FINANCE

Types of Unsecured Loans Available in India

By on July 15, 2021
Unsecured Loans Available in India

Business finance may seem tricky at times. Especially in a dynamic environment like today, as a business owner, you may often find yourself wondering about the best possible way to fund a particular business need. Business needs can vary between purchasing assets such as land or leasing a factory or shop or buying new machinery, working capital requirements, or basic operating expenses such as overheads and salaries. Here are ten different types of unsecured business loan available for entrepreneurs in India.

Term Loan

One of the most common types of business finance is a term loan. The loan could be secured or unsecured. The amount available depends on the business’s credit history. A term loan is taken for a specific purpose, generally for capital expenditure. 

Start-up Loan

A start-up loan is for new business ventures. Applicants for such loans may not have an excellent credit history on their company due to a lack of business vintage. The current turnover figures and other financials are also considered to decide the loan amount, tenure, and interest rate applicable. 

Working Capital Loan

Working capital loans is a type of unsecured business loan taken to overcome the shortage of cash to operate a business on a day-to-day basis. It generates a balance in the cash flow necessary to run a business. This loan is also helpful to deal with a shortfall of cash during the off-season or meet demand during a peak season. Most eligible applicants are service providers, manufacturers, wholesalers, retailers or traders engaged in exports and imports.

Also Read:- Line of Credit – Know Meaning, Definition, Types & Advantages

Invoice Financing

Invoice financing is also known as invoice discounting or invoice factoring. This type of funding is primarily for small businesses that encounter a time lag between raising invoices and receiving payment from the clients. The financial institution provides funds against the amount raised in the invoice. 

Equipment Financing

It is the manufacturing businesses that usually opt for equipment financing or machinery loan. Manufacturing units require costly equipment for the operation of their business. And to purchase the machines, out of all the types of business loans, equipment financing is the most preferred one.

This is because machinery loans are specific in nature, wherein the equipment in question is taken as collateral along with some other security. The interest rates could be lower than those charged on term deposits.

Business Loan for Women

Some of the financial institutions have special schemes on an unsecured business loan for women entrepreneurs. Even the government of India has initiatives in place to encourage women to establish small to medium-sized businesses. 

Merchant Cash Advance

Here, the financial institution provides an advance of capital on a portion of daily debit card sales or credit. The borrower has to repay then the advance with a part of the daily credit sales. The borrower must ensure that they have enough cash flow to manage the payments. The advantage of a merchant cash advance is that the person has to pay as per the daily sales. So, if the business is slow, the amount to return is also low, and when the company is doing well, one can repay more.

To Conclude

It is advisable to select a business loan based on your business profile and requirement. The above-provided information will help you as a business owner decide the type of financing best suited for your venture. Oxyzo offers unsecured business loan of up to two crores for businesses to manage their working capital requirements.

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BUSINESS | FINANCE

Line of Credit – Know Meaning, Definition, Types & Advantages

By on July 13, 2021
Line of Credit - Know Meaning, Definition, Types & Advantages,

Similar to credit cards, the line of credit for business is a revolving credit account that lets you borrow up to a limit without having to borrow the total amount at a go. They can be used in almost anything and are suitable for borrowers who may need funds but at different points in time. 

However, compared to other loans and credits, a line of credit carries a lower interest and gives variable access to funds to users. Let’s know about the line of credit in detail and how it works.

What is a Line of Credit for Business?

A line of credit is an unsecured and ready source of funds, which can be used for business needs. The borrower can withdraw funds from the line of credit loan account either through bank transfer or line of credit cheques. Every borrower is allotted a credit limit for the loan term and can withdraw from that as many times as the borrower wants.

The loan withdrawn must be repaid with interest on the outstanding balance as per the terms of the lender and preset repayment schedule. During the line of credit facility, the borrower can also increase the credit limit based on their usage pattern and credit profile.

Different Types of Lines of Credit

Lines of credit are broadly classified into two categories:

#1: Secured Line of Credit

In this particular line of credit, you have to pledge your assets to get the line of credit loan for business. Failure to pay the amount borrowed, the lender will liquidate your assets to cover the losses. 

#2: Unsecured Line of Credit

Under this type, you don’t have to pledge collateral to open a line of credit loan account. The lender extends the facility based on your eligibility and their own policy. Compared to the secured line of credit, the lender charges a higher rate of interest for this category. 

The business line of credit is the most common type of line of credit availed by businesses to meet the business expenses of an ongoing nature such as working capital requirements, wage payments, inventory etc. It is offered to individuals with a high credit score, good credit history, with a favourable debt utilization ratio. 

How Does the Line of Credit Work?

LOC is a very flexible credit option for individuals and allows withdrawals according to the borrower’s requirements. Further, the interest is only levied on the amount borrowed, not on the entire credit limit, and there is no compulsion to use the whole line of credit.

Advantages of Line of Credit for Business.

  • Lower interest rates
  • High borrowing limit
  • Cost-effective
  • Flexible repayment option
  • Constant access to funds
  • Best for meeting long term project costs, temporary cash shortfalls and emergency

Allows for better planning, as you would have only borrowed the amount you need and wouldn’t give in to impulse purchases at a later point in time

Should You Apply for a Line of Credit?

Business LOC is an excellent financial tool but is not for everyone. It is suitable for only those who require constant access to funds due to an irregular or unpredictable set of requirements. Further, you need to have a good credit score to qualify for the facility and maintain the same. In the event of default, the lender may stop your business LOC facility, which will adversely affect your credit score.

