It’s a difficult world for small businesses available when they have to attain their big goals. They are able to push themselves beyond their limits while attempting to achieve their targets but what about managing cash flows? For small merchants, who sell online, Indian e-commerce players are providing all of them with a platform to access capital.
India’s growing Internet economy presents immense opportunities for that development of small and medium businesses; however, they face many challenges including limited use of credit within their entrepreneurial journey. Lack of funding has often emerged as among the key hurdles for small businesses. In fact, the majority of the lending organizations consider them “un-bankable,” which makes SMEs to shut down or borrow using their company sources at high rates.
To make financing accessible and efficient, e-commerce players are building financing solutions for that small businesses operating through their platforms.
Whether it’s Snapdeal, Flipkart, Shopclues or Jabong all are geared up to construct their businesses via helping small merchants. Snapdeal identified this challenge in early stages among the impediments to their growth and chose to address this with the Capital Assist platform, which leverages technology along with a sound ecosystem of banking partners and Nonbanking Financial Companies (NBFCs).
The Capital Assist platform premiered in 2014 and it has been working on creating an enabling ecosystem for small businesses. Capital Assist was the very first online platform in India to enable SMEs to obtain instant loan approval from financers.
Sharing the number of SMEs benefitting through this programme, Vijay Ajmera, Senior Vice President, Snapdeal, says, “Under the programme, over 300 SMEs have availed loans amounting to greater than Rs 100 crore. This programme has particularly benefited first generation entrepreneurs. The programme was launched in August this past year and possesses been running successfully for a year now.”
Currently, Snapdeal works together with a network of two,00,000 sellers from across India and intends to grow this base to 250,000 in this particular year. Capital Assist facility can be obtained to any or all Snapdeal sellers. It really works with every banking partner to build up criteria by which qualified SMEs are identified. The criteria include seller’s sales history, vintage and ratings on Snapdeal.
“On an average, sellers who have availed financial assistance through Capital Assist platform have seen 100 per cent growth within a quarter.
More sellers are willing to leverage through Capital Assist to grow their businesses,” says Ajmera. Similarly, the development Capital initiative from Flipkart offers financial help to sellers across the nation.
Within the words of Ankit Nagori, Chief Business Officer, Flipkart, “So far, around 100 sellers have availed services through Growth Capital, and loans worth Rs 4 crore happen to be disbursed till date. Although sellers across categories can avail the facility, a clean background and good customer ratings are always an added bonus.”
The interest rates start at as little as 12 per cent per annum having a fast processing of loans within two-five days. In June this season, Shopclues also entered the domain of vendor financing using its Capital Wings programme.
According to Vishal Sharma, VPOperations, Shopclues, “We now have greater than 2,20,000 sellers. These sellers or merchants invariably want to improve their businesses. So that they keep coming back to us on how we are able to support them when it comes to meeting their cash flow needs. That’s where we felt we should align ourselves with assorted NBFCs/banks and financial institutions, which can help these sellers or merchants to boost money.”
These loans include flexible repayment terms not really a curated monthly installment time. So the payment term ranges from per month to three months to six months. Shopclues makes tailor-made programmes with the help of banking institutions meeting the requirement of SMEs based on the businesses they’re doing.
Besides tying track of FinCap and Capital Float, Shopclues is tying up with some banks for big requirements. On short listing vendors on the amount and their eligibility, Sharma says, “We been employed by out a criteria based on the past trends of the merchant’s sale and vintage. So this provides a calculator that shows the amount that a merchant is entitled to.” As per Sharma, sellers in home and furnishings, mobile accessories, mobile and tablets came up in good sized quantities to take these financing options.
“The initial response was from metro but small Tier 2 and three merchants were active in the last 200 loans,” says Sharma. Shopclues processes merchants’ payments faster, helping them again on the income side. The easing from payments is dependent on merchants’ customer comments and ratings.