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Know About The Features and Use of A Working Capital Loan

Working

At certain stages of a business’s operations, it can face a severe capital crunch, leaving it unable to capitalise on growth potential. This is a common scenario of every up and coming enterprise.

On the one hand, there are new customers and newer prospects of growth, while the other hand sees insufficient finances. In such cases of low working capital turnover ratio, a working capital loan can be a saviour to address production cost.

What is working capital loan?

Working capital loans are short-term funds taken by a business owner to address temporary cash crunches. Generally, borrowers utilise such quantum to facilitate seamless day-to-day business operation and not for big-ticket investments.

Features of a working capital loan

Following are some of the characteristics which make a working capital loan a suitable means of funding.

  • Adequate loan amount: Financial institutions provide significant amounts to eligible applicants to fund working capital shortages. For instance, Bajaj Finserv offers up to Rs.45 lakh, to aid enterprises. Entrepreneurs can list their business requirements and accordingly apply for the required amount within this limit.
  • Collateral-free: Individuals do not need to hypothecate assets to acquire these financial products. This can be especially beneficial for small business and start-ups with a low working capital turnover ratio.
  • Instant disbursal: Relaxed eligibility and verification process facilitates speedy loan approval and disbursal, often within 24 hours.
  • Pre-qualification: Several NBFCs also offer pre-approved offers on financial products to facilitate an even shorter processing time and hassle-free disbursal. Always check your pre-approved loan offer by submitting your name and contact details before proceeding with the application.
  • End-use flexibility: Getting qualified for working capital finance does not require submitting a business plan. Also, lenders do not restrict or monitor which financial requirement you are addressing with these funds, as long as it is business-oriented.

The convenient usability of these funds allows borrowers to utilise them against a number of business needs.

Uses of a working capital loan

Some of the most prominent uses of working capital finance are as follows.

  • Stocking up inventory: Getting the latest equipment on-board, as well as restocking products, is intrinsic to your company’s prosperity. A business loan can come in handy to address these considerable expenses of machinery purchase and protect your savings.
  • Managing emergency expenses: Besides paying for rent, utilities, and employee wages, there can be a number of unexpected financial requirements like vehicle breakdown, malfunctioning machinery, and worker-related medical emergencies. An immediate short-term loan, like working capital finance, can facilitate addressing these overhead costs.
  • Clearing debt: Such financial products can help manage your existing repayment liabilities effectively and help boost your business working capital turnover ratio.
  • Expanding business operations: With increasing demand, businesses need to augment their operations. Borrowers also utilise their acquired funds to finance a modified infrastructure, hiring more workforce, or expanding office space. Follow these tips to expand your manufacturing business to effectively allocate a working capital loan.

However, there are specific requirements to qualify for a business loan to finance any of these above requirements.

How to qualify for a working capital loan?

Once you have chalked out how much working capital their business needs, it’s time to check if you match lender-specific eligibility requirements. Some of the basic parameters are as follows.

  • Credit score: Must not be below 750.
  • Age: Should be within 25 to 65 years.
  • Business vintage: Should be minimum of 3 years.

Additionally, applicants need to produce the following documents for verification.

  1. KYC
  2. Address proof
  3. Proof of business ownership (registration certificate from a credible source).
  4. Financial records (bank statements, ITR documents, and audited balance sheets).

Such relaxed eligibility criteria and simple documentation make working capital finance easily accessible to most loan-seekers and help boost their working capital turnover ratio quickly.

For maximum benefits, make sure to compare the policies of various lenders before picking the best.

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4 Myths Surrounding the Aircraft Financing

The myths circulating around about aircraft financing discourage many prospects to pursue their purchase. Therefore, it is important to clear out all the misconceptions to encourage businesses to carry out the dream acquisition of the desired aircraft. Following are some of the prevailing myths that have no truth to them.

There Are Fewer options for Financing

No doubt, with today’s condition the playing field is a bit smaller. However, there is still numerous credible financing provider available like Air Fleet Capital to help businesses buy new or used aircraft. There are a variety of options available for financing including banks and financial institutes that supports the businesses of regional markets.

Now, the businesses looking for aircraft assets like piston or turboprop may just need the help of a local bank for the financing. However, if the business is looking for newer or bigger jets, it’s better to take the help of knowledgeable lender who specializes in high-end business deals.

