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Business Loan against Card swipes in India

Now it’s possible to get a Business loan purely based on the transactions you do on your E.D.C or swiping machine. This is an amazing product for those businesses who generally do not qualify for a normal business loan as this is a totally different product by design and lenders are quite comfortable lending since there is a higher probability of recovering the loan amount.

How do you qualify for this product?

  1. You need to be a card-accepting business with a minimum vintage of one year. Certain lenders will consider your online receivables as well.
  2. Since you have an online business or a physical store which accepts payment via card mode, you already possess certain documents which the bank or lender requires like company registration, G.S.T Certificate, etc.
  3. Few lenders insist on the monthly card/online payment transactions of at least 1,00,000 & above per month in your account. However, most of them would look at 3,00,000 & above transactions.
  4. You need to have a decent Credit history/CIBIL rating. However, under this product, lenders are more liberal compared to a normal business loan.

How does this product work?

  1. Once you qualify for this loan product & loan is approved you will be required to put in an EDC machine as specified by the lender.
  2. Most of the times repayment is done on daily or weekly basis. Based on your eligibility & credit profile, you could get fortnightly or monthly repayment facility
  3. The daily/weekly/fortnightly/monthly emi will be deducted at source through the merchant banker & balance amount will be settled to your current account.
  4. The rate of interest is pretty high under this product. On average you will be levied a flat monthly interest of 2%
  5. Tenure is usually limited to 6 or 12 months

Since repayments are on daily/weekly/fortnightly mode, lenders receive payments much faster. Also, tenure is limited to shorter period which reduces the risk to large extent to the lender.

Moreover, banks & other lenders have started lending to segments that normally was considered a negative or Risky profile through this product. This includes petrol pumps, bars & restaurants, garment shops, etc. More customers have joined the loan bandwagon.

Have a business accepting cards or online payments and looking for advice? Get in touch with us

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