The business of petrol pump operations is long term in nature. It involves significant capital expenditure and license agreements. While the revenue earnings look attractive to most people, the owners of such businesses know that their operating expenditure (OPEX) is also huge.
Fuel retailers do need a steady supply of working capital to maintain the viability of their business in the industry. They must invest suitably in logistics, warehousing and restock fuel whenever the international market prices are low. The costs of such activities along with the usual expenses for the maintenance of the pump site at times lead to the need for additional petrol pump finance.
Just as for other businesses, loans for this stream of commercial operations can be procured from banks, non-banking finance companies (NBFCs) and the digitally active NBFCs called FinTech companies.
The process of applying for and procuring loans from traditional lenders is most often a long drawn one, and the condition of having to pledge a collateral makes borrowers hesitant. FinTech companies that accept online loan applications and soft copy uploads of documents make it easier for genuine business borrowers to avail loans at the right time. The process, being digital, is also quicker and funds are usually disbursed in 72 hours after the approval. All in all, it takes no more than a week to apply for the loan, receive the approval and get the funds in the applicant’s bank account. If you wish to apply for a petrol pump loan or motorcycle loans and prefer to get the same from an established FinTech firm, here’s what you need to do:
1. Determine Your Eligibility Criteria
A loan for petrol pump is a working capital generally granted to businesses with at least one year in operations. Also, they should have a reasonable average annual turnover. The actual amount to qualify for the fund will differ between lenders but Rs. 20 lakhs is typically the minimum sum disbursed.
2. Choose Your Lender
The Indian FinTech industry has kept pace with its global counterparts and has grown over the past decade. Search for options that best suit your business needs, and make your choice prudently on the basis of reviews, the credibility of the company website and your general understanding of this industry. Ensure that the organisation has a good network of offices and approachable customer service executives.
3. Leverage Your Digital Payment Handling System
A high number of people in the urban communities now frequently make digital payments for retail shopping, eateries and also fuel refills. The government’s Digital India initiative and November 2017 demonetisation announcement have also contributed to the trend. Petrol pumps across India have seen a significant rise in their credit and debit card-based transactions.
As a fuel pump owner, you can borrow from a FinTech company as per your cashless settlement preferences. By applying for petrol pump finance in the form of merchant cash advance, you can fulfil your short-term working capital needs. Different from a conventional loan, this is an advance granted on the basis of your future revenues or credit card sales. Looking at your daily card generated monetary receipts, a FinTech company can lend you up to 200% of the amount.
While looking at this criterion to issue the loan, FinTech companies expect at least six months of credit/debit card payment history from the applicant petrol pump. Apart from their cash payment receipts, they must have at least seven to ten customers paying via debit or credit cards every month.
4. Ensure that You Have the Required Documents
One of the many positives of borrowing from a FinTech is the convenience of uploading the documents necessary to support your application. While applying for petrol pump finance, see that the soft copies of the following are readily available on your desktop:
- Bank papers signifying your business current account for the past one year
- VAT (and from July 2017 onwards, GST) returns for the last six months preceding the loan application date
- Record statements of credit and debit card settlements for three months preceding the loan application date
- KYC documents for yourself and your promoter
Once again, the list of papers required can vary from one lending company to another and it is best to give the digital lender’s customer service team a call in case of any doubts.
5. Get a Comprehensive Understanding of the Loan Terms
Loans given as merchant cash advance are usually short-term loans, the tenure for which ranges between nine to twelve months. The amount you can borrow depends upon your operational years in business and the recent revenue streams. In India, eligible borrowers usually apply for funds in the range of Rs. 1 lakh to Rs. 1 crore.
To know all about the repayment terms, scroll carefully through the website of your chosen FinTech lender.
6. Be Aware of the Fee and Interest Rates
The processing fee for a loan from banks and traditional NBFCs varies between 2% and 3%. The new age digital NBFCs however do not keep this at more than 2%. Check the interest rate applicable on your merchant advance.
When you borrow from an established FinTech firm, you will be happy to see that there are no prepayment penalties on any loan. Therefore, it is possible to get rid of the debt as soon as you wish without having to pay anything other than the usual interest on the outstanding amount being cleared.
7. Fill Up the Application and Get the Approval Instantly
Having understood all the factors mentioned in steps above and gathering the documents, you can successfully fill in and send your application for the petrol pump fund. The decision on your application will be given within a few hours and if approved, the funds are disbursed into your bank account within two to three days.
Replenishing the working capital needs for your business is now simpler, easy to apply for and obtain, and can be repaid as per your ability to do so. Awareness of the right sources of finance and good planning for your venture will help you achieve unprecedented growth in your business.