Cash is the Best Option

The first decision for airplane financing is to decide whether to carry out the purchase through cash or credit. The businesses that decide to pay cash have various benefits including no down payment, credit check, or interest payments. However, when it’s time to sell the aircraft, it can create complications. All-in-all, the decision of cash or credit depends on the individual businesses. If the loan payment is more than the fund’s investment value then borrowing the loan is not a good idea, and cash is a better choice. By contrast, when the funds can earn remaining in investments, the loan payment is better.

In conclusion, cash is not the only best option. The situation varies with each business.

You Cannot Negotiate the Terms with Financing Source

When the financial source quotes the rate, they do it by analyzing the situation of the business. Therefore, you can negotiate the terms about the interest rate or installments. Remember, if you are willing to pay more amount as a down payment, the better it will be for your business aircraft financing. It lowers down the risk for lenders, hence they will be willing to decrease the interest rate. However, if the business puts a small amount of down payment, then this rate will be skyrocketed.

More so, the decision depends on the borrower, whatever terms suit them best. So, try to negotiate the deal and be wise in doing so.

A Borrower Doesn’t Have To Worry About Title Search

Not all lenders carry out the title search before closing out the loan. If there is an issue, later on, it will be harder to sell the aircraft. Plus, the lender will still have you on the hook for the loan balance. Therefore, all the purchases should have a thorough title search before the closing of any deal. In comparison to the problems that occur later, this method is quick and inexpensive.

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Did You Realize That You Can Return Home Insurance For Vacant Homes?

Work involves him to venture out widely to unfamiliar Insurance Company areas to regulate the IT frameworks of different customers and keep up associations with them. Since his folks live in his hometown, Rakesh purchased a house for himself in the city near his working environment. In any case, because of his broad travel and work responsibilities, Rakesh’s home is abandoned for at any rate a month to a half year in a year. 

Thus, rather than going for a customary home insurance strategy, Rakesh decided to go for insurance for empty homes. The insurance for abandoned homes not just defends and guarantees Rakesh’s home from fire, robbery and harm yet in addition gives him genuine feelings of serenity while he is away for work. 

Do you own a subsequent home or does your work expect you to travel most pieces of the year? Try not to stress! You would now be able to profit insurance for empty homes. With quick globalization and expanding expendable wages, individuals are presently purchasing more than one property, either to be utilized as a subsequent home or for venture purposes. Notwithstanding, keeping it empty can open it to significant danger of defacing, illicit infringement or primary harms. 

What is Insurance for Abandoned Homes? 

Insurance for abandoned homes can be alluded to as forte property insurance intended to make sure about your uninhabited house in the event of robbery, misfortune or harm. 

Abandoned homes represent a more serious danger of thievery, harm or defacing for the undeniable explanation that there is nobody remaining in the house to forestall it. In addition, it is likewise at more serious danger in the event that there is an underlying or electrical flaw or harm inside the house yet isn’t accounted for or managed quickly, which could bring on additional genuine harms. For instance, if the gas pipe begins releasing and isn’t accounted for promptly, any little sparkle in the region can result in genuine outcomes like the house burst up into flames. 

For what reason do I need Insurance for Empty Homes? 

In the event that you are away from your home for over 30 days at a stretch, you might need to think about purchasing insurance for abandoned homes, since various insurance organizations have various arrangements for giving inclusion to any harm caused during the period the house was left vacant. Henceforth, it is fitting to address your guarantor to comprehend explicit constraints around the range of time the house could be left vacant and how the organization characterizes it. 

The following is the rundown of few situations which could legitimize why you need to take insurance for vacant homes. 

  • You’ve purchased a subsequent home and visit there just couple of times in a year 
  • You’ve purchased another home however would take a little while before you move-in 
  • Your work expects you to travel broadly for most pieces of the year 
  • You will be away for two or three months for clinical treatment 
  • You’ve moved to a better place as remodels are going on 
  • You lease your home to inhabitants and are currently finding another house 
  • What are the costs required when contrasted with the normal home insurance strategy? 

You may buy the insurance as a different arrangement or as an extra to your present home insurance strategy relying on the insurance organization’s approach inclusion and according to your need. Different home insurance strategy suppliers have changing arrangement conditions and inclusion alternatives. On the off chance that you are accepting it as an extra to your present home insurance strategy , chances are it might just cover the property for harms caused because of fire or robbery. In addition, on the off chance that you take independent inclusion for empty homes, you may cover it for 10-12 situations, for example, fire, robbery, defacement, deficiency of substance

Insurance charges for vacant property are by and large higher than standard home insurance strategy because of the higher danger related with it. Be that as it may, in the event that you are sure about the particular number of weeks or months you will be away from home, thinking of it as would be a brief period, you may examine this with your guarantor and make changes to the arrangement premium on favorable to rata premise to shield it from harm while it was empty. 

