Month: March 2016

New Online Lenders – Boon for Small Businesses Loans

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I believe this is one area on which I have also started working for past one year and have seen lot of action and some Einstellung thoughts / business actions which go a long way in defining a fresh /new business model getting emerged where the customer (small business unit) will be the ultimate winner. Gone are the days when businesses had to queue up outside banks to get business loans. With the entry of new online lenders in the market, loans are quite easy to come by. You do not need to move out of your house, face tedious paperwork and bothersome negotiations with the bank manager. The online lenders are very business friendly and understand the specific needs of this niche.

Who are the New Online Lenders

So, who exactly are these new online lenders? These are companies that facilitate credit for small businesses by bringing the borrowers and lenders on a common online platform, or they themselves act as lending companies under the aegis of RBI as an NBFC.

Also known as online peer-to-peer lending, it is a very well-known method that offers fast and hassle-free loan to businesses at amicable interest rates and favorable conditions. The major names include Fair cent, NeoGrowth Credit, iLend, Lendbox, IndiaLends, World Of Lending, CashKumar ,SMECorner and many more.

These lenders leverage the power of technology to speed up the application process. They use web tools for evaluating eligibility, repayment capacity, credit worthiness and other variables that govern the loan sanction process. They are more flexible than their traditional counterparts and are proving to be very popular with small and medium business enterprises.

Quick and Easy EDC Swipe Loans 

 One of the most innovative and easy credit sources, EDC swipe loans are gaining acceptance among businesses. This is a loan that is secured against the EDC i.e. Electronic Data Capture machine or Card Swipe Machine, by swiping your credit card. It lets you access extra cash for your business in record time. Quick and easy, you can use this loan in any way your business requires as it is an all-purpose loan. The best part is that it is a collateral free loan with easy EMIs and attractive rates.

NeoGrowth is a pioneer in this field and today have expanded to 10 major cities across the country.

Advantages of Online Lending 

These new online lenders are becoming the go-to people for small businesses as they offer many advantages against the traditional lenders. Let us take a look.

  • Online lenders are easy to access, offer quick loans and the processing is faster as compared to conventional banks.
  • They offer loans at competitive and attractive rates which suits small businesses and startups.
  • They also offer customized loans which means there is greater scope for different business niches to fulfill their borrowing needs. From a manufacturing unit to a spa owner, all can apply and get assured loans.
  • The lending criteria are highly flexible and the interest rates vary according to the amount. They can be low as well as high, depending on the nature of the loan.

 Online Vs Traditional Lenders

  

There is no doubt that these new online lenders have made things easier for businesses but before you take the plunge, you should be aware of all the downsides. Here are the details.

  • Online lenders may charge high interest in case of loans that are on the upper end of the risk graph. But then most of these loans are for shorter tenor of say within 6 to 24 months, whereas banks /traditional NBFC would have tenors of 24 to 48 months.
  • The processing fee may also be higher and there is also higher penalty fee for late repayment, unlike traditional banks, which have fair processing fee and lesser penalty in case of default.
  • Online lenders, mostly, asks for repayment over a short span of time which is not the case with banks. This often leads to undue pressure on the borrower.
  • Online lenders are new entrants and still striving to become established in order to give competition to the banks which are more recognized and trusted. The latter have a wider network and also enjoy more clout. 

 

NeoGrowth as a Platform 

This FIN-tech company – NeoGrowth Credit – offers innovative loan products that are perfectly suited to the current business environment. They focus on small and medium sized retailers and have tailored their loans to bypass the troublesome paperwork and fixed EMI system. Loans are offered against future credit card and debit card sales to retailers. The main eligibility criteria are:

  • Business operations of > 6 months
  • Average monthly sales over INR 2 lacs per month

The documentation is also simple and the repayment tenure flexible. The repayment is automatic and dependent on the volume of business in a month. No penal charges are levied for tenure extension. Also, the borrower is given the option of pre-closure without having to pay any charges or undergo formalities.

Evaluating Online Lenders 

At the end I would say that before moving to any online/Fintech lender, do compare the different rates offered by them. Research well and decided what you are looking to get. In short your laundry list should be well prepared before you start the search, this will help you to take a decision faster.

