The below article is authored by Priyank Kothari, Director of Arvog
Meet Jaya, a rising entrepreneur with a thriving boutique business of four outlets and a well-equipped workshop in Secunderabad. What began as a small hobby with a single sewing machine has grown into a business supporting over 50 families. Her journey was driven by determination and the smart choice to use her gold jewelry as capital, helping her build and expand whenever needed.
When Jaya created and delivered a festive outfit for a close family friend, she never imagined it would turn her hobby into a thriving business. Known among friends for her talent in fashion design, Jaya had been hesitant to make it a commercial venture. Until then, she only had one “regular customer” who would request custom outfits for special occasions. This setup was manageable for Jaya, allowing her to exceed expectations with each design. Both Jaya and her customer were pleased with the arrangement.
Golden Opportunity
Jaya’s fortune changed when her “regular customer” joined a new company as the head of business operations. Since the company she joined is in transition mode, their management decided to change the staff uniform too. The company was looking for a designer who can design the uniform as per the company’s new vision and philosophy and also deliver the customized uniforms before the launch. The company’s staff strength is around 2400 employees across locations. Jaya’s friend took no time to brief Jaya for this task. Jaya was happy with such a big opportunity, but it has its own set of new challenges.
Gold backing to overcome challenges
With the new opportunity, came the bigger challenges too. And as the smart business owner, Jaya took note of critical business challenges that she will be facing like a steady cash flow to handle critical situations like inventory shortages, new machinery requirement, supply chain issues etc. To keep operations running smoothly, she will require capital. Can gold loan become smart credit solution, empowering her to sail through the turbulence? Like any other Indian household, she also had jewellery to support this gold loan requirement. Jaya’s gold jewellery became the valuable asset to fund the capital and pursue her entrepreneurial dream.
Since then, Jaya has been leveraging on the transformative power of gold to avail loan as and when required.
What makes gold loans the smartest choice for business capital
The gold loan supports unwarranted liquidity requirements, ensuring smooth business continuity and to propel towards new heights. The key advantages of gold loan are:
- Quick, easily accessible: Gold loans require lesser documentation, lengthy approval processes and are quick in disbursal too. They are best for small businesses immediate funding.
- Flexible purpose: Whether the contingency is for new machinery, business expansion, employee salaries, or any other purpose; the reason for the gold loan is not important.
- Lower rate of interest: Gold loans come with lower interest rates as compared to other unsecured loans, thus proving favourable to small business owners by reducing their overall operational cost.
- No collateral required: For a gold loan no need of any collateral or guarantor. Gold loans are secured loans; amount is disbursed against the pledged gold.
- No Credit Score: There is no need for any credit history or credit score for gold loan. Small business owners with lesser credit scores or no credit history may often face challenges in obtaining easy financing. However, gold loans are secured against the appreciating value of gold, reducing the risk assumed by lenders and making it easier to raise capital.
- Repayment flexibility: Gold loans usually offer flexible repayment options, which can help business owners manage their working capital more efficiently and choose a repayment timeline that aligns with their cash flow.
- Gold ownership continues: Although gold is pledged, the borrower retains ownership of the jewellery. Once the loan is repaid, the gold is returned to the borrower, thus ensuring that the small business owner’s valuable family assets that may have been passed down through generations are safe.
- Risk of default mitigated: Given that gold loans are secured with a valuable tangible asset having sentimental value, it is a reassurance to both lenders and borrowers thus fostering a more stable financial arrangement.
About Arvog
Arvog is a new-age, AI/ML-powered, customer-centric finance company that makes digital lending quick, efficient, and easy. We see worth in in lending wings to people’s aspirations, hopes and dreams. We believe purpose-driven credit can be a true-life enabler. Arvog is here to lend a helping hand, with affordable loans designed specifically for those who need them the most.
Arvog empowers NBFCs and fintechs with the tools and solutions they need to get fast access to credit, thus building more resilient and confident communities.