Be it work, travel or venture, insurance for abandoned homes will help you secure and defend your new Home Insurance from unexpected conditions and with full inclusion.

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The Right Way to Manage and Monitor Credit Card Debt

Debt management

According to a recent report, credit card debt in the country between 2015 and 2019 has increased rapidly, averaging around 27% annually. To this end, with the average credit card interest rate around 41%, failure to manage the debt ensuing from such card’s usage can be quite damaging to one’s financial health.

Therefore, it is imperative to know the ways via which you can manage your credit card bill payments and avoid falling into a debt trap.

6 tips to manage credit card outstanding efficiently

  1. Change your spending habit

The best way to avoid the trap of high credit card interest rate is to alter your spending habit. You can create a budget for your monthly expenses and spend accordingly. It will help you to limit your expenses and keep your credit utilisation ratio lower. A point to note here is that, high credit utilisation ratio can also negatively affect your CIBIL score.

  1. Convert bills into EMIs

In case you are struggling to pay the bills on time, thereby increasing your total debt, you can talk to your card issuer and opt for the EMI facility. It will streamline your repayment process, and assist you to clear your debt faster. While you can enjoy interest-free EMIs up to a certain tenure, you will be interest eventually. However, this interest amount is comparatively lower than what you will be charged for defaulting regular repayments.

  1. Utilise the interest-free period

Every credit card has an interest free period of 45-50 days, and if you can complete your payment within that period, you can save yourself from paying any extra amount over your bill amount.

  1. Pay off the ones with the highest interest rate first

To mitigate your credit card debt, you can choose to pay the ones with a higher interest rate on priority. Individuals often make the mistake of repaying the bills with low outstanding first, consequently letting interest gather on other debts. Since interest on late payments is considerable, it is ideal to repay the ones that charge such a higher rate of interest at the very onset.

  1. Paying more than the minimum amount

Credit card users often follow the practice of paying just the minimum amount due, effectively falling into a debt spiral that is not easy to get out of. Therefore, instead of paying just the minimum due amount; repay something extra to reduce your total debt. There are many convenient options to pay credit card bills, explore them.

  1. Know the billing cycle

A billing cycle is the 30 day’s period during which the credit card company records all your transactions, and sends you a statement accordingly. As a user, you must be aware of this cycle, as it will help you to reap the benefits of interest-free period and plan your repayment better.

Since credit card interest rates are usually high, it is ideal to monitor your credit card debt regularly to avoid any issues. You can do so easily via the official website or mobile application of your respective issuer. NBFCs like Bajaj Finserv allow their customers to access every detail of their Bajaj Finserv RBL Bank SuperCard via mobile applications and repay their bills as well. Additionally, the competitive interest rate and a host of other customer-friendly features help individuals manage their financial requirements without any issues.

Furthermore, the company also provide pre-approved offers, which streamline the application process and save time. These offers are available on financial products like credit cards, personal loans, business loans, etc. You can quickly check your pre-approved offer by submitting your essential contact details.

Credit cards are an excellent financial tool if used correctly. Otherwise, the high credit card interest rate can become a one-way ticket into a debt trap. You can follow the tips mentioned above to manage and repay your credit card debts efficiently and refrain from mounting dues.

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Balance Transfer: Examining the Right Time and Other Factors to Consider

Balance Transfer: Examining the Right Time and Other Factors to Consider

The demand for home loans is expected to be significant, with the future prospects of growth remaining strong. 

  • The predicted growth rate in this sector between 2021 and 2026 stands at 22%. 

Affordable interest rates, along with urbanisation increasing at a steady pace, are expected to drive this growth in the coming years. In the past few months, the housing loan interest rates have fallen to an all-time low, benefitting not only new borrowers but also the existing ones.

With a home loan transfer, individuals with existing housing credit can further avail lower rates on their outstanding principal amount. Nevertheless, one must first understand the basic principles of such a credit transfer to know when it is most profitable to opt for one.

What is a home loan balance transfer?

Existing home loan borrowers carry an option to switch their outstanding loan principal from their current lender to a new lending institution. 

In such a case, the new lender pays the pre-requisite amount to one’s current lending institution, effectively clearing all dues. The borrower continues to pay EMIs for the home loan but to this new lender and not the old one.

