• E-Commerce Loans in India

    The e-commerce market has posted tremendous growth over the last few years with several lakhs of customers moving to online marketplaces in order to get lucrative deals on a wide range of products and services. Banks have subsequently taken cognizance of the massive growth prospect that still prevails and have begun to extend loans to e-commerce companies to help them grow their business operations and increase market penetration. Several top banks have designated dedicated loan services specifically to e-commerce companies – these loans cover small, medium and big market players. With the market becoming highly competitive with the passage of time, loans have come as a boon to several e-commerce companies that are adding great value to the services they provide.

    As mentioned earlier, several top banks have taken up the cause of lending to e-commerce companies with the intention to foster their growth. Besides banks, venture capitalist companies are also investing significantly in several e-commerce companies in India, mostly because of the market potential. Venture capitalists extending loans to e-commerce companies aren’t based just in India – several foreign companies have also shown keen interest in the Indian e-commerce sector. Let us look at some options available to e-commerce companies – those that mostly small and medium enterprises – in India.

    The SBI e-Smart SME E-Commerce Loan

    SBI, India’s largest bank, has launched the e-Smart SMS e-commerce loan that seeks to fund the growth of e-commerce companies in India. The loan is mostly structured to benefit Small and Medium Enterprises (SMEs) in their quest to meet market standards and become more competitive in the fast-growing market. SBI has launched this initiative in partnership with Snapdeal, one of India’s largest e-commerce companies.

    Here are some salient features of the SBI e-Smart e-commerce loan:

    • Under the MUDRA Loan scheme, no collateral is required for amounts under Rs.10 Lakh.
    • Processing of the loan is speedy and does not involve procedural delays.
    • The processing fee for the loan is 0.3999%.
    • A concession of 0.25% is given to women entrepreneurs.

    The loan, which specifically targets the medium segment sector, has been successful ever since its launch in January 2016. Several SME e-commerce companies have benefited from this initiative by SBI.

    Loans by Public Sector Banks

    Besides the initiative by SBI in partnership with Snapdeal, several Public Sector banks in India also offer loans to e-commerce companies in India. Some notable banks include Canara Bank, Syndicate Bank, Bank of Baroda and Punjab National Bank. These banks usually provide loans on the basis of collaterals and interest rates can vary.

    Loans by venture Capitalists

    Venture capitalist companies have also cashed in on the growing e-commerce market. These companies invest in e-commerce companies that are growing, and help them increase the depth of their operations. As a matter of fact, investments by venture capitalists in e-commerce companies and other start-ups has become a visible trend these days with several companies directing investment with the hope of seeing an enhanced market share and subsequent profits.

    As such, investments by venture capitalist firms has seen success over the past years with several firms more than doubling their initial investment. In cases, banks themselves invest in e-commerce companies if scope for growth is large.

    Capital Float

    Capital Float is a relatively lesser known enterprise that delivers working capital loans to SME companies, particularly e-commerce companies. The enterprise offers flexible loan options to start-ups and helps them commence operations by providing them with working capital.

    With many initiatives taken by banks, venture capitalist firms and other financial institutions in providing loans to e-commerce companies, the prospects of growth have certainly risen over time.

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