Most social enterprises struggle to raise debt from mainstream banking options like Banks and NBFCs. This is because Banks and NBFCs use traditional banking methodology to assess credit in social enterprises that mostly comprise of disruptive business models. Having said that some of the social enterprises have the financial capability to afford a basic debt structure that involve periodic payment of interest and principal. UCIC, with its understanding of the social enterprises, is well positioned to offer vanilla term loans upto 24 months.
Financial Inclusion led by Non-Banking Finance Company have been one of the most impactful business models that is able to successfully marry scale with profitability. However, sometimes the growth gets restrained because of want of Equity Capital as required by the Reserve Bank of India under the Capital Adequacy Requirements (CAR). UCIC, on a selective basis, will be keen to support high quality, scalable and impact focused NBFCs with sub-ordinated debt with a tenure of upto 66 months.
We have observed that a number of companies experience significant “crests” and “troughs” in their cash flows. This results in serious cash flow mismatch which hampers the business operations. We would be very open to helping companies smoothen their cash flows through a line of credit for a specific period with specific limits from which the Companies can draw and redraw the loan multiple number of times
UCIC, having been incubated by Unitus Capital, understands that many social enterprises have cash flows that reflect the seasonality of their business model. However, such businesses may not find favour from traditional Banks and NBFCs. UCIC, depending on the needs of its borrowers, can offer structured payment options to manage working capital, bridge finance, project finance, receivable finance etc.
Business models that are supported by predictable cash flows do have the ability to encash them earlier than due in order to ensure efficient management of capital. Securitization is one such option to do so and is also considered an “off-balance sheet” financing option. Securitization also allows companies to strip the risks into buckets through financial structuring that cater to the risk-return matrix of a specific investor segment. UCIC, through its participation in these structures, can support a multitude of institutions that are looking to widen their funding options.