We live in the age of technology where the internet was able to bridge the gap between consumers and business. This gave rise to new technologies which meant there was a lot of room for new businesses to pop up and that was what happened in the recent past. Startups have been mushrooming rapidly to meet the demand in various sectors and it is safe to say that we live in the age of information technology and startups. The startup ecosystem was a thriving sector until the whole world came to a standstill when the COVID-19 virus began spreading across the globe.
Governments went into emergency mode and with no vaccine available and none in sight for the near future, governments declared strict lockdowns and curfews with the hope to stop the spread of the virus. The Indian Government announced the first lockdown on March 24th and has since extended it till the end of June while easing some restrictions. The first two months were the hardest and the economic impact was the hardest on travel, events, movies, sporting, rental and transportation industries. As the lockdown is slowly easing the actual impact of the COVID-19 on startups is beginning to show. The National Association of Software and Service Companies (NASSCOM) conducted a survey to study the impact of the COVID-19 crisis on Indian Startups.
The survey shows that
- 90% of startups registered a decline in revenues.
- 70% of these startups have less than 3 months of cash runaway.
- 30-40% of startups have suspended their operations.
The survey also showed that 70% of travel related startups have faced 40% decline in revenue, 50% of Fintech and logistics have seen a similar dip in revenues while 14% of edtech and health tech startups expect revenue growth amid COVID-19 crisis. The survey also suggests that early and mid stage business are the most affected segments, especially in B2C (business to consumer) space. It also found that around 60% of B2C startups were facing closure as revenues plummeted to near zero levels after businesses were forced to shut down for nearly 2 months, because of the lockdown.
The president of NASSCOM Debjani Ghosh said “However, it is not all doom and gloom; more than half of the start-ups are looking to pivot to new business opportunities, diversify into growth verticals like healthcare, and enhancing focus on emerging tech like Artificial Intelligence, Internet of Things (IoT), Cloud (sic.)” She also added, “to ensure that the Indian start-up movement and its growth trajectory is not derailed, coordinated support from key stakeholders is the need of the hour. Some of our key recommendations to the government include access to working capital, easing compliances and fiscal policy and funding support (sic.)”
The Indian Government took note of the economic situation and has announced a whopping 20 lakh crore rupees as part of the AtmaNirbhar Bharat package which would be used to help various industries and sectors. The Government also called for buying products which are made from locally sourced materials once again stressing on the need for ‘Make In India.’ This is a test for startups to prove their mettle and emerge stronger from this crisis.
The Rise Of Gig Economy In India
India is notorious for churning out graduates from colleges at a very high rate and the education system in India is always under fire for not focusing on all round development but on marks and grades, instead. This is a growing concern as there are not enough jobs available to accommodate all the graduates passing out from college. However, the Indian millennial is a smart individual and when put under pressure, a millennial is capable of coming out of it better. So, what did the Indian millennial do when there were less opportunities and did not want to be part of the rat race? They turned to taking up gigs and that spawned an entire economy and industries to flourish.
Gig economy can be defined as a work engagement where on one side, there is a service seeker that is a consumer with a demand for a specific task, and on the other side, there is a service provider that is. a gig worker who can perform that specific task. The gig economy was able to flourish solely because of the advent of digital platforms which were able to connect a service seeker with a provider. More and more Indians are looking to escape from the monotony of a 9 to 5 desk job and instead take up freelance gigs which complement their skills.
In order to put the gig economy into simpler terms, here are some examples. An individual who likes to drive cars would consider working with Uber as a driver partner to earn some extra bucks. An individual who is good at playing the guitar would consider performing in live shows with a band to earn extra money. A person who is good at painting would consider selling their art for extra money. The gig ecosystem offers the millennial an outlet to escape monotony and pursue their passion instead.
The gig economy could only thrive when there are digital platforms which are able to connect the supply with the demand. The digital gig economy generated a gross volume of approximately $ 204 billion from worldwide customers in 2018. India has emerged as the 5th largest country for flexible staffing after the United States of America, China, Brazil and Japan. Haryana, Madhya Pradesh, Andhra Pradesh, Gujarat and Telangana have the most opportunities in terms of growth for the flexible workers.
