growth in revenue
growth in fleet size after using GetAdvance
Discover how a transport company secured an instant advance on its outstanding invoices using Baya’s GetAdvance product
A1 Transport Services provides truck and tempo services for shipping goods from one location to another. The company commenced its operations in 2012 with a single truck. The business grew quickly and they started receiving a lot of contracts to an extent that their truck was working at full-capacity all year round. Later, due to rising demand from the clients, the company expanded its fleet size by adding three tempos and two trucks. To fund this expansion, the owner took a bank loan on the two new trucks purchased; however couldn’t secure a loan for the three new tempos. He decided to serve his home as a collateral to secure a loan for the three tempos. Over the years, the business grew substantially and the owner made his trucks completely debt free while he is still paying the loans for his three tempos. As the business has scaled, it faces a working capital shortfall consistently especially during peak seasons.
At current fleet size, A1 transport typically has around 75% of its fleet occupied with contracts for transporting goods. However, during peak seasons, the company experiences a significant surge in client demand. To seize this opportunity, A1 planned to lease additional vehicles from other providers for fulfilling the demand and increasing profits but the company had to forgo these contracts due to insufficient working capital. The owner approached multiple banks for a loan for filling the working capital gap but couldn’t secure one since he didn’t have any additional collaterals for the loan and his home was already serving as collateral for the loan he had taken to finance the purchase of tempos.
After facing numerous rejections on their loan request, the owner started looking for alternative financing options and came across the GetAdvance product by Baya. He then immediately reached out to us to understand more about how the product could help his company.
GetAdvance is a product that provides instant credit on outstanding invoices of the seller. The seller can get up to 90% of the invoice value as credit and the amount is disbursed within 24 hours once the seller applies for it on eligible invoices. The process is fast and efficient since the seller doesn’t need to furnish any collateral to secure this facility as it is an unsecured loan.
After learning about our product, A1 Transport understood the product would suit its needs and they promptly started using it. Within two months of usage, based on their average monthly revenue, they applied for a bill discounting facility and had their limits sanctioned within a week of application. After the approval, it started applying for bill discounting on eligible invoices, and the amount was disbursed to their bank account within 24 hours.
This facility allowed A1 Transport to finance additional contracts during the peak season, leading to a 32% increase in their annual revenue for the respective financial year. Due to GetAdvance, the company has grown substantially over the years and has expanded its fleet to seven tempos and six trucks, while continuing to leverage it with significantly higher sanctioned limits. GetAdvance has proved to be a transformational product for A1 Transport and many other such businesses.
Secured loans are usually granted for a specific purpose while unsecured loans pose no restrictions on the use of funds
While securing an unsecured loan, collaterals are not required while a secured loan cannot be availed without a collateral.
Secured loans are typically issued for long-term (minimum 12 months), whereas unsecured loans don’t have any such restrictions. They are used for both short-term and long-term duration depending on the requirement of the borrower
Unsecured loans generally have a much shorter processing time than secured loans. The entire process, from application to disbursement, is usually completed within a week. In contrast, the process for secured loans is more complex and time-consuming, leading to longer processing times. Below is a description of the intricate steps involved in availing a secured loan contributing to the longer timeframe:
Whereas unsecured loans are processed faster than secured loans due to a shorter and simpler approval process as shown below.
Though interest rates are high in unsecured loans as compared to secured loans, the overall cost of borrowing is higher for secured loans since unsecured loans are utilized for a shorter duration as opposed to secured loans.
For example, consider a secured loan with an interest rate of 9% and an unsecured loan with an interest rate of 12%. If a company takes a secured loan of Rs. 1 lakh with a condition that they have to take the loan for a minimum of one year, their annual interest is Rs. 9,000. However, if the same company secures an unsecured loan of the same amount with no restrictions on payment timeline and repays the loan within 2 months, the interest charged to them would be Rs. 2,400. This flexibility with unsecured loans allows the company to save Rs. 6,600 annually.
Be a part of Mission Digital India, where the entire process - from registering your account with GSTIN to securing loans and managing daily transactions - is fully digitized and built on the India stack.
Baya is a SaaS (Software-as-a-Service) platform revolutionizing collections management for SMEs. The Baya platform was designed for and in partnership with SME business owners. With Baya, businesses manage the entire receivable lifecycle from signing contracts, raising invoices, payment requests, collections via payment gateway, reconciliation and access to instant credit. Our products:
