Frequently Asked Questions

FAQ for borrowers

Sign me up

Who can borrow?

Any private limited company can borrow through Loans 4 SME (L4S). As our name suggests, we are primarily focused on facilitating loan financing for small and medium enterprises. You can be from any sector or line of business.

How much can I borrow?

The amount you can borrow is determined by your requirements and the Lenders interest. L4S is a marketplace where you will request for a loan that meets your financing requirements. The amount of financing you get is determined by the Lenders, based on their evaluation of your company. Typically, our borrowers request for loans between INR 1-25 crore.

What form and structure is this loan in?

L4S is a marketplace that provides you the flexibility to request for a customized loan structure based on your growth capital and working capital requirements. The final structure will be mutually negotiated between you and the Lender.

What purpose can I borrow for?

You can borrow for growth and expansion of your business and also to manage the working capital cycle of the business, taking into account the seasonality and spurts in demand.

What duration can I borrow for?

The tenure of the loan will be mutually negotiates between you and the Lender, on the basis of your projected cashflows. L4S provides you the flexibility to structure repayment schedules that best suit your business cycle.

What is the interest on this loan?

The interest rate you pay on your loan is determined by the current market rates as well as the Lender perception of the risk in the company. L4S is a marketplace and does not decide the rate of interest. However, you can request feedback on the expected risk profile of your loan, and the interest rate you can expect to pay, based on our proprietary credit risk algorithms.

What other costs will I have to pay?

In addition to the interest rate, you will have to pay legal costs like stamp duty and debenture trustee fee. L4S charges a fee of 1-2% of the loan amount depending on the complexity of the structure and tenure of the loan.

What information do I need to provide?

In order to apply for the loan, you will need to provide KYC documents (incorporation documents and address proof for the company and it's directors), as well as some details regarding the company’s business and funding requirements. For L4S to provide a credit risk opinion based on our proprietary algorithm and for your subsequent discussions with Lenders, it will help if you have financial forecasts and a detailed business plan.

What is the role of L4S in the process?

L4S is a peer to peer business loan marketplace that makes the process easy and hassle free for both you and the Lender. We connect you to a wide range of Lenders, and once the two parties agree on the transaction, we facilitate the entire process flow to draw down and subsequently repay the loan. However, at no stage does L4S act on behalf of either the borrower or the Lender. While our technology driven credit risk algorithm provides an indication of the risk profile of the loan, the Lenders do their own diligence on your company when deciding on whether to make a loan to you.

How will I repay the loan?

You will repay the loan directly to the Lender. The repayments can be made either through a cheque or direct fund transfer to the Lender’s account.

Can I prepay my loan?

Yes, you can prepay your loan. There is no prepayment penalty charged on early repayment of the loan.

What happens when the payment is delayed?

L4S strongly recommends that you only take a loan that you can comfortably service. A delay in repayment of the loan will affect your credit profile, and will make it difficult for you to access financing in future. In the unlikely event of a delayed payment, you will be liable to pay a penal interest and a late payment fee. You will also be liable to legal action for recovery of any defaulted payments.

Can I get a loan if I already enjoy a bank facility?

The loan facility availed on the L4S platform has no connection with the current banking facility; it may be used to supplement or replace a bank facility as it is based on the cash flows of the business and not fixed criteria and collateral that bankers normally looks for.

How secure is my information with L4S?

We take information security very seriously. L4S has best in class data protection services. Our systems and internal processes ensure that any information provided by you is stored on secure servers, with access restricted to select L4S personnel only. We never share any information with any external party without your express approval.

FAQ for Lenders

Sign me up

Who can invest?

L4S is India’s first peer to peer business loan marketplace. Our goal is bring as many Lenders to participate in the growth of Indian SMEs as possible. The Lenders who can access exciting SME loan investment opportunities through our platform include high net worth individuals, investment companies as well as corporate treasuries.

What form do I invest in?

Certain Lenders are able to offer direct loans to companies. These loans are secured by the company's receivables and other assets. We also offer other flexible structures like loans against shares, and convertible securities.

What return can I expect from the investment?

The rate of return is a function of the risk rating, tenure and sector in which your investee company is present. However, you can expect your average rate of return to be well above your alternative fixed return investments (like FDs). Most of our Lenders earn returns in the range of 16% to 20% p.a.

What fees does L4S charge me?

At L4S, we connect you with the right kind of borrowers and provide a hassle free investing experience with all the structuring and the operating issues taken care of. For our services to close the transaction with the appropriate paperwork, we may charge a fee ranging from 1-2 % depending on the kind of loan and complexity of the transaction.

Why should I invest through L4S? Can’t I give a loan to the company directly?

Investing in a loan/NCD comes with a cumbersome process that involves tons of paperwork, legal documents and even keeping track of monthly or quarterly repayments. At L4S, we take care of all the paperwork, so investing in a loan is really easy. We handle everything for you, starting with legal documents and right upto depositing the last repayment cheque into your account.

How many loans can I give on L4S platform?

An Lender can give multiple loans on the L4S platform. We advise that you follow a diversified approach to investment and participate in multiple loans instead of concentrating on a couple of companies.

Why should I give loans to a company when I can earn higher returns by investing in equity?

As an equity Lender, your return is at best uncertain. We provide you an opportunity to diversify your investments by investing in a high yielding loan, that will give you regular returns on your investment. For some very high risk loans, where you perceive an equity like risk, we also help you structure warrants that allow further possible upside on your returns.

Can I invest in part of a loan and be a part of a consortium?

Yes, the total requirement of a specific company can be funded by a number of Lenders. However, there is a minimum amount that would be prescribed by L4S for each loan that an Lender needs to contribute.

What is the role of L4S?

L4S is a purely a tech based platform that acts only as a broker between the Lender and borrower and charges a fee for the same. It does not lend any money or accepts any money on behalf of the Lenders. The flow of funds is directly between the Lender and borrower.

What diligence does L4S do on the borrower?

L4S uses a proprietary tech based algorithm to provide an opinion on the risk profile of the company. This opinion is solely based on the facts provided to us. Our role as a lending marketplace is to connect you to the borrower and not to assume any default risk. We highly recommend that you do a thorough analysis of the risks before making an investment.

Is my investment safe? What if the borrower defaults?

L4S connects you to borrowers with a wide variety of risk profile, depending on your investing goals. We always recommend that you make your investment decision after taking into account all the risk factors. That said, L4S team comes with a long history of credit experience and we will always ensure that we showcase genuine borrowers with an intention and capability of repaying the loan on time.

In the unlikely event of a delayed payment, L4S team will facilitate the collection of late payment fee and penal interest from the borrower, and even connect you with the appropriate legal resources if need be.

What information will you collect from me?

When you sign up with L4S, we will give you a call to understand your investing goals and make sure we find the right investments for you. Once you decide to invest in one of the loan transactions, we will require your identity and address proof to meet KYC and anti-money laundering requirements.

Is my personal information safe?

We take information security very seriously. L4S has best in class data protection services. Our systems and internal processes ensure that any information provided by you is stored on secure servers, with access restricted to select L4S personnel only. We never share any information with any external party without your express approval.