Gig economy allows task ownership, convenience and flexibility. Based on tastes and preferences, an individual can determine the number and type of projects they can work on, the quantum of their earnings, and thus, their work-life balance. For example, an individual who took on five gigs in one month could take only three gigs the next month to balance life at their regular job.
The gig economy has a disruptive model to connect sellers and buyers for almost all kinds of skills and services. While the size of the gig economy may seem marginal when compared to the traditional economy, it is recognized for its enormous potential with the desire of workers, specially millennials to have a flexible work schedule and the rise in the on demand consumer services. Of In India, almost 70% corporates have already used gig workers for at least one task in 2018.
In India, a platform called Lemonop, is setting an example in the gig economy by providing a platform for students and working professionals to look for gigs of their liking. There are plenty of other platforms like Lemonop which are slowly bridging the gap between talent and job demand.
Five Interesting Facts About Elon Musk’s SpaceX
If you have been following the news, you would not have missed when Elon Musk’s SpaceX made history as being the first private organization to transport astronauts to the International Space Station (ISS.) The entire operation from launch to docking at the ISS has been live streamed by the National Aeronautics and Space Administration (NASA) and was watched by millions from all over the world. The live stream might have disappointed a large number of flat earthers as well when the images of Earth’s curvature were live streamed. Ever since SpaceX was launched in 2002 by Elon Musk, it grew in leaps and bounds to what it is today, one of the premier privately owned space transportation technology companies in the world.
Let us take a look at some of the interesting facts about SpaceX and the recently launched SpaceX Dragon.
The name Dragon:
The name Dragon was inspired from the fictional “Puff the Magic Dragon,” from the hit song by music group Peter, Paul and Mary. Musk said he used the name because many critics considered his goals impossible when he founded SpaceX in 2002.
Dragon’s first payload was a wheel of cheese:
The Dragon capsule had its first test flight in 2010 and it carried a wheel of cheese into orbit. Prior to the flight, SpaceX officials hinted that a special cargo was being carried into space but did not disclose what it was until later when the spacecraft returned back. The wheel of cheese was launched in honor of a classic skit from actor John Cleese in the British comedy show Monty Python’s Flying Circus.
Falcon Rockets named as a pop culture reference
Elon Musk’s love for pop culture references is very well known if you are following him on the micro blogging site Twitter. The Falcon rockets are used by SpaceX to launch their capsules into orbit. The name Falcon is after the fictional Millenium Falcon spaceship from George Lucas’ Star Wars movies. The Falcon is commanded by Han Solo in the Star Wars franchise.
First Company To Reuse Rockets
Unlike most rockets, which are expendable launch systems, since the introduction of the Full Thrust version, Falcon 9 is partially reusable, with the first stage capable of re-entering the atmosphere and landing vertically after separating from the second stage. This feat was achieved for the first time by SpaceX in December 2015. A 2011 NASA report “estimated that it would have cost the agency about US $ 4 billion to develop a rocket like the Falcon 9 booster based upon NASA’s traditional contracting processes while “a more ‘commercial development’ approach might have allowed the agency to pay only US $ 1.7 billion (sic.)”
Starlink is a satellite constellation being constructed by SpaceX to provide satellite Internet access. The constellation will consist of thousands of mass-produced small satellites in low Earth orbit (LEO), working in combination with ground transceivers. SpaceX intends to provide satellite internet connectivity to underserved areas of the planet, as well as provide competitively priced service to urban areas.
Elon Musk will definitely go down in the annals of history as one of the best entrepreneurs to have ever lived with his vision and innovations. The ultimate goal of Elon Musk’s SpaceX is to send humans to Mars as he believes humans are an interplanetary species.
Types And Details About Corporate Loans
Guest post by Ashish Gupta
Corporate loans are loans that are taken for the purpose of business. There are many banks which provide corporate loans. However, the eligibility criteria and the upper limit for the sanction of such loans would differ. The loans are generally sanctioned for those businesses that have been in existence for at least 5 years and have been making profits for a period of at least 2 years before making such an application for the loan. The funds of the loan when sanctioned can be used for long term as well as short term business expenses.
