Loan Against POS Machines to Run Your Business Without a Break
Last Updated : March 6, 2019, 5:55 p.m.
Expansion or say innovation is the answer to survive the fierce competition existing in every sphere of life these days. And more so in the world of business where everyone is fighting tooth and nail to step ahead of each other. To help businesses run smoothly and surviving the pressure of the intense competition, banks and non-banking finance companies (NBFCs) are even providing loans to merchant establishments having Point-of-Sale (POS) machines that accept debit card and credit card payments . These can be disbursed either on the basis of business loans or overdrafts by the lenders.
These Loans, which can be said as merchant cash advance in the lending terminology, are granted up to 2-5 crores for a period of up to 3 years. Sounds exciting, isn’t it? The actual loan disbursement would, however, depend on the business volume generated through these POS terminals for a specific period. So, where should you apply for such a loan given that there are a handful of players in this space?
Well, for that, you must read the article featuring every single detail pertaining to loan against POS machines. Let’s approach the session by discussing the loan offers of each bank or NBFC separately.
SBI Power POS Loan
State Bank of India (SBI) never takes a backseat when it comes to offering diverse financial solutions. To maintain a strong grip in the lending space, the banking giant offers loan against POS terminals with SBI Power POS Loan.
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business volume via POS |
| Minimum loan amount | ₹25,000 |
| Maximum loan amount | ₹5,00,000 |
| Maximum loan tenure | As applicable |
| Processing fee | As applicable |
| Eligibility | The loan is sanctioned only after 6 months of installation There must not be any commitment charges on the terminal due to the lack of its activity The transaction volume generated via the POS must not be less than ₹1.25 lakh in the last 6 months |
ICICI Bank Loan Against POS Machines
The private sector biggie ICICI Bank offers the loan to retailers and merchant establishment against the credit card swipes. However, the bank secures the loan by asking you to submit a collateral security to procure the same.
| Loan Aspects | Details |
|---|---|
| Interest rate | 10.75% per annum (Floating) |
| Maximum loan | ₹2 Crores, ₹50 Lakhs for new entities |
| Maximum tenure | 3 years |
| Processing Fee | Up to 2% of the loan amount plus applicable Goods and Services Tax (GST) |
| Eligibility | Organizations with 3 years of business vintage |
| Security needed | Residential or commercial property |
Kotak Mahindra Bank Loan Against Credit Card Swipes
Kotak Mahindra Bank is another lender offering loans against the credit card swipes made at POS terminals held by business enterprises. Check out in the table below the critical information pertaining to the loan type.
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business assessment, loan amount required |
| Maximum loan | Up to ₹3 Crores |
| Maximum tenure | As applicable |
| Processing Fee | Up to 3% of the loan amount plus applicable GST |
| Eligibility | Sales made via credit card swipes must be more than ₹60 lakhs in a year The organization must have generated positive profit before tax (PBT) for the last 2 years The business must have been in the existence of 3 years or more The customer must have its own premise by which the business is conducted |
| Security needed | No need to submit any security |
Above you saw the list of banks that fund businesses based on the card swipes made at their POS terminals. Now, let’s get into the list of NBFCs that offer loan against the card swipes.
NeoGrowth Loan Against POS
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business assessment, loan amount required |
| Maximum loan | Based on the current business performance |
| Maximum tenure | Up to 2 years |
| Processing Fee | As applicable |
| Eligibility | Average sales made via card swipes must be ₹2 lakhs on a monthly basis. The organization must have been carrying the business for at least 2 years A minimum 1 year of credit card or debit card swipe is also needed |
| Security needed | No need to submit any security |
Capital Float Loan Against Card Swipes
Capital Float is one of the non-banking finance companies actively involved in funding the business enterprises seeking loans against the card swipes. The details of the loan are shared in the table below.
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business assessment, financials, loan amount |
| Maximum loan Amount | Up to ₹1 Crore |
| Maximum tenure | Up to 1 year |
| Processing Fee | 2% of the loan amount plus applicable GST |
| Eligibility | The business must have been operational for a minimum of 1 year The minimum turnover needed is ₹20 lakhs The monthly card business volume must be a minimum of ₹5 lakhs Must have a minimum card acceptance vintage of 6 months Minimum of six settlements a month is required |
| Security needed | No need to submit any security |
Clix Capital Loan Against POS
Clix Capital is another NBFC that offers collateral-free loan to business enterprises based on the sales generated by the POS terminals installed at their outlets. For more information, you can check the table below.
