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Secured vs. Unsecured Loans: How does it matter to your business?

India as an economy has been witnessing the eons-old tradition of a secured business loan where the lender demands security to be offered as collateral promised against the loan amount disbursed by the lending agency. An asset is hypothecated by the borrower with the lender in order to disburse the loan amount and will be retaliated only at the event of full payment of the principle and the interest amount. Banks are the most conventional mediums of offering secured loans. But the catch is all the setbacks associated with it. Its selective nature when it comes to acceptance of collateral, time-consumption, lethargic procedure, hectic documentation requirements has made them unapproachable. 

These setbacks have collectively given rise to technological intervention in the classic debt market by the emergence of fintech companies with its unsecured business loan in India. These fintech companies offer funding for your enterprise and business online without expecting collateral security against the loan amount. Following are some points which explain the difference secured and unsecured loans will make in your business.

Flexibility: Traditional lenders will simply offer an off-the-shelf credit product. However, fintech companies providing business loans will give you a chance to carefully understand your business objectives and selecting a policy with tenure and amount as per your requirements. With fintech companies, you can successfully fulfil your short-term requirements with loans for an amount as low as two lakhs and term for as low as three months as well.  

Speed: Along with flexibility, fintech companies also offer speed with their loaning services. Unlike secured loans with banks, you can rest assured that unsecured loans with fintech companies demand relatively less time since the entire procedure takes place online. If the application and the back end teamwork in synchronization, your loan can be approved within a week and the amount can be disbursed in less than five working days.

Digitalization: This infusion of technology in the financial world has caused business owners to have access to unsecured business loan online without requiring you to divert your attention from your business to gather funds from a bank or physically visiting the banks. You can avail business finance at the tip of your fingers by applying online. Moreover, the signing of the e-agreement too takes place online.

Processing and hidden charges: When it comes to conventional lenders, you are required to pay a heavy processing fee and many other procedural charges. However, such is not the case with fintech companies as they don’t require you to pay heavy processing charges. These charges are pretty minimal and deducted from your principle loan amount itself.

Documents: Conventional lenders are known for requiring you to pile up a load of documents. On the contrary, fintech companies require you to upload only basic and nominal documents at the pre-assessment, application and the disbursal stage. This makes the entire loaning process smoother and more convenient.

Conclusion

Secured and unsecured business loans are both an equally available alternative. However, opting for the latter gives your business monetary perks and other boons which will make your financial journey a more viable and relaxed one.

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Is it wise to avail a micro loan for your business?

Courtesy of micro loans, many individuals and businesses in the developing countries have gained sustainability and financial stabilization empowering the developing economy. Microfinance extends its support to people who don’t have access to sufficient capital in the form of small loans and other basic financial services. Micro loans are hugely responsible for entrepreneurs to become financially independent by providing the seed capital to be invested in their businesses. Offering micro loans not only steadies businesses but also the families which grow and evolve monetarily with the business whilst creating jobs and further empowering more families.

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Need short-term finance? Here's why you need to consider online loans

Whether you operate on a B2B level of business or with a wider-reaching audience, when you need short-term finance, it needs to avail at the earliest. This short-term finance may be necessary to satiate an unanticipated cash flow severity or to diversify your current reach. It’s unreasonable to approach the conventional lending sources for short-term finance as the hassle is way too much to be borne. Under these circumstances, availing an online business loan can be a tenable option. Following are some of the reasons which will convince you stronger.  

Swift procedures:In this quick-paced commercial world of business, it is extremely significant to have access to sufficient funds in a timely fashion because no entrepreneur can afford to go through heavily time-consuming procedures by the banks. When you opt for Fintech companies to avail business loans, you are left to deal with a procedurewhich assures quickness and ease with the application and disbursal procedures. Once approved, the disbursal of the loan amount can be completed within seven business days.  

Simplified procedure:The entire loaning procedure designed by the Fintech companies to apply for a loan is extremely simplified. All you need is a Wi-Fi connection and an automobilewhere you need to fill in the fundamental details of your organisation in the pre-assessment and application forms which take minutes to apply for. Once sanctioned, even the e-agreement is signed virtually and doesn’t require you to visit any place.  