Happy Borrowing.

Post By-
Jatinder Mohan Singh Shah
Sr.Vice President – Sales & Marketing

 NeoGrowth Credit – Business Loans specially created for Retailers & Online Sellers

For more Information – email us on digital@neogrowth.in

Or Give Missed Call @ 08080861166

Alternative Financing Options – for Your Small Business 2016

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In today’s time it is not very easy to secure funding for small businesses where either the ITR is of low amount , no credit history, low credit score or say it is -1 or 0  , no more collateral to offer to a bank/financial institution or leveraging basis the balance sheet size is already over.

Banks and traditional lending institutions have tightened their leash on lending as a precautionary measure to avoid the mistakes committed during recession. This has caused a credit deficit in the market but some new financial entities have entered the scene to fill the gap.

These entities offer excellent alternative financing options to businesses looking for quick and easy loan. And startups and small businesses often require quick loans because they do not have cash in reserve to rely on. Their credit needs are sudden as a business opportunity or crisis may knock at their door any time, new expansion, internal working capital requirement for working capital gap for a short term. So, this trend of “alternative lending” is like the much needed elixir that small businesses can utilize to fuel their growth and expansion strategies.

Types of Alternative Lending Options

I am just trying to give a snapshot of alternative lending options which comes in various forms and you can utilize any of them to fulfill your credit requirements.

1. Peer to Peer Lending

Simple, hassle-free and quick to the core, peer to peer lending is also known as online lending where lenders offer credit to borrowers through a facilitator i.e. a website. The owners of these websites create a marketplace for both the parties and let them choose. The procedure is very amicable and one can get loans at attractive rates. The repayment terms are flexible and no need for collateral or guarantor.

2. Crowd funding

Innovative, dynamic and popular; crowd funding allows you to use the social media platforms to generate funds for your business or project. Relatively new, it has caught the fancy of investors as well as common people who have an eye for business. With it, you can raise money from different lenders at zero interest rate. In return, you offer them equity or a specific share in profits.

3. EDC Swipe Loans

Easy and quick, EDC swipe loans are quick loans that are secured by swiping your credit card with cash swipe machine. It gives you access to a quick and all-purpose loan with easy EMI and attractive rates. Fast and simple, it does not require any collateral or paperwork either. 

4. Customer Lending

Customer lending refers to credit lent by the customers of the business entity. In exchange, the business/borrower promises to pay back their lender/customer in kind i.e. with products at discounted prices. It is very popular in the agriculture and food industry. It offers easy and fast loan with no collateral. 

5. Factoring

An old alternative finance method, factoring refers to the loan secured by a business against its account receivables (money owed by customers in exchange for goods/services that have been used but not paid for). It offers quick access to cash and is suited for a growing business with regular sales. 

6. Convertible Debt Instruments

This refers to the loans secured against the assets of the company. It may require the company to part with some of its equity if the lender desires so. It offers fast access to money and is also cost-effective to a great extent. The lender is also at less risk and gets more choices in terms of repayment.

The lending business

Lending, one of the primary functions of the business, is also changing. Various players like Neogrowth are now using technology to make loan payments hassle free. For example, in Neogrowth’s business model, the repayment is automatic and flexible so that the merchant doesn’t need to pay a fixed EMI. It is based on the merchant’s average card sales.

Conclusion

These alternative finance options are undoubtedly helpful but they too come with certain pointers like high interest rates but they are damn fast and available with not so deep dive on traditional paper work. In general, they are expensive than bank loans. So, in order to make their best usage, first pinpoint what needs to be funded in your business. Examine your situation meticulously. Also, thoroughly evaluate the timing. Compare the different lending rates and then select the one which will fulfill your requirement and pose no threat to your equity.

At the end these options comes with high degree of flexibility which sometimes overpowers their high rate of interest and of course they make sense if the loan required is for a shorter duration.

 

Post By

Jatinder Mohan Singh Shah
Sr.Vice President – Sales & Marketing

 NeoGrowth Credit – Business Loans specially created for Retailers & Online Sellers

For more Information – email us on digital@neogrowth.in

Or Give Missed Call @ 08080861166