Corporate loans can be either secured or unsecured loans. Secured corporate loans require collateral like business assets, for the sanction of the loan, and such collateral can be seized in case of non payment of principal or interest amount depending on the contract between the lender and the borrower. On the other hand, unsecured corporate loans are those that do not require any collateral as such. However, unsecured loans can be obtained only if the borrower has a good credit score.
Types of Corporate Loans
There are various types of corporate loans offered to be lent by financial institutions. Few of them are:
- Term loan is a loan that can be secured for the purposes of buying property for business, or for buying new equipment with better technological advancement.
- Loans against securities are those where the borrower can obtain a loan by pledging securities like mutual funds, bonds, insurance policies, and any other securities of similar nature.
- Letter of Credit Facility and Bank Guarantee is when the bank acts as a surety for transactions made by the concerned person for business purposes.
- Cash Credit Facility is wherein the borrower can avail up to 70% to 80% of the value of assets that he/she pledges for business needs.
- Overdraft Facility is an offer by the bank to debit your current account beyond the money that is present in there. Such a facility is generally provided according to the assets pledged by the borrower.
- Channel Financing helps the distributors in obtaining the funding required for buying new equipment, tools and other items.
- Working Capital GST Corporate loans help in attaining quick cash on the basis of the applicant’s GST returns and also eliminates some cumbersome paperwork.
- Drop-line overdraft facility is where the lender deposits certain money in a separate account for the borrower, from which the latter can utilise business expenses. The speciality of this kind of loan is that the borrower only needs to pay interest up to the amount of loan that has been used by him/her from the money deposited in the account.
The eligibility criteria for each financial or lending institution may vary according to their policies and rules. However, few of the basic requirements that are necessitated by almost all lending institutions for availing a corporate loan are as follows:
- AGE: The applicant must at least be 21 years old, but less than 65 years.
- INCOME: The expected annual income of the applicant is generally Rs.1, 00, 00,000. However, some financial institutions may provide loans for a slightly lower income level as well.
- INCOME TAX RETURN: The income tax return for at least one year must be filed before applying for such a loan. Some lenders may even expect the applicant to have filed income tax returns for two years before applying for the loan.
- PROFIT: Most lenders require that the business must have made profits for at least 2 years before submitting the application for a corporate loan.
- CREDIT RATING: The applicant must have good credit ratings and credit score before making an application for a corporate loan, especially for those who wish to obtain unsecured loans.
- STABILITY: The history of the business is also looked into by financial institutions to know the stability and growth of the business.
The documents required may also be subjective depending upon the lender. However, few documents are fundamental that all lending institutions would need when an application for a corporate loan is submitted. They are:
- Permanent Account Number card, or the PAN card
- Identity proof
- Address proof
- Bank Statements for the past 6 months of one years
- Continuance proof of the business
- The latest Income Tax Returns which have been filed
- Other Documents like the certified copies of Memorandum of Association and Articles of Association of the company, or a declaration of sole proprietorship or partnership deed.
Things to consider before applying for a corporate loan
- CREDIT SCORE: The applicant must check his/her credit score before applying for such a loan, as credit scores would drastically affect the availability of a loan.
- INTEREST RATE: It is important to analyse the interest rates of each bank to ensure that more of the profits in business do not end up getting spent for interests.
- TENURE: The tenure of the loan is another important aspect that needs to be considered and analysed for the benefit of the applicant’s business. If the applicant knows that more profits can be made quickly, then he/she must opt for a shorter term of repayment of loan. On the other hand, if the applicant is aware that the business might not make profits immediately, then it is better to opt for a long-term loan.
- FILING INCOME TAX RETURNS: The applicant must ensure that the ITR has been filed for at least 1 or 2 years before applying for a corporate loan.
- OTHER ALTERNATIVES: The applicant must consider other feasible alternatives than loans while in need of funds for business. For instance, if the business is a registered company, then alternatives such as shares, and debentures must also be considered.
Term of repayment for corporate loans
The term for repaying corporate loans depends on the contract between the lender and the borrower, and the kind of loan that has been secured by the borrower. The repayment period of some corporate loans may be about 12-48 months, or it can even extend up to 5 years.
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