Drip Capital apprises SME exporters in Ghaziabad about alternative working capital solutions
New Delhi, Feb 7 (KNN) Trade finance firm Drip Capital apprised the SME exporters in Ghaziabad about the alternative working capital solutions like factoring firms and NBFCs alternative financing solutions.
They had organized a seminar on ‘Interactive sessions on Export Factoring: Easy access to unsecured finance for SME Exporters’, organized in association with the EEPC (Engineering Export Promotion Council).
According to Drip Capital release “SMEs account for 40% of India’s total export volumes but are some of the most underserved when it comes to working capital provisions. With Demands for collateral, long processing times, heavy paperwork burden, and other such factors contribute towards making working capital highly inaccessible for SMEs. Institutions like factoring firms and NBFCs offer alternative financing solutions.”
However, it said that many SME exporters are unaware of these offerings and need to be educated about the same. One of the easiest such alternative methods is invoice factoring.
Presented by Ankit Verma, Director, Business Development, Drip Capital, the event was graced by Gavinder Pal Malhotra, Assistant Director, EEPC and SME exporters community from Ghaziabad.
Explaining invoice factoring process, Verma said “At its most basic, invoice factoring is a process of procuring finance by selling the invoices of your transactions to a third party known as the factor. Based on your transaction history and other parameters, the factor gives the seller (the exporter) a credit line which they can then use to finance further transactions to other buyers (importers).”
He asserted that in most cases, the seller gets 80% of their invoice value upfront from the factor (often without the need for collateral), and the remaining 20% minus the factor’s fees and interest -- after the buyer transfers the value of the invoice to the factor.
He said “Ghaziabad and its adjacent districts are also major producers of foodgrains in India. Most of the states’ population depends upon farming activities. Wheat, rice, pulses, oilseeds and potatoes are some of the major agricultural products. Sugarcane is the most important cash crop throughout the state. The destination is also known for exporting potatoes and Basmati rice.”
These factors combine to make Ghaziabad a bustling hub of the SME exporter ecosystem. However, many of these SMEs face severe issues with managing their working capital because of a lack of adequate financing options, Verma pointed.
In order to solve this problem, he said that the Drip Capital provides collateral-free post-shipment finance to Indian exporters with instant approvals and minimal documentation.
Ghaziabad in Uttar Pradesh is also referred as the “Gateway of UP” as it is close to New Delhi. Uttar Pradesh is the second-biggest state economy in the country and has emerged as a hub for IT companies. The state ranks fourth in the country in terms of software exports, with trade of about US$957 million in the sector.
Drip Capital is a US-based trade finance firm, providing collateral-free post-shipment finance to SME exporters with instant approvals and minimal documentation. (KNN Bureau)