Frequently Asked Questions

Borrowers




1. What is loanzen?
Loanzen is a peer-to-peer marketplace for small business loans (unsecured). The platform enables borrowers to post their invoices or other proxies for future cash flows and create a loan ticket. Loanzen undertakes verification and scoring post, which lenders can bid on the loan ticket. Once loan is approved, loanzen helps execute the loan process/documentation.



2. Who is loanzen for?
Loanzen is for small businesses in services, manufacturing who have large, reputed clients (MNCs or listed Indian corporates). Loanzen works only with private limited companies. Loanzen does not currently cater to trading companies or proprietorship/ partnership concerns. Loanzen is not meant for firms looking for long term projects/ debt restructuring/ asset financing/ general working capital financing.



3. Am I eligible?
You are eligible if you are a:
* Private limited company
* At least 1 year IT return filed
* Have multinationals, listed Indian corporate clients
* Use accounting solution such as Tally/ QuickBooks





4. How much can I borrow?
You can borrow between Rs.1-50 lakhs maximum outstanding for your account on the platform at any given point of time. Loanzen typically sets lending limits at 20% of monthly revenue.



5. What is the cost of the loan?
Loanzen determines the pricing of the loan basis borrower credit history, quality of clients, quality of cash-flows/ accounting, existing credit record of company, directors. Typically, the interest cost would vary between 0.8% to 2% monthly discount rate.



6. What are the charges other than interest?
Loanzen charges a platform listing fee of 1% of loan value from the borrower. In the event of delayed payments, lender would levy a penal interest of 1% per month additional to normal interest along with any actual collection/ handling charges incurred.



7. What is the collateral for the loan?
The loan provided is unsecured. Loanzen enters into a tripartite escrow agreement administered by a bank to collateralize the receivables. The invoice is not “sold”. It is used primarily to determine the volume, tenor of the expected cash flows against which unsecured credit is being extended.



8. How long can I repay a loan over?
The loan repayment tenor is determined basis invoice due date and after reviewing past receivable history and is typically between 30-120 days.



9. What type of loan do I get?
The loan is an unsecured loan. It will either be a loan by an NBFC or an ICD (inter corporate deposit) by a private limited company.



10. What role does loanzen play in my loan application?
Loanzen leverages technology to compile a credit score basis accounting, banking data, invoice validation, receivable escrow and loan execution on behalf of lenders.



10. What role does loanzen play in my loan application?
Loanzen leverages technology to compile a credit score basis accounting, banking data, invoice validation, receivable escrow and loan execution on behalf of lenders.



11. Does loanzen lend it’s own money?
No, loanzen is only a technology platform to link lenders and borrowers and does not lend it’s own capital.



12. Who lends on loanzen?
NBFCs and private limited companies lend on loanzen. No individual can lend capital on the platform. All lenders are accredited prior to coming on board Loanzen.



13. Does loanzen sell my details to multiple banks or NBFCs?
No. Loanzen is not a lead generation platform. Loanzen will provide lenders access to your profile on Loanzen only on your explicit consent for each lender.
The benefit of loanzen is convenience where lenders review your loan ticket and decide to either extend credit or not. It saves you multiple phone calls/ visits/ document pickup exercise.



14. How is my data used?
Loanzen will create a credit profile with the data shared, post verifications that lenders can see. At no point is individual invoice level details/ profitability/ expense details visible to a lender. Only aggregated metrics will be part of the credit profile.
For specific invoice discounted, invoice value and buyer name will be visible to the lender for that specific invoice.



15. How secure is my data?
Loanzen is dedicated to protect all customer data using industry best standards.
The cloud hosting service provider we use is AWS S3. Loanzen uses Transport Layer Security (TLS) encryption via HTTPS for all transmitted data. We also protect accounts with passwords and HTTP referrer checking.



