March 24, 2019
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Online sellers are a relatively a recent addition to the shopping options. Taking advantage of technology, most such online sellers rely on a good technical back-end architecture to facilitate sales with buyers using the internet. By their very definition, online sellers can operate from anywhere without even a regular office and staff till the business grows in size and touches levels enjoyed by leading retailers like a Flipkart or even Amazon. One thing common about most successful online sellers is their emphasis on improving business through better customer service. They have limited time at their disposal as they have to constantly innovate by studying competition and other modern online trends.

Retailers who engage in online selling start small, and may not have much assets of their own. But they too look for and need finance; and understanding their peculiar circumstances, financial institutions have come out with products aimed at this category of entrepreneurs by way of collateral free loans.But then, as in any loan being considered, the prime focus will be on repayment capacity with a process laid out for these type of loans some of which are as under. A 30 day delay in repayment is the first trigger for most lenders and if remedial steps are not taken by the borrower, a careful watch is kept and reported to the rating agency with a sizeable drop in the credit score so that the lender’s eligibility for any other loan gets adversely affected.

Registration

Lenders look for retailers who are registered under various provisions for online selling.

Cash Flow

Lenders also analyse present and future cash flow patterns to assess business stability. They go through bank statements and study collections and margins while ensuring that all statutory aspects have been taken care of.

Documentation

As with any other loan, care is taken to collect relevant details regarding the firm, its promoters, nature of business as well as details of address, identity proof etc.

Online sanction

Because of the very nature of the business and the time pressure on these online retailers, application and documents are collected online and if eligible, they are able to get loans of sizeable amounts without collateral. The only difference here is that the loan is a type of personal loan carrying higher interest simply because it is unsecured.

A number of retailers involved in online selling, welcome these loans as they help them increase the size of their business quickly, urged on by the short tenure of the business loan which puts higher pressure on them for repayment from funds which has to be generated from the business.

The advantage of loans without collateral is predominantly for the borrower whilst the lender takes adequate precaution to safeguard their loans. Towards this, extra care is taken in documentation and plugging any loopholes that could lead to avoiding repayment. Lenders therefore get access to the business transactions of the borrower on a regular basis.

Rawat

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