Category Archives: Business Loan

01 Feb

Is Business Loan Eligibility Still Relevant?

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Documents to be submitted while Applying for Business Loan

Firms have to gather the business loan eligibility criteria and submit the following documents to their lender:

Application Form

Applicants have to submit a duly-filled application form.

Self-Attested Know Your Customer (KYC) Forms

Passport-sized photograph of every applicant and co-applicant
Residence/address, proof of proprietors/partners/directors, whichever applicable
Residence/address, proof of guarantors and security providers
Entity proof: Shops and Establishment certificate/ Partnership deed/ Certificate of Incorporation, whichever applicable
Self-attested PAN card copy of an entity, directors/ partners/ proprietors, whichever applications as well as of guarantors and security providers

Financial Documents

Income Tax Returns of the previous year, along with computation of income and copy of acknowledgment
Profit and Loss Statement and Balance Sheet of the last two years
Tax audit reports and Statutory Audit report
Last year’s provisional and sundry creditors and debtors list
Proof of business continuity: ITR/Trade license/Establishment/Sales Tax certificate
Memorandum of Association (MOA), Articles of Association (AAO), Power of Attorney, or any other document required by the lender

Bank Statements

Primary account bank statements for the previous six months

These are the minimum documents required by lending institutions. The requirements may vary from bank to bank. In most cases, the process of submitting documents is simple. However, if you have neglected to file still a single document, getting a loan approved would be not easy. Therefore, carefully check the documents before applying for a business loan.

The firm has to also give documents connected to the reason of taking the loan. If the enterprise is borrowing a loan for a new project, the documents to be submitted include project report stating the cost of the project, sources of finance and future projections, all along with justified details. Approval letters from the government for power, pollution and building plan has to be submitted, too. If the company seeks funds to purchase assets, the related documents to be submitted are invoices of the assets to be purchased, conveyance deed/allotment letter in case of land property as well as architect certificate confirming the cost of the structure to be constructed.

Nowadays, lending institutions have