Bogged down with back-and-forth Drawing Power (DP) calculation, a garment wholesaler in Delhi didn’t know that his dream to expand his business would come true. Thanks to timely intervention by OneNDF (leading fintech platform in lending segment), which assisted the wholesaler secure a timely business loan worth Rs 13 crore within less than two weeks. This financial boost not only resolved his immediate challenges but also paved the way for significant expansion and growth in his business operations.
Quote Nitin Khandelwal
The biggest challenge faced by the borrower was finding a bank who could understand his business needs and address his core issues. After getting into details, we found that the wholesaler was experiencing friction with his existing bank over the calculation of Drawing Power (DP) for his cash credit limit.
The bank had asked him to reduce the limit as some debtors were more than 90 days overdue, which the bank refused to include in the DP calculation. This issue was hindering his ability to effectively manage and expand his business.
Understanding the retailer’s predicament, OneNDF proposed a strategic solution: converting the cash credit limit into an Overdraft (OD) limit and offering a part of the funds as a term loan. This approach provided a double bonanza for the retailer.
Firstly, the term loan allowed him to start repaying the principal amount of the loan, which was not possible with the constant limit where he was only paying monthly interest. Secondly, he was freed from the constraints of the Drawing Power calculation, giving him more flexibility in managing his finances.
About OneNDF
Founded in 2013 and operating diligently to address the debt financing we have successfully disbursed loans amounting to over Rs 3,000 crore and empowered over 2,000 businesses in their financial pursuits. OneNDF took a significant stride forward in 2021 and emerged as a premier digital loan marketplace specifically designed for SMEs. It quickly established itself as a pivotal fintech solution in the north Indian market, renowned for streamlining the loan acquisition process by facilitating rapid approvals from banks.
What sets OneNDF apart is its holistic approach to addressing financial crises faced by borrowers. Leveraging over a decade of rich experience, the OneNDF team conducts a thorough analysis of a business’s financial health to identify underlying issues and craft customized solutions.
This meticulous process, encompassing Credit Bureau Analysis, financial analysis, GST analysis, and Banking analysis, was instrumental in resolving the DP challenge encountered by the Delhi-based wholesaler. To discover more about OneNDF’s innovative solutions, visit the official website.
Business Requirements
- The wholesaler was seeking additional funds of INR 3 crore to fuel the expansion of his business.
- He aimed to secure these funds as a loan from a bank, with a tight deadline of less than a month to meet his financial needs.
Challenges
- The wholesaler faced issues with his existing bank regarding the Drawing Power (DP) calculation for his cash credit limit, which prevented him from obtaining additional funds.
- Furthermore, his limited understanding of the DP concept and a lack of a practical approach to credit-raising made it challenging for him to secure the necessary financing.
- Banks perceived the wholesaler as a riskier borrower, adding to his difficulties.
Solution
OneNDF proposed a multifaceted strategy to address the wholesaler’s financial challenges. Firstly, the existing cash credit limit of INR 10 crore was converted into a drop-line overdraft, providing a more flexible financial structure and alleviating the DP issue.
Additionally, a portion of the funds was disbursed as a term loan, enabling the wholesaler to begin repaying the principal amount, which was not feasible under the previous constant limit where only monthly interest payments were made.
This comprehensive approach not only resolved the existing financial constraints but also paved the way for the approval of a larger loan worth INR 13 crore, surpassing the initial requirement of INR 3 crore for expansion
Outcome
The resolution of the DP issue and the subsequent loan approval empowered the wholesaler with greater financial flexibility. With the additional funds, he was able to implement his expansion plans, which included opening new outlets, investing in inventory, and enhancing marketing efforts. The business witnessed a significant increase in its reach and revenue, demonstrating the transformative impact of OneNDF’s intervention.