16. Why does loanzen want me to login to my net banking account?
Loanzen uses your cash-flow details as key metrics in evaluating ability to repay short term debt. Since audited numbers/ ITRs are not available for shorter accounting periods, cash-flow patterns provide a more complete picture of the health of the business.



17. Why does loanzen ask me to login to my QuickBooks account?
Loanzen intends to eventually offer next day advances to it’s regular users and using cloud based data sources if a key part of the faster decision making process. Among the multiple data connectors we are building, QuickBooks is the first.



18. I have an existing bank loan, can I borrow on loanzen?
Yes, you can.



19. Do I "sell" the invoice to loanzen or the lender?
No, the invoice is not ‘sold’ or ‘factored’. It is used to estimate volume and tenor of cashflows into your account for estimating loan repayment ability, duration. The invoice collection is entirely borrower responsibility as is the repayment of the loan regardless of the collection on the invoice.



20. Can I choose my repayment date?
No. Loanzen provides the repayment date at the start prior to your submitting the loan ticket for the auction. It is linked to expected invoice payment date.



21. Can I repay my loan early if I like?
Yes, you can. Interest will be charged only for the duration of funds utilized.



22. How is my repayment calculated?
Repayment is calculated on a flat interest rate method. The repayment will be as a bullet payment of principal and interest. For each loan, you will receive a cost schedule before your loan ticket goes for auction that indicates the APR applicable on your loan, total costs including all fees over the lifetime of the loan in a single, easily readable table.



23. How will loanzen determine my eligibility?
Loanzen utilizes a credit risk model that counts parameters including accounting, cash flow, social data to assess credit risk.



24. Why did I not get a loan in the auction?
Loanzen is a marketplace and if loan ticket has been approved for auction, not getting a loan typically has to do with either better borrowers given the number of available borrowers, lenders in a particular auction.



25. What happens if multiple lenders agree to approve my loan?
The lender offering the lowest interest rate gets to execute the loan agreement. Our goal is very clearly to ensure that the borrower gets the lowest possible cost of credit.



26. What happens if I delay or miss an EMI?
In case of a delayed EMI, additional penal interest of 1% per month will be applied to the amount due for the duration of delay and handling charges of Rs.2,000 will be charged to the Borrower. In event of default, loanzen will facilitate the collection through empaneled agencies. These are reputed collection agencies, which are empaneled by banks and financial institutions. This also includes due legal process for recovery of funds.



27. Can my loan application be rejected?
Yes, if loanzen believes that there has been any attempt at fraud, lack of transparency, poor credit profile the loan application can be rejected.



28. Can I withdraw a loan application?
You can withdraw a loan application before auction date.



29. How do I change my profile details?
On registration, you will have an account where the details are editable. Please write in to hello@loanzen.in



30. Is loanzen registered under any financial services regulator?
Currently, peer-to-peer lending marketplaces are not regulated by the RBI. Loanzen provides technology services to the borrower in accessing lenders with a single credit file created using loanzen's data connectors and credit scoring platform.



31. What happens if loanzen shuts down?
Your loans and advances are safe as they are fully legally vetted and are a private party agreement between borrower and lender. Given our agreement with our partners in legal, recovery, for the duration of the loan, the services would be fully maintained.



32. Where is loanzen located?
Loanzen Technologies Private Limited is a private limited company registered in Karnataka state with it’s registered and corporate offices in Bangalore. Our corporate office address is
734, 1st floor,
22nd Cross, (Club Road)
Sector 3, HSR Layout,
Bangalore 560102
Karnataka











Lenders



1. What is loanzen?
Loanzen is a peer-to-peer marketplace for SME loans. The platform enables borrowers to post their invoices or other proxies for future cash flows and create a loan ticket. Loanzen undertakes verification and scoring post, which lenders can bid on the loan ticket. Once loan is approved, loanzen helps execute the loan process/documentation. Loanzen provides sourcing, origination and credit scoring for lenders subscribing to the platform.