The primary benefit of a home loan transfer is that it allows a borrower to pay interest at a lower rate when compared to his/her previous lender. This check on interest outgo can either result in reduced loan tenure or decreased EMIs. 

If one can undertake such transfers at the opportune time, the option can lead to sizable financial savings. However, before choosing a home loan balance transfer, one must consider a few key factors to ensure profitability from such a move.

Factors to consider before opting for home loan refinance

  • Check the scale of EMI reduction

Home loan borrowers, mostly salaried individuals, often face a challenge in meeting the monthly liabilities when servicing such credit. Still, most housing loan borrowers in India are salaried.

  • 88% of the home loan borrowers in 2020 comprised salaried individuals.

Thus, if you are opting for a home loan balance transfer, you should consider whether the new EMI amount represents a significant reduction from the previous figure. 

A minor reduction may not be worth undertaking the hassle of such a refinance. Using a home loan balance transfer calculator, one can easily determine the total amount of savings, along with a decrease in EMIs.

  • Check whether your home loan interest is charged as per RLLR or MCLR

Interest rates on home loans in India are linked to an external benchmark, generally either MCLR (marginal cost of funds based lending rate) or RLLR (repo linked lending rate). Those with MCLR home loans often do not receive the best interest rates due to a lack of transparency in reflecting any mandated rate changes. 

The Reserve Bank of India, on the other hand, adjusts the repo rate from time to time, which can often lower the rates, typically RLLR, offered by financial institutions to home loan borrowers.

  • Since February 2020, RBI has slashed repo rate by 115 basis points (100 basis points = 1%).
  • This repo rate cut has translated into interest rate reductions ranging between 70 and 90 basis points for most home loan providers.

If your existing lender follows the MCLR benchmark, shifting to an RLLR-based home loan refinancing option may be more beneficial since you would be able to take advantage of adjusted rates.

  • Consider the remaining tenure for your home loan repayment

Considering the remaining tenure is crucial when pondering over home loan transfer. To pick the correct time to undertake such a step, one needs to possess significant insight into the amortization schedule of such loans. 

EMI for any credit is composed of two aspects, namely principal and interest components. Every month, a portion of home loan EMI goes toward servicing the principal outstanding, while the remaining is assigned to the interest accrued.

During the initial years of your home loan repayment, the interest component forms the majority of your EMIs, while the principal portion is limited. 

Thus, early on in the tenure would be an ideal time to undertake a home loan transfer, making it considerably beneficial in terms of the total interest payment as per the applicable rate.

For instance, if you are just four or five years through your repayment tenure of 20 years, refinancing can lead to hefty benefits. However, balance transfer would not be profitable if you undertake it after 15 years of repayment for a loan of similar tenure.  

  • Additional charges for a balance transfer

Borrowers should know that balance transfer basically means closing one loan account and opening another with a different lender. Therefore, they need to bear the processing fees, foreclosure charges, and other costs to refinance. 

If such costs are more substantial than the savings you stand to make after initiating a home loan transfer, you should reconsider your decision.

  • Top-up loan facilities

Borrowers planning to refinance their existing home loans also need to know about top up loan on home loan. These are additional credits offered by the new lender to individuals who choose to refinance the existing home loans with them. 

Top-up advances are available over and above the transfer value and come with no end-use restriction.

Reputed financial institutions extend attractive top-up advance offers to home loan balance transfer borrowers. Such advances are high-value credits amounting up to Rs.50 lakh.

Some lenders also provide pre-approved offers to simplify the loan availing process and help save time. These offers are available on several financial products, such as home loans and loans against property. You can check your pre-approved offer by submitting only your name and contact details.

Now that you know everything about home loan balance transfer, it should ease the process while ensuring maximum benefits from the facility. Make sure to check the additional eligibility of a new lender, if any, before you apply to experience a hassle-free transfer of your existing home loan outstanding.

Read Also: Home loan rates fall to below 7%. Five tips on how to reduce your EMI burden

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A Brief Insight Into Credit Score Calculation – Things You Should Know

 

Around 79% of all loans in India are approved for consumers with a CIBIL of 750 or above. CIBIL or the Credit Information Bureau (India) Limited is an organisation, which tracks the creditworthiness of each Indian, through his/her credit history and other factors.

All lenders today thus check a loan applicant’s CIBIL or credit rating in general, when processing a loan application. Therefore, to improve one’s likelihood of availing loans, he/she must be aware of CIBIL score calculation and the factor that weigh in to determine one’s score.

What is CIBIL score?

CIBIL or credit rating refers to a 3-digit numeric figure, representing the creditworthiness of an individual based on prior handling of loans or advances and credit discipline adopted. An individual with a clean record of timely repayment of loans or credit card debt often carries an impressive CIBIL score and vice versa.

CIBIL scores range between 300 and 900, whereby a score of 750 or above is generally considered sufficient to avail various kinds of loans in India. While you can get a personal loan if you have a bad CIBIL score, it is best to take measures for score improvement when planning to avail finance. It is primarily because the terms for such a loan are often not in the borrower’s favour.

Factors affecting CIBIL score calculation

The following four major aspects determine whether an individual carries an impressive credit rating or otherwise –

  • Payment history – It refers to your track record of servicing loans in general, and is indicative of your repayment habits. Your payment history thus depends on whether you have closed dues in time or if you have defaulted on such payments in the past.
  • Multiple enquiries – Successive and substantial number of loan enquiries can hamper your credit rating since it indicates that you are likely to avail fresh debt soon.
  • Credit mix – If you want to improve your CIBIL score, attaining the perfect balance between secured and unsecured credit mix in your loan portfolio is critical. If you avail too many loans of one particular kind, your credit rating may suffer as a result due to one type of advance outweighing the other, thus hampering your future financial standing.
  • Credit utilization ratio – If you consume too much credit in a short span, it indicates a credit hungry nature and also lowers your repayment capacity. The credit utilisation ratio thus indicates the total percentage of credit already consumed out of the total credit available to you, with an ideal ratio standing between 30 and 50%. A high ratio, too, can thus negatively affect your CIBIL score calculation.

How to check CIBIL score for free?

As per the RBI guidelines, CIBIL is obligated to offer one free credit report check to every individual. Moreover, one can check this score online, by following the steps mentioned below –

  • Step 1: Visit CIBIL’s official website.
  • Step 2: Fill in the requisite form with necessary details like name, contact number, email address, and others.
  • Step 3: Enter your PAN number.
  • Step 4: Answer all questions regarding past loans, credit cards, and repayment correctly.

Based on this information, CIBIL provides your credit score instantly. If you want to generate more than one credit report in a year, you can go for subsequent reports against a stipulated charge.

Ways to improve your credit score organically

One can adopt various ways and do several things to improve his/her personal credit score. Understanding the CIBIL score calculation process should give you an insight into how you can approach credit rating improvement –

  • Never avail substantial credit, which you may find challenging to repay. Late EMIs or credit card bill payment can hurt your credit score and vice versa.
  • If you have availed personal loans in the past, try to avail secured credit options in the future. Such a credit mix is viewed as a positive trait in potential lenders.
  • Keep your credit utilisation ratio to a minimum. For instance, if you have availed a credit card with a limit of Rs.1 lakh, ensure you use only up to Rs.40,000 – Rs.50,000 for the existing billing cycle.
  • Check your credit report every year and intimate any errors that may crop up in your report for rectification. Although not frequent, CIBIL score calculation may be a result of errors or omissions in one’s credit records.

If your credit scores are high enough and are an existing customer, you can also avail pre-approved offers from lenders like Bajaj Finserv. These offers are available on a range of financial products, including personal loans, business loans, credit cards, and more. You can check your pre-approved offer by providing your full name and contact details.

As a potential borrower, CIBIL score is one of the integral determining factors you should keep in mind and identify if your CIBIL score is getting you down when availing finances. The scores in this scale can dictate the interest rates and amount of funds you can avail as a loan. Additionally, it can also determine whether you are eligible for unsecured and secured credit.

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Challenges on Standby for the Investment Banking Sector

Investment banking certification

The major challenges that the investment banking sector will encounter in the late 2020, or early 2021, would revolve around market digitalisation and electrification, high capital charges, layered and inflexible technology involving high degree of sophistication, stuck cost base, and stringent regulations.

This year is going to be an interesting one, provided that there will be many hurdles in the pathway to success for the banking sector? The chances are, that there will emerge a banking ecosystem that will be highly volatile. The conditions that seem most favourable, constitute the latter half of the year filled with destructive storms, similar to what happened in 2008. The chances are very slim that the investment banking sector will see a bright and rewarding 2020.

On the other hand, a small percentage of professionals in the said sector may have to let go off their respective jobs, given the degree of recession, COVID pandemic has brought in. However, there will emerge new opportunities, once the epidemic ends. Most of the professionals who have been laid off recently, will find opportunities to come back into the workforce.

