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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.

Point of Sale Features

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

Benefits of POS System

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

Learn How a Loan Against the POS Machine Can Help Start a Business

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.

Eligibility Criteria for A Loan Against a POS Machine

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

Documents Required for a Loan Against POS Machines

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

Read More

How to Apply for a Loan Against a POS Machine

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.

FAQs on Loan Against POS Machine

What advantages does the Loan Against POS/Merchant Cash Advance provide you?

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.

What is the credit limit on the loan against POS machines?

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.

Is a Loan Against a POS machine a good idea?

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.

How can repayment of Loan Against POS be facilitated?

Repayment is handled instantly through daily POS machine transactions, thus eliminating the tedious process of regular EMI repayment.

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