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Explore loans against POS machines in detail.
Point of Sale (POS) machine is a financial product offered by various lending institutions in India. These systems are a critical component of any retail or hospitality business. They are a quick and convenient way for small and medium-sized businesses to make smooth financial transactions while also having the option to access short-term funding if necessary.
POS loans are similar to merchant cash advances and provide businesses with immediate cash flow. This type of loan is typically used to purchase inventory, pay bills, or cover unexpected expenses. To know more about the loan against POS machines, read on.
The POS systems found in retail establishments such as stores, kiosks, and hotel receptions are quite advanced. They are loaded with features, allowing business owners to offer their customers a wide range of perks. Additionally, a POS system can include features such as barcode scanning, credit card processing, and customer loyalty programs. These systems are used in a wide range of businesses from small retail shops to large department stores and hotels.
Some of these features include the following:
Keeps track of stocks and quotations
Manages inventories and processing sales
Maintains customer invoices and supplier records
Assists in the issuance of procurement orders
Eliminates the burden of maintaining price tags
Creates barcode labels covertly
Generally utilised in retail establishments Records and executes transactions that occur during the sale of services or goods
You can benefit from a POS system in the following ways:
Monitors sales patterns, price, gross income, and inventory levels across all locations
Manages stock to generate product variants
Uses a special serial number to identify inventory items
Creates a single order that combines orders and purchases
Assists in the digital scanning and counting of items
Businesses can take POS loans of up to ₹3 Crores or higher depending on the size and the scale of their business. The loan amount varies based on the volume of business generated through POS terminals. Lenders provide hassle-free processing services and often competitive interest rates which can go as low as 1.5% per month.
These loans can give them the initial stability and resources they need for them to succeed and be self-sustaining. The liberty of a POS loan allows businesses to start a new line of credit under a parallel credit system. This is what makes it so dependable. The daily EMI payments are based on the income made that day; therefore, the debited amount varies according to your daily income.
The eligibility rules can be characterised as follows:
Minimum 1 year's worth of business operations
A minimum amount of card transactions per month (may vary based on the lender)
Current Account with the respective bank
Minimum six-month usage of POS
ITR for two years if the turnover exceeds ₹10 Lakhs
The documentation to apply for a loan against a POS system differs depending on whether the organisation is a limited corporation, a partnership, or a sole proprietorship.
Proof of Identity
Passport
Driving licence
Voter ID
PAN card
Aadhaar and PAN card of guarantors or the borrowers of the company
Proof of Residence
Voter ID of the borrowers and guarantors
Aadhaar Card
Passport
Driving Licence
Utility Bill
Proof of Income
Bank statement from the previous 6 months displaying the revenue from POS transactions
Last 12 months’ Statement of credit card sales
Last 3 years' audited balance sheet, ITR, and profit & loss account
Performance proof for the current fiscal year and projected turnover
Proof of a Business Establishment
For sole proprietorship: Number of Stores Registered for Sales Tax, VAT, and GST
For partnership firms: Partnership Agreement and Letter
For a company: Articles of Association, Memorandum, and Certificate of Incorporation
There are two ways to apply for this credit facility, which include online and offline methods:
Online
Visit the lender’s portal.
Enter important personal and business information along with the POS details.
Complete the application by providing the data appropriately.
The loan will be processed by an authorised representative.
On approval, the funds will be disbursed to you.
Offline
To apply for a loan against a POS system offline, simply visit the branch of the lender with all the required documents. The lender will evaluate your application to take it further. Once the criteria are met, they will then verify the documents and approve the loan.
You get instant access to funds. The interest rates are competitive. The paperwork is minimal. The loan amount and the tenure are flexible. Moreover, a specified percentage of the daily collection is transferred to the lender’s account automatically. This makes Loan Against POS/Merchant Cash Advance an excellent option for your financing needs.
You can get a credit limit ranging between ₹50,000 and ₹3 Crores or more. It largely depends on the volume of business generated through the POS terminals.
The loan against POS can be useful if you’re looking for financing for business expansion or to increase working capital. It is a safe, flexible, and simple way to run a parallel line of credit for your business.
Repayment is handled instantly through daily POS machine transactions, thus eliminating the tedious process of regular EMI repayment.
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