For young finance graduates, it will be a great opportunity to break into investment banking, the moment pandemic ends, and the job market revives. Getting your hands on industry-relevant investment banking certifications would certainly be a great competitive advantage.

The Majority of the Year Will Go Into Dealing with Crisis Recovery

Second half of the year is expected to make investment banks busy dealing with the post economic crisis revival, and there is every chance of fin tech firms rising high amid all of this. However, the predictions many go wrong like a weather forecast, but similar to climate science, the trends always indicate the looming truth. And that’s why, it’s high time for investors and banks’ c-suite executives to plan attentively for the remaining of the year.

Top 6 Challenges That Await the Investment Banking Sector

Difficult Regulatory Norms

There is an international standard, called IFRS 9, designed and developed by IASB (International Accounting Standards Board) that oversees financial instruments. It constitutes a whole set of mandatory rules & requirements that are to be stringently followed by the banks. It leads to a different level of sophistication and complexity for bankers. BASEL, the international regulatory organization, too, has soared its minimum capital requisite for investment banks from 2% to 4.5%, advancing from BASEL II norms to now new, BASEL III norms. Such difficult standards set by the regulatory bodies can lead to many financial institutions forced to change their behaviour of working.

Service Diversification

Amid the intense competition among the different banks in the said sector, the continuous need to launch and offer new services from time to time, has become a mandate. Servicing your clients and customers well, is the need of the hour for investment banks around the world, or you simply lose them, as your immediate competition would grab the chance of attracting your client/customer towards them.

To remain competent as an investment bank in 2020, you ought to offer new and diverse services to your customers that entice them, and keep them glued to you. Coming up with new services that the clients of investment banks would like, will be a big upcoming challenge in the latter half of the year.

Profitability Woes

With the advent of BASEL III, there has come limitations to product profitability. Arrival of such new regulatory standards does affect the profit-making, and ROE (return of equity). Banks will need to dig into their current business structure to identify the loopholes, and get rid of the non-profiting services and transactions. Efficient capital management will be the key to success, as it’s quite evident that the available capital to the banks is absolutely scarce at this point in time.

Challenges with Cross-Border Service Offerings

A majority of large investment banks are known to offer international banking services, which is worth a trillion-dollar market to tap into. However, the introduction of new stringent regulations this year, have made it intensely difficult to seamlessly provide for cross-border services. The disadvantages of transacting in bitcoin (popular cryptocurrency) for international payments are not unheard of. However, blockchain has emerged among the most-promising disruptive technologies that facilitate cross-border transactions, but with the recent happenings of hackings and fraud, has put it under ‘unsafe’ category.

Cost-Management for the Services Extended

Cost-optimization would be a big worry amid the strict government regulations that are needed to be followed by the banks, in 2020. The laws been formulated off late by the governments across the world, has hit the ROE of banks really hard, and has forced them to reconsider their production costs. Bankers need to ensure that there is no loss incurred while they offer their clients, the services of their liking. And for that, performing effective cost management and detailed risk analysis is required.

Network Security

Financial service firms are the most vulnerable to malware attacks and hacking. Reports of a number of digital thefts and frauds have been observed in the recent past, pertaining to investment banks and financial institutions, globally. Banks will need to deploy stringent network security algorithms to their central servers so as to help prevent such mishaps. If the banks want to survive in this digital age, they will have to cope up well with the loopholes in the system.

 

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Why is channel financing essential for establishing a supply chain?

Channel finance can be described as a working capital financing facility, which enables channel partners like dealers, distributors or buyers to purchase goods and services. Typically, it is a short-term advance that enables supply chain stakeholders to avail funds from financial institutions for fulfilling various working capital requirements.

Additionally, several other benefits that accompany channel financing make it vital for the supply chain of a firm.

Reasons why channel finance is valuable

Channel financing offers several unique features and benefits, which is why it has become so crucial for an organisational setup.

Some of the most noteworthy benefits are as follow –

  1. Helps to meet the working capital gap

Generally, a firm’s working capital remains tied-up in its supply chain until all its invoices are processed. The said gap between sale and payment often leaves a cascading impact on various aspects of trade and retail.

With the help of channel financing, businesses can easily fulfill their working capital deficiency and continue with everyday operations. Also, a substantial loan value allows borrowers to meet all their financial requirements without straining available funds.

