Purchase Finance

Question 1

What is purchase finance and how does it work for SMEs?

Answer

Purchase Finance is a working capital loan offered by Oxyzo to SMEs for procuring raw materials by making upfront payments to suppliers. Oxyzo pays the supplier directly on the borrower's behalf, and the SME repays the credit within a flexible tenure of 60-120 days. This allows businesses to access bulk-purchase discounts (up to 3% savings), improve their working capital cycle, and avoid cash flow gaps without pledging any collateral.

Question 2

Does Oxyzo provide only unsecured purchase finance, or are secured options available?

Answer

Oxyzo offers both secured and unsecured purchase finance. The unsecured variant -- which requires no collateral such as land, property, or bank guarantee -- is available for eligible SMEs with a minimum annual turnover of Rs 3 crores and at least 3 years of business operation. For businesses that wish to leverage assets, secured working capital limits are also offered with potentially higher credit amounts.

Question 3

What is the eligibility criteria for purchase finance at Oxyzo?

Answer

To qualify for purchase finance at Oxyzo, a business must have a minimum annual turnover of Rs 3 crores and at least 3 years of business vintage. Eligible entity types include Public Limited companies, Private Limited companies, Sole Proprietorships, and Partnerships. KYC documents, GSTIN, 6 months of bank statements, and 3 years of financial statements are required.

Question 4

What is the maximum credit limit available under purchase finance?

Answer

The credit limit under purchase finance is assessed individually and depends on the applicant's business turnover, creditworthiness, repayment history, and Oxyzo's credit assessment. Oxyzo offers unsecured working capital up to Rs 5 crores for eligible businesses. Higher limits may be available for secured facilities based on asset valuation and credit comfort.

Question 5

What interest rate is charged on purchase finance?

Answer

Purchase finance at Oxyzo starts from 12% per annum. Interest is charged only on the exact amount drawn and for the actual number of days used -- not on the full sanctioned limit. There are no foreclosure charges, no part-payment charges, and no minimum utilization charges, making it significantly more cost-efficient than a traditional business term loan.

Question 6

How quickly are funds disbursed after purchase finance approval?

Answer

Once the credit line is sanctioned and a supplier invoice is submitted, Oxyzo disburses funds directly to the supplier's account within 24-48 hours. The entire process is 100% digital, requiring no physical visits. Loan approval itself typically happens within 48 hours of submitting the required documents.

Question 7

What is the difference between purchase finance and a regular business loan?

Answer

The core difference is in how and when interest is charged, and what the funds are used for. Purchase finance is a revolving credit line disbursed against specific supplier invoices -- you pay interest only on the amount used and for the exact days used, with no foreclosure or minimum utilization charges. A business term loan, by contrast, is disbursed as a lump sum with interest charged on the entire amount from day one, regardless of actual utilization. Purchase finance is best for recurring raw material procurement; a business loan suits one-time capital expenditure like buying machinery or expanding a facility.

Question 8

Can I use purchase finance to pay multiple suppliers simultaneously?

Answer

Yes, Oxyzo's purchase finance credit line can be used to pay multiple suppliers from a single sanctioned limit. Each disbursement is triggered by submitting the respective supplier invoice, and Oxyzo pays each vendor directly. This makes it ideal for businesses that source raw materials from several vendors simultaneously, as it eliminates the need to manage separate credit arrangements with each supplier.

Question 9

Is there a minimum loan amount for purchase finance at Oxyzo?

Answer

Oxyzo does not publicly state a strict minimum disbursement amount for purchase finance; the limit is customized based on each business's eligibility, purchase volumes, and credit assessment. However, given the minimum eligibility threshold of Rs 3 crores annual turnover and the operational focus on SME procurement cycles, the credit lines sanctioned are typically meaningful enough to cover realistic raw material procurement batches, often in the range of several lakhs to crores.

Question 10

Does applying for purchase finance affect my CIBIL or credit score?

Answer

Checking your eligibility on Oxyzo's platform does not impact your credit score, as the initial check is a soft inquiry. However, when you formally apply and Oxyzo submits a credit inquiry with the bureau as part of the full underwriting process, it may reflect as a hard inquiry on your CIBIL report. This is standard practice across all regulated lenders. Responsible utilization and timely repayment of purchase finance will positively build your credit profile over time.

Question 11

How is repayment structured for purchase finance -- is it EMI-based or bullet repayment?

Answer

Purchase finance at Oxyzo is structured with flexible credit terms of 60-120 days, typically aligned to the SME's business cycle and cash inflows. Repayment is not structured as a traditional EMI but rather as a revolving drawdown-and-repay cycle: once a drawdown is repaid, the credit limit becomes available again for the next purchase. This revolving structure is more cash-flow-friendly for businesses with regular procurement cycles compared to fixed EMI term loans.

Question 12

Is Oxyzo a registered and regulated lender for purchase finance?

Answer

Yes. Oxyzo Financial Services Limited is a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI). All lending activities -- including purchase finance -- are carried out under the regulatory framework prescribed by the RBI. This means Oxyzo is subject to RBI guidelines on interest rate disclosure, fair practices, grievance redressal, and borrower rights. Customers can verify Oxyzo's NBFC registration on the RBI's official NBFC list at rbi.org.in.

Purchase Finance

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Purchase Financing vs. Business Loans