS smartphone to create a free loan account. The process for application is fairly straightforward, fill in your business details, loan requirements and upload the aforementioned documents to get an instant business loan quote. The quoted loan amount can be equal to or slightly lower than the requirement you share with us. Choose to accept the loan offer and Lendingkart will start the verification process.

You can easily track your loan application status from your Lendingkart loan account online. If all things check out, Lendingkart will credit the funds to your business account within 3 days of application.

For securing a quick, collateral-free working capital loan from Lendingkart.

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.