Do Not Call
Understand how Channel Financing helps optimise your supply chain funding.
Channel financing is a type of working capital loan offered by banks and NBFCs. This loan is designed to help companies manage their supply chain more efficiently. This type of financing is especially suitable for distributors, dealers, and buyers who purchase goods or services from a corporate entity. When a manufacturer company sells products to several dealers, the dealers might not always have money to pay the company immediately. With the help of channel financing, banks and NBFCs pay the company on behalf of the dealers or distributors. The dealers or distributors can later repay the bank or NBFCs.
As a dealer or distributor, you can get loans of up to ₹50 Lakhs. It allows flexible repayment tenures ranging from 12 to 96 months, with interest rates starting from 14% p.a.
Channel financing is a structured funding solution designed to optimise working capital across the supply chain, offering advantages to both suppliers and buyers. It typically involves three key players, namely the corporate anchor (supplier), the channel partner (distributor, dealer, or buyer), and a financier (bank or financial institution). The channel partner places an order with the supplier. Instead of waiting out standard payment terms, the supplier can use channel financing to receive early payment from the financier. This accelerates cash flow and eases working capital pressure for the supplier.
The financier assesses the creditworthiness of the channel partner. Once approved, the financier pays the supplier directly, and the channel partner is offered a repayment window. This window is often accompanied with flexible terms aligned with their cash flow. Financing options may include bill discounting, overdrafts, or cash credit facilities. As for the corporate anchor, this model ensures a smooth and consistent supply chain, improves partner relationships, and boosts liquidity. For the channel partner, it allows for procurement without upfront payments, supports day-to-day operations, and may even unlock early payment benefits.
Below are the benefits of channel finance that make it a valuable tool for businesses looking to optimise liquidity and strengthen supply chain relationships:
Channel financing involves an easy loan application process. If the documents are clear, the funding gets cleared in just as few as 3 days.
Eligible profiles can get collateral-free loans up to ₹50 Lakhs through channel financing
The loan account can be operated and managed conveniently through any device from anywhere
Flexible repayment tenure ensures a smooth payment process. The loan can be repaid within a short-term or long-term depending upon the business revenue. One can choose from 12 months up to 96 months.
Have a look at the table below for the typical interest rates and associated charges for channel financing facilities offered by various lenders:
Available Offerings |
Min Interest Rate (p.a.) |
Processing Fee |
|---|---|---|
Aditya Birla Capital UDYOG PLUS Business Loan |
22% |
3% to 4% of the loan amount + GST |
Ambit Finvest Business Loan |
20% |
3% of the loan amount |
AYE Finance Business Loan |
29.50% |
Up to 2% of the loan amount |
Bajaj Finance Business Loan |
14% |
Up to 4.72% (Inclusive of applicable taxes) of the loan amount |
FlexiLoans Business Loan |
18% |
Up to 2.5% of the loan amount |
IIFL Finance Business Loan |
16.50% |
Up to 2.50% of the loan amount + GST |
InCred Business Loan |
24% |
2% to 5% of the loan amount |
Indifi Business Loan |
22% |
Up to 3% of the loan amount + GST |
KreditBee Business Loan |
18% |
3% to 4.25% of the loan amount |
L&T Finance Business Loan |
15.50% |
2% + GST |
Lendingkart Business Loan |
19.20% |
Up to 3% of the loan amount |
Protium Business Loan |
20.5% |
1% to 6% of the loan amount |
Credit Saison Business Loan |
22% |
Up to 4.72% (Inclusive of applicable taxes) |
UGRO Capital Business Loan |
24% |
Nil |
Disclaimer: The interest rates and charges presented above are indicative and subject to change based on the lender’s discretion and prevailing market conditions. Borrowers should verify with financial institutions for the most accurate and updated terms before making any decisions.
Channel financing is offered to eligible micro, small, and medium enterprises (MSMEs). The business owner should:
Minimum annual income: Must be ₹1.5 Lakhs as per ITR
Property: Own either a business property or a residential property
Business vintage: At least 3 years
The business owner should offer the following documents when applying for Channel Financing:
Certificate of business existence
ITR for the last year
House and business address proof
PAN card
Aadhaar card
Profit and loss statements for the past 3 years, etc.
Let’s take a look at a few of the positive effects that it has had on the supply chain:
Keeps the Supply Chain Active
Businesses can ensure that there are no disruptions in their supply chain due to lack of funds. They can also quickly scale up their supply chain to meet a sudden spike in demand.
Helps Manage the Inventory Better
Having adequate inventory is an important facet for businesses and they can get the funds needed to shore up their inventories in accordance with the market demand without any hassle.
Enhances the Relationship Between the Business and Its Customers
The customers might tend to delay payments until the due date, while businesses want to quickly get their invoices paid, leading to a friction between the two. Channel finance helps to reduce this friction through seamless transactions, ensuring a healthy relationship between both.
Instant Access to Funds
The ability to get instant access to cash streamlines the supply chain of a business by increasing liquidity. Also, thanks to low channel financing interest rates, the burden of debt is also very low.
Follow the steps below to apply for a Channel Financing loan in a hassle-free manner on Bajaj Markets:
Click on the ‘Check Eligibility' option on this page
Enter your basic personal and business details in the online application form
Enter the loan amount and preferred repayment tenure
Submit the form for verification
Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.
The interest rate for channel financing is competitive, starting as low as 14% per annum, depending on the loan tenure. A strong credit score can improve your eligibility and help secure more attractive interest rates.
Channel financing is an innovative form of funding that enables businesses to get working capital from a third party (a lender in the form of a bank or NBFC). They provide the businesses operating within a supply chain. The supplier sells its invoices or receivables to the financing provider at a discount, and the distributor can make the payment at a later date, often agreed upon by the lender.
The primary objective of the channel finance facility is to provide businesses with funds for their working capital requirements. Through this credit facility, businesses can ensure that their operations go on smoothly without any interruptions.
When it comes to supply chain finance, the maximum limit that you can borrow depends on various factors like the requirements of the business, how long the business has been in existence, its financial situation, and creditworthiness, among others.
Channel finance is different from traditional loans as they are typically extended to individual businesses based on their creditworthiness, while channel finance is based on the strength of the entire supply chain and the transactions within it.
The difference between channel finance and supply chain finance lies in their focus. Channel finance supports distributors and dealers by providing them credit to purchase goods. Supply chain finance, however, is pivotal on suppliers getting early payment for invoices, leveraging the buyer’s creditworthiness to improve cash flow for both parties.
.webp){kind=icon}