Flexible term: When it comes to conventional lending structures, they are less inclined towards fulfilling short-term finance with a modest amount as it may not be feasible for them to allot the same due to the elevation of risk involved as the term lowers. When it comes to fintech companies, you can avail a short-term loan for flexible tenures ranging from as short as 6 months to 18 months as well. Therefore, you can select a policy plan with a tenure apt for the nature of your business, cash flow or the objective of your short-term requirement.

Collateral free: When you apply for short-term finance with a conventional lending agency, you are required to provide collateral as security against the loan amount you avail for your business. However, considering the requirement term, it’s impractical for you to forgo an expensive and valuable asset for a small amount. Therefore, owing to the unsecured nature of short-term finance with fintech companies, you can avail an unsecured loan for short-term without collateralizing any asset.

Loan amount: With fintech companies, you can select a loan amount at your discretion to suffice your short-term financial requirements with an amount as low as two lakhs or as high as ten lakhs as well.

Conclusion:

Fintech companies offer loaning products which have already overcome the setbacks and negative aspects of availing a loan from the traditional banking service. Therefore, these products are a result of a merger between all the benefits of an unsecured loan along with technological intervention to make this process smoother and easier. Owing to these characteristics, obtaining a fast business loan in Mumbai and anywhere in the country has become extensively convenient.  

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Top factors influencing your credit score

Having a high credit is important especially if you are planning to apply for online business loans in Mysore to gain more business funding. Therefore, you cannot ignore the Credit Information Bureau of India Limited (CIBIL) score (also known as a credit score in India).

 Do read these factors that influence your credit score:

 1)     Payment history- Payment history is the most important factor that affects your credit score, making up as much as 35% of the credit score calculation, according to CIBIL. It is observed that those people, who have been late for loan payments earlier, are more likely to be late on payments in the foreseeable future. The credit score additionally considers the trend or pattern currently payments. For instance, being over a month late on an instalment may bring down your financial assessment much more than being just a couple of days late.

The best thing you can do is avoid late payments altogether. If you have made late payments in the past, do not get worried. You will have the opportunity to amend a late payment history through a new timely payment behaviour which will help to increase your current credit score. As time goes by, you will realize that the good way you’re managing your finances today is as much important as how you managed your finances years ago. As in love and credit scores, time does heal all wounds.

 2)     Amounts owed and credit card utilization- Credit utilization also known as a debt-to-limit ratio measures the amount of your overall credit card limit that you are using. Staying below 30% is good, but the lower the better. A high credit utilization signals to lenders that you’re overextended and may not be able to handle more credit.

Your credit utilization ratio is calculated by dividing your total outstanding balances on all of your cards by your total credit limit. Credit card issuers typically report your payment and utilization information based on billing cycles and not real-time, so your credit score may not reflect the most recent updates to your credit card balance and credit limit.

3)     Types of Credit- Out of your overall credit score, 10% relies on the type of credit you have got in use. CIBIL looks at the various accounts you have and determines if it is a well-balanced mix. Those with the highest scores don’t just have credit cards, but finance company accounts, mortgage loans and instalment accounts, and so on. Besides, creditors consider the number of accounts you have in use. A lot of accounts in use can have a negative impact on your score, whereas just a handful of credit cards used will likely increase your credit score. Do keep in mind that while you don’t want an overabundance of accounts in use at one time, it’s better to use part of the credit on several cards than to max out one card.

4)     Number of Credit Inquiries- Each time you submit an application that requires a credit check, an inquiry is placed on your credit report showing that you've made a credit-based application. Inquiries make up 10% of your credit score. One or two inquiries won't hurt much, but several inquiries, especially within a short period of time can cost you many points off of your CIBIL score. Downplay your applications to save your financial assessment. The good news is those only inquiries made within the last 12 months factor into your credit score. Inquiries fully disappear from your credit report when twenty-four months.

The Bottom Line

While your credit score is extremely important in getting approved for loans and getting the best interest rates, you don't need to obsess over the scoring guidelines to have the kind of score that lenders want to see. In general, if you manage your credit responsibly, your score can shine and will help you in getting business loans in Mysore.

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How to fix business financing mistakes?

Entrepreneurs are constant hunters of risks and that’s one trait which differentiates the from the conventional business traders. However, all these risks need to be calculated or may result into excessive drainage of your business finance. Never stop looking from distinctive opportunities but always ensure where you need to set boundaries. These boundaries need to be stricter when it comes to finances. Following are some of the financial mistakes a business can make and ways to fix them.  