       2. Offers collateral-free loan facility

Facilities like invoice financing enable businesses to avail a high loan-value without pledging any asset as security. This puts borrowers at ease and enables them to access funds without going through rigorous and lengthy verification processes.

       3. Accompanies simple eligibility criteria

Leading financial institutions like Bajaj Finserv extend funding under channel financing against easy to meet eligibility criteria. Typically, the standard eligibility criteria to avail a business loan like this require the following –

  • Applicants must belong to the age group of 25 years and 55 years.
  • They should own a business for at least 3 years.
  • The business in question should have filed ITR for at least a year.

Such institutions offer customers with pre-approved offers to further simplify the process of availing finance. Such offers are provided on multiple financial products including business loans and personal loans as well. You can check your pre-approved offer online by entering your name and contact number.

      4. Simple documentation

Eligible businesses need to submit a set of documents to attest its eligibility criteria for invoice finance. Typically, applicants are required to submit documents that serve as valid proof of identity and address, like any KYC document.

Other than that they are required to furnish documents attesting for their income, such as ITR, bank statements, etc. It must be noted that documents required for a business loan for self-employed professionals and other prominent business entities may vary.

     5. Quick approval and disbursal process

Most leading financial institutions that extend funds under channel financing offer quick verification process. As a result, applicants receive faster loan approval, typically within 24 hours, as well as quick disbursal process. All these help businesses gain access to the required funds and meet their business requirements quickly.

Hence, it can be said that the benefits of channel finance help businesses to meet their working capital needs and streamline their operational activities effectively. Regardless, businesses should factor in a few things about this form of funding option to facilitate effective supply chain management. For instance, an applicant should find out more about the accompanying interest rates, the terms of repayment and additional charges and processing fee before applying for a credit.

Application process

Most financial institutions allow individuals to apply for a channel finance facility either online or offline.

One can apply for this credit option online by following these simple steps –

Step 1 – Visit the website of a financier.

Step 2 – Navigate to ‘Supply Chain’ finance option.

Step 3 – Click on ‘Apply Now’.

Step 4 – Fill up the form by providing the required details.

Step 5 – Verify the details shared and click on the ‘Submit’ button.

Once these steps are completed, representatives will contact applicants to initiate the verification process.

In a nutshell, it can be said that features like simple eligibility criteria, hassle-free application process, minimum documentation and high loan value makes channel financing an attractive funding option. Also, with a fair idea of these factors, one can benefit from this funding option and improve the quality of their operational activities significantly.

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How To Avail The Best Interest Rates On Personal Loans?

 

Best Interest Rates On Personal

Personal loans are a suitable funding option in case of an emergency since they can be availed of quickly and with minimum eligibility. Moreover, they are available as an unsecured credit, which means that borrowers do not need to provide any asset as collateral to avail this loan.

Nevertheless, interest rates on personal loans can be a differentiator as to whether a borrower opts for the advance or not. Also, with multiple factors affecting interest rates, a person with the right eligibility stands to negotiate with the lender for affordable rates.

Hence, borrowers can go through the below pointers to know how to avail the best personal loan interest rate.

Ways to avail of a personal loan at attractive rates

  • Check CIBIL Score

CIBIL score is one of the most critical parameters that lenders consider before approving a personal loan. It is a numerical representation of one’s credit history. Lenders thus refer to this score to assess borrowers’ creditworthiness.

Accordingly, a high credit score of 750 or above suggests responsible credit behaviour and the borrower is considered to be of low-risk by lending institutions. Applicants with a high credit score, therefore, stand better chances of availing competitive personal loans interest rates.

Their loan application also stands a chance of quick approval by financial institutions. Moreover, it also creates a scope for them to negotiate with their lender for a higher loan amount.

On the other hand, lending institutions charge a significant interest rate from borrowers with a poor CIBIL score. Hence, they should adopt the following measures to improve their credit score –

  • Strictly regulate their credit utilisation ratio to 30-40% of the total credit limit.
  • Pay off the maximum of their existing debts.
  • Avoid applying for multiple credit cards or loans at the same time.
  • Maintain a healthy balance between secured and unsecured credit options.

 

  • Leverage your employment credentials –

Borrowers with a stable source of income who are permanently employed at a reputed firm or organisation – public or private, are considered eligible for timely loan repayment. Hence, they stand better chances of availing personal loans with favourable interest rates. Self-employed individuals with a steady source of income, such as doctors, chartered accounts, etc. can also avail low-interest personal loans conveniently.