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FINANCE

Why is an FD Always Better than Saving Account?

By on January 23, 2021
Finance

People who are looking for simple and stable investment options prefer investing in a savings account or a fixed deposit plan. Though both these instruments are safe, the savings account might not provide sufficient returns even if you keep your savings intact for a longer period. This is because the interest rate of FDs is usually twice as much as the interest rate offered by savings accounts. 

However, the recent decline in the bank FD rates has put forward a new confusion among the investors as to whether the FDs are still as good as before. These are some factors that help you to compare these two investment options:        

Interest rates 

Fixed deposits offer a much higher FD interest rate than savings account. The interest generated is also much higher as FDs compound your interest after every quarter that a savings account doesn’t. 

If you want to earn better interest gains then you can deposit in a high-paying FD like Bajaj Finance FD that offers FD rates up to 6.85%. 

By investing in its senior citizen deposit scheme you will get a 0.25% additional FD rate. Non-seniors can invest online by using an online FD form to get an extra FD rate of 0.10%. 

Flexible tenor

Savings account enables you to keep your deposits intact for as much as you want but you will have to maintain a minimum account balance. FDs provide more flexibility when it comes to tenor as they come with a broad tenor range. 

For example, Bajaj Finance FD allows you to pick a tenor between 12 and 60 months and you can start investing in a fixed deposit plan with a minimum amount of Rs. 25000. 

The option of dividing the corpus and investing it in multiple FD schemes and types is also available. This facility enables you to ladder your FDs smartly to meet your fund requirements in the future. 

Liquidity options

You can withdraw as much amount as you need from the savings account while maintaining the required minimum balance. You will not get the option of availing a loan against your savings account whereas some financiers like Bajaj Finance are offering an easy loan against FD. 

To calculate the maturity value precisely, you can use an FD calculator India that is available on the portal of banks and NBFCs. Also, the lenient withdrawal policies of FDs allow you to liquidate your investment whenever required. To be eligible to receive this benefit, your deposits need to complete at least 3 months from the date of investment. 

Periodic interest payouts

FDs provide the option of choosing between periodic payouts and accumulated earnings by investing in non-cumulative or cumulative FDs respectively. For example, the non-cumulative FD from Bajaj Finance enables you to pick between monthly, quarterly, six-monthly, and yearly interest payout options as per financial needs. 

Moreover, it is a safe investment avenue as reputed credit rating organizations such as ICRA and CRISIL have rated it highly for its stability and safety.

Savings accounts and FDs are safe investment options but there is a vast difference between both of them. A savings account might be less restrictive when it comes to the method of investment and tenor but it does not provide the options that an FD provides. For instance, an FD compounds the interest after every quarter whereas no such facility is provided by a savings account. Also, the option of availing the interest payouts periodically is not provided by a savings account.

One of the best FD plans is offered by Bajaj Finance as it multiplies your invested amount at a faster rate, provides convenient withdrawal features, and is also a safe option as it has received high ratings for being a stable instrument by credit rating organizations like CRISIL and ICRA.

Author Bio:Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.

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FINANCE

How can you open an SBI savings account online in minutes?

By on December 16, 2020
SBI

Do you have any savings accounts in any bank (SBI saving bank account, CBI savings bank account) or not? 

If not then you should do it.

Everyone should have a savings account so it makes you financially secured. Everyone should save a small amount of money from his monthly income that you can use anywhere to fulfill your needs. Many banks have introduced the online facility to open a bank account so everyone can utilize the banking services from the comfort of your own home.

The time has passed when you visit the bank then move to many desks to get a savings account form and other services. SBI has launched an online banking application YONO to make the SBI saving account process easier.

Positive points of SBI saving bank account online

YONO is an online application developed to serve SBI banking facilities in a more convenient way. If you are interested in SBI banking facilities, SBI savings account interest rate online. Here  follow the below steps to get an SBI saving bank account online.

Procedure for SBI savings account online

It is an online application that only needs a smartphone or PC with an internet or Wi-Fi facility to access the interface of the app and SBI’s official website.

This process will be performed in a proper digital format or paperless process.

To open an SBI saving account online, you only need your PAN card, Adhar Card.

Download the app, and when you successfully enter the interface, just fill in the details of the PAN card and AADHAR CARD. 

After that, you will receive an OTP, enter this in the required field and proceed with the further steps.

You can also fill the nomination facility.

With this online system, you can access your bank account information 24×7.

SBI Quick Missed Call service and SMS alerts will also be available for online bank holders.

Once the account is created, the SBI account will also provide an ATM card to facilitate all the transaction facilities as we receive in offline or paper mode account opening bank system. 

This online process hardly takes 10 minutes to complete the registration and bank account activation process.

Don’t share the OTP that you are receiving to open an SBI saving account online or there are chances of data loss. So please be careful as there are many fraud entities are involved in the real world. Sharing any kind of personal and financial information loss may put you in an uncomfortable situation.

SBI saving account for children

You should encourage your children to save money and teach them necessary and unnecessary expenses so they can understand the value of money. You can open a savings account for your children to introduce them to banking services to make them independent.

SBI has a wide area network of banking services that avail or earn the 2.75 interest rate from April 2020. As we have mentioned, find the process that you can perform from the comfort of you within a few minutes. So you can be financially secure like other people. You have multiple alternatives, either you can opt for a basic SBI saving account online or a small savings account.

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