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business assessment, financials, loan amount |
| Maximum loan Amount | Up to ₹30 lakhs |
| Maximum tenure | Up to 18 months |
| Processing Fee | As applicable |
| Eligibility | The minimum business vintage must be at least 2 years Must have been using the POS machine for at least a year The minimum card sales volume must be at least ₹2 lakhs per month Must have an ownership proof of residence or business premise in the applicant’s name or his/her parents or spouse |
| Security needed | No need to submit any security |
Flexi-Merchant Cash Advance from FlexiLoans
FlexiLoans is an online lending platform that keeps a close watch on the emerging needs of small to medium scale enterprises with products such as loans on the basis of card swipes. The below detail would give you a clear idea of the loan offer.
| Loan Aspects | Details |
|---|---|
| Interest rate | Determined on the basis of business assessment, financials, loan amount |
| Maximum loan Amount | Depends on the volume of business generated by card swipes |
| Maximum tenure | Up to 1 year |
| Processing Fee | Up to 2% of the loan amount plus applicable GST |
| Eligibility | The minimum business vintage must be at least a year Must have been using the POS machine for at least 6 months The minimum card sales volume must be at least ₹50,000 per month The annual turnover and net profit must be a minimum of ₹12 lakhs and ₹3 lakhs, respectively Must have an ownership proof of residence or business premise in the applicant’s name or his/her parents or spouse |
| Security needed | No need to submit any security |
Documents Needed
The documents can vary according to the type of organization – Sole Proprietorship, Partnership or a Limited company. Check out below the documents needed for each of these organizations.
| Type of Business Organization | Identity Proof | Residence Proof | Income Proof | Business Establishment Proof |
|---|---|---|---|---|
| Sole Proprietorship Firm | PAN Card/Voter ID/Aadhaar Card/Passport/Driving License of an individual, security providers or guarantors. PAN and Aadhaar of proprietorship firm is also needed | Voter ID/Aadhaar Card/Passport/Driving License/Utility Bill of sole proprietor, security providers or guarantors | Last 6 month bank statement showing the income made through POS transactions Credit Card Sales Statement for the last 12 months (for loans granted against credit card payment at POS) ITR, profit & loss account and audited balance sheet for the last 3 years Current year performance and a projected turnover of the organization’s letterhead | VAT/Sales Tax/GST Registration Number of Shops |
| Partnership Firm | PAN Card/Voter ID/Aadhaar Card/Passport/Driving License of partners, security providers or guarantors. PAN and Aadhaar of Partnership firm is also required | Voter ID/Aadhaar Card/Passport/Driving License/Utility Bill of partners, security providers or guarantors | Last 6 month bank statement showing the income made through POS transactions Credit Card Sales Statement for the last 12 months (for loans granted against credit card payment at POS) ITR, profit & loss account and audited balance sheet for the last 3 years Current year performance and a projected turnover of the organization’s letterhead | Partnership Deed & Partnership Letter |
| Company | PAN Card/Voter ID/Aadhaar Card/Passport/Driving License of company directors, security providers or guarantors. PAN and Aadhaar of the company is also required | Voter ID/Aadhaar Card/Passport/Driving License/Utility Bill of company directors, security providers or guarantors | Last 6 month bank statement showing the income made through POS transactions Credit Card Sales Statement for the last 12 months (for loans granted against credit card payment at POS) ITR, profit & loss account and audited balance sheet for the last 3 years Current year performance and a projected turnover of the organization’s letterhead | Certificate of Incorporation, Memorandum & Articles of Association |
How to Apply for Loan Against POS Terminals?
You can do it online or by visiting the nearest branch of the lender. The online application would require feeding relevant personal and business details, as well as information pertaining to the POS terminal. Furnish those details properly before submitting the application. The lender would go through the application before sending an executive to pick up the document from your shop, office or residence. The details, if matched properly, would result in an approval and subsequently the disbursal to your bank account.
Whereas the offline application would require you to take some time off your business schedule and visit the branch of the concerned lender with the list of documents. The lender would scrutinize the details, as is the case with the online application, and give approval only when they are verified successfully.
Why Does It Make Sense for Businesses to Go for Loans Against Card Swipes?
It makes sense for businesses to go for loans against card swipes because of the increase in transaction volumes through the machine. If the RBI report on Bank-wise ATM/POS Card Statistics is to be believed, POS transactions made through credit cards and debit cards stood at ₹5,42,347 million and ₹5,31,416 million respectively, in December 2018, which were ₹4,14,371.53 million and ₹4,11,026.86 million at the end of January in the same year. This means an approximately 30% growth in the transaction volume by both credit and debit card-enabled POS transactions.
On the other hand, the number of credit card and debit card transactions at POS terminals stood at 13 crore and 30.13 crore respectively, in January 2018. By the time 2018 ended, the count of credit card and debit card-enabled POS transactions went up to 15.83 crore and 38.75 crore. If you talk in percentage terms, the growth has been approximately 22% (credit cards) and 29% (debit cards).
The rampant rise in business volumes through POS offers an exciting opportunity for merchant establishments to take loan against the same to ensure sufficient working capital to run the business smoothly. Collateral-free loans offerings from NBFCs, as stated above, only make it easier for businesses to access the credit type.