2. Who is loanzen for?
Loanzen is for NBFCs that are looking to provide credit to high quality small businesses with credit profiles authenticated and verified by the platform.
Loanzen is for private limited companies that have sufficient reserves to extend an ICD for short term, high yield credit to vetted borrowers.



3. How much can I lend?
You can lend between Rs.1-50 lakhs per lender account.



4. What is the kind of returns I can expect?
You can expect returns between 1%-2% per month. An IRR of 15%-30%



5. What are the charges other than interest?
Loanzen does not charge lenders. Other than interest, the penal interest rate would be payable by borrower to the lender in the event of delayed payments.


6. How long do I lend for?
The individual loan will be for a tenor between 30-120 days


7. What type of loan do I extend?
The loan is an unsecured loan executed between borrower and lender. The documentation provided by borrower would include a company PDC for loan amount, personal guarantee of director, hypothecation agreement for the receivable and loan agreement. If ICD, board resolution of the borrower approving the same.



8. What is the collateral for the loan?
There is no collateral. However, loanzen works with a bank and the borrower to escrow receivables to an account from where the lender will be paid on receipt of said invoice’s receivables.



9. What are the risks involved from invoicing to loan repayment and how does loanzen handle them?

Invoice
  • Loanzen undertakes verification of invoice
  • Authenticity
  • work completion
  • acceptance confirmation
  • double invoicing
End Client Record
  • End client bankruptcy
  • Dishonoring obligation to pay
  • Client quality check
  • Promoter check
  • Past record check
  • Payment record
  • Delays
  • Disputes
  • Acceptance methodology
Borrower repayment
  • Escrow mechanism
  • Guarantee
  • PDC








10. How safe is my money?
The lending instrument is an unsecured loan or an ICD are therefore carries higher risk than secured lending. Loanzen does not guarantee loan repayment. However, all borrower profiles on the platform however are carefully curated. The decision to lend is however left to the judgment of the lender and the credit risk is solely with the lender.



11. What role does loanzen play in my loan?
Loanzen undertakes scoring, verification, invoice validation, receivable escrow and loan execution on behalf of lenders.



12. Am I eligible?
Please write in to hello@loanzen.in to register as a lender. We require that lenders be private limited companies or NBFCs who fully understand the nature, benefits and risks of unsecured, high yield lending.



13. How are repayments calculated?
Repayments are calculated on a flat interest rate method.



14. What happens in case of delayed payment?
In the event of delayed payment, the account moves to arrear status and the collections team engages with the borrower to ensure the account moves back to standard status. For the duration of the arrear period, penal interest would be levied additionally.



15. What happens if a loan default occurs?
Loanzen will initiate collection proceedings on your behalf. Loanzen has empaneled accredited legal resources and recovery firms who work with leading banks to pursue default accounts. The cost for the recovery will be borne by the lender and will be adjusted against recovered proceeds.



16. How much time do I have to review the borrower details and approve the loan?
Loanzen operates in an auction model. Once the loan tickets are approved and auction starts, auction will be live for 24 hours during which bids can be placed on the platform.



17. Do I retain any collateral or documents with me?
No, loanzen retains all documentation specific to the invoice. Soft copies of all documents and original of loan agreement will be available with the lender.



18. When does funds get disbursed?
Post auction, the operations team at loanzen will initiate legal documentation for the loan. Once documentation is executed from both sides (in 2-3 days), funds will be required to be wired to the borrower.



19. Can I relend my repayments to ensure full deployment?
Currently, this is not possible



20. How does the borrower pay me?
All borrower repayments will be by NEFT/RTGS



21. How do I bid on a loan in the auction?
Currently, the lender can agree or disagree to lend for each loan ticket.



22. Is interest income received by me net of TDS?
No, interest will be paid by borrower directly to lender. Income taxes will need to be paid by lender. Loanzen will provide the statement of account for each loan and the entire account.