Never delay getting finances: Getting microfinance for your enterprise is a huge decision. However, being in denial that your business doesn’t require external funding until it starts affecting negatively and reduces your profits is never a wise option. One way to fix it is always monitoring your cash flows closely and predict your ongoing finances. This will help you detect any cash suckers or crunches and taking steps in advance. Applying for an unsecured business loan online can be a smart option due to its quick loan processing, instant disbursal, no requirement for collateral and minimal documentation and hassle.

Never underpricing your products or services: It is organically wise for you to set prices which will give you a sufficient margin to create profit. If your prices aren’t adequately high, your profits will fall and your business will deteriorate. It is tempting at first to keep lower prices and lure more customers. However, it is a mistake to do so. Calculate your desired profit margins by including your industry’s standard profit margins, your sales and financial plans and then determine your product’s value.  

Business loan is not the only alternative: Opting for a business loan is a wise option and fintech companies have made acquiring business loans and all over India an extremely easy task. However, that’s not your only alternative. Determine the objective of your financial need and then apply for a loan. If you need to buy new machinery, opt for equipment loan, if you need operational expenses, apply for a working capital loan. Applying for a business loan for every need is not recommended.

Not keeping a track of your credit score: Neglecting your credit score is a gravely serious mistake which should be avoided at all costs. Always keep a track of your credit score. If at all you fail to do so, fret not. You are never too late and there are ways with which you can get your credit score back on track. Always ensure that you never hesitate to take up small loans and debts. But at the same time, pay off these dues whenever they are expected to be. This will always reflect on your credit score positively.

Conclusion

At the end of the day, making mistakes will always teach you something. However, making mistakes which could have been easily avoided contribute little towards your goals. One of the best ways to avoid mistakes is closely monitoring the business legends from your industry and studying their journey and follow their footsteps.

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Business budgeting tips from financial experts

The effort that goes into planning a workable budget that monitors your business funding in Mumbai closely, keeping all your expenses in check is seldom adopted by businesses merely due to the sheer effort that goes into it. However, budgeting is a signal which indicates the next move in your business journey and guides you whenever you need to stop or proceed. Budget is the most effective and smart way of meeting your pre-determined standards with respect to profits and growth whilst staying prepared for any unanticipated expenses. Following are some tips which will help you create a budget efficiently.

Plan rigorously: A budget is not a sales report which can be created in a couple of days. It requires you to invest a lot of time and construct a budget which is fit to monitor your organization’s expenses. Creating a budget might not be a one man’s show due to which you can always consult your managing team or even hire a financial advisor to guide you.  

Practice will make you perfect: Your budget needs to be in conformity with your goals. However, you cannot expect it to be perfect. It takes practice to reach at a point where your budget reflects perfection. Budgeting is all about striking the perfect balance between how much time you invest versus how accurate your calculations and predictions are.

Make a budget but not for every penny: When you create a budget, you consider every ounce of resource at hand. However, it is not practically possible for you to draw exact results down to every penny. Budgeting is about creating a course of corrections at a level of inarticulacy only where it’s possible. You cannot predict every expense in your budget and some miscellaneous expenses have to be rounded off.

Assess your results: If you don’t compare your current results to the budget you had set, you’ll understand the pace at which your business is progressing and whether your business has a healthy financing body. When budget comparisons are made, you need to ask yourself the question whether your results are matching your budget, if not; where did it fall short, how can you avoid the negative outcome, what are the measures you can take to improve your budget for the next month and so on.

Keep trading items off your budget: Your resources are not infinite and hence need to be spent with extreme cautious. If you come across an expense for which you didn’t anticipate but is extremely important, maybe even offering productive returns, you need to take a judgement call as to which expense needs to be eliminated from the budget for this extra expense to make space. If you don’t follow this method, you’ll end up exceeding your limits and overspend.  

Conclusion

At times, your budget may get imbalanced due to external forces or any internal complications, you shouldn’t hesitate to opt for a business loan if the circumstance demands you to. Moreover, there are many fintech companies which have changed the tangent of lending and made availing a business or SME loans in Mumbai for enterprises extremely easy.