  • Create a positive repayment history –

Apart from the CIBIL score for a personal loan, lending institutions will also take into account your repayment history, which is a record of previous or existing loans or credit card payments. Timely payment of loan EMI and credit card bill will result in a positive repayment history creation.

In contrast, defaults and late payments will lead to a negative or poor repayment history, which in turn, can hurt your credit score, thus hampering your chances to avail a personal loan at competitive rates. Hence, you must maintain a positive repayment history to avail personal loan at low interest.

  • Look for seasonal offers –

During certain times of the year, such as the festive seasons, lenders provide competitive personal loan interest rates and other attractive schemes. You will be able to save a substantial amount on interest repayment if you take advantage of such seasonal offers. However, you should check other fees applicable to your loan before applying.

Furthermore, some lending institutions such as Bajaj Finserv also provide pre-approved offers on personal loans to facilitate hassle-free loan processing. Besides personal loans, such offers can also be availed on other unsecured credits such as business loans, credit cards, etc. You can check your pre-approved offer by entering only essential details like your name and contact information.

Borrowers should also keep in mind that there are various methods of interest calculation used by different lending institutions, which can affect the total interest payment even though the personal loan interest rate specified by the lender is low.

For instance, some lending institutions use the flat interest rate, whereby interest is calculated on the total loan amount throughout a tenor. Some lenders employ the reducing interest rate method, where the interest is calculated on the outstanding loan amount. Hence, in the former approach, the interest amount is constant, whereas, in the latter, it reduces over time.

Apart from knowing how to avail the best interest rates, applicants should also know about the eligibility criteria. Plus, arranging for all important documents required while applying for a personal loan helps streamline loan processing.

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4 Important Reasons to Apply for a Credit Card

credit card

While you may be inclined to stick with your debit card or carry around cash, using a credit card has its own benefits. In fact, with a credit card, you can both save on your spending and gain from a better purchasing experience. While being too dependent on your credit card and using more than you can repay can lead you to debt, prudent use of this tool can improve your financial health. So, if you are wondering if you should go for credit card apply, take a look at its benefits to make the right choice.

Convenience of credit

One of the major perks a credit card brings to the table is that it is universally accepted. This isn’t always true for your debit card. Additionally, credit cards give you increased purchasing power, allowing you to make big-ticket purchases without dipping into your savings. However, be wise when using a credit card as you alone are responsible for its repayment.

Financial security and fraud protection

Having your debit card skimmed, stolen or subject to fraudulent transactions is money stolen right out of your account. This however, is not the case with credit card, and due to that fact lenders provide you with a lot more security when it comes to credit cards. Some lenders such as Bajaj Finserv let you disable your credit card from your smartphone if you ever suspect fraud. Additionally, you also enjoy financial security in the instance that you’ve paid for a service but it wasn’t carried out. Disputing transactions is extremely simple and in most cases the transaction is reversed as soon as you report it.

Rewarding features to help you save

The reward system offered by credit cards is a favourite among consumers simply because of the value it adds to the purchasing experience. Some issuers let you earn points based on the transaction amount or the number of transactions and these points can be then redeemed for exclusive products and discounts. However, it doesn’t stop there. Certain issuers have collaborations with brands and offer additional exclusive deals on purchases made at those stores. For example, Bajaj Finserv RBL Bank SuperCard allows you to save up to Rs.55,000 annually.

Increase in credit score

This benefit of a credit card is especially important to those with a low credit score or without a credit history altogether. A factor that determines your CIBIL score is your repayment behaviour and credit history, and so, you can use a credit card for this purpose. Making consistent credit card bill payments will add points to your credit score and you’ll see an increase in no time! This will help you secure credit in the future on favourable terms.

These are the benefits that speak for the popularity of credit cards. Besides these, several issuers also give you access to exclusive offers through their various collaborations and this can greatly impact your quality of life for the better. This can be in the form of airport lounge access, special reservations and in some cases, even complimentary amenities. You can enjoy all of this and more when you pick the right issuer and one such option is the Bajaj Finserv RBL Bank SuperCard.

The credit card offers on the SuperCard are some of the best in the market on purchases made for travel, food, entertainment and even utilities. You get to enjoy special discounts, cashback offers and all your purchases earn you reward points, which can add even more value to your future purchases. Additionally, in emergencies you can get an interest-free loan for 90 days on your credit limit and even withdraw interest-free cash from credit card for up to 50 days from any ATM. To apply for this credit card online, all you need to do is check your pre-approved offer and view a customised deal and enjoy instant approval.