Private Lending

Money matters and it is true as we witness it every day in our business.

We meet so many SME entrepreneurs and we see them struggle every day in the pursuit to scale up their businesses. SME entrepreneurs put in their sweat and blood to establish their business especially first-generation entrepreneurs.

MSME is the backbone of Indian economy and contributes almost 40% to the GDP of our country. Each of the SME entrepreneurs, that we meet, in our view are Smart, Intelligent, Passionate, Dedicated, and runs the soul agenda of Growing their business. When it comes to their business, they are the subject matter experts, and they know their business at the back of the hand. They know how to run operations, manage employees, manage vendors, select right customers, and ways to maximise profit. However, when it comes to raising money for the business whether it is for working capital or for CapEx or towards managing any other expenses, they get completely misguided. The situation becomes worse when they already have working capital limit and they need further immediate money in a very short span of time for fulfilling new orders or towards any other unforeseen expenditure. We see them struggle to raise this money, which actually is required immediately and also for a very short period of time. For the reason they don't want to let go this opportunity, or they need to pay off these unforeseen expenses for smooth operations of the business, we come into play as we have the largest network of private lenders in the country. Whether it is a small funding or a big funding that is required, we get it fulfilled for our customers. The source of money remains legit as it comes from lenders who are HNIs. These lenders rely on the healthy financials of the business, and they come forward to help the entrepreneur meet their financial objective.

Given that these private lenders, as the name say they are private, are very discreet, not very popular and not much known in the industry - SME entrepreneur struggle to connect with these lenders and end up compromising on things that they should not have compromised. For example - not paying the vendors on time or not paying off statutory liabilities like GST, TDS, Provident fund, etc... etc. These compromises are being done to achieve a short-term financial objective, but it becomes a big hindrance in the long run as the same vendor in future either refuses to give credit or charges a higher amount in lieu of credit to his client, similarly many repercussions for not paying Statutory Liabilities on time.

In our business, we take pride that we have helped so many of our customers getting them money at immediate notice from many of these lenders and help our clients achieve the financial objective without compromising on their day-to-day operations.

Some of the myth about the private lending are as below:

• Private lenders lend money at a very high cost which is actually not the case they are very reasonable, and they customize the lending according to the customers need and cash flow.
• Whoever approaches a private lender gets the money actually that is not the case because private lenders help the business owner to overcome a particular situation but only after a thorough due diligence of his business.
• Private lenders do not need any documents falls flat as private lenders ensure that the cashflow remains positive for the business, financials are healthy, and the repayment capability of the borrower is assessed. They also check the integrity of the entrepreneur and verify whether the business owner has been paying off all his current liabilities on time. They put their trust on the fact that the MSME entrepreneur honours their commitment and thus the private lender goes through the bank statement to ensure that there are no cheque bounces, they go through the Credit history report to ensure that there are no defaults made by the client, they go through the financials thoroughly, read the audit report, review and reconcile the sales with GST returns, they conduct physical verification of the factory and the residence of the borrower and only after establishing the fact that the borrower is genuine they take the decision whether they want to lend or not.
• Private lenders create debt trap in reality private lenders help customers to achieve the financial objective and come out of the debt trap. In fact, they customise a tailormade repayment schedule according to the cash flow of the borrower. For example if the borrower is looking to take money only for few months they customise it that way, if the borrower is looking to repay over a bit longer period of time - the repayment plan is designed that way, if the borrower is looking to repay monthly they customize the repayment frequency that way, if the borrower is seeking to repay on a daily basis they go to that extent of customising the repayment schedule accordingly.
• A private lender is not concerned about the compliance of the business of the borrower we have seen that a private lender is more thorough compared to many of the financial institutions and ensures that the borrower remains compliant as far as the regulations are concerned - whether it is about ensuring that GST returns are submitted on time, GST and other taxes are being paid within stipulated time, Provident funds are being paid to the authority, etc…
• A private lender after reviewing the documents only will lend the money in reality a private lender ensures that the borrower owns office and residence in the city and after the physical verification of the office and residence and going through the relevant documents including electricity bill, property tax receipts, maintenance bills, etc… they lend the money

Private lenders typically lend to borrowers within the city in which they are comfortable dealing with and given that they are private the custom of private lending differs from city to city and from lender to lender.

Money from the private lender should be taken to overcome a particular situation it should not be considered as a substitute of normal banking borrowing. Private lending is a great solution for businesses to tap on opportunities which needs to be monetised within a very short span of time or to overcome challenges which were unforeseen, and they have to pay off the obligation quickly.

Features of Private Lending:

• Disbursement within 48 hours
• No Collateral required
• No upfront money
• Unsecured Private Lending
• Against PDCs
• Minimal documentation
• Immediate Liquidity boost for the business
• Helps you achieve short term goals
• Does not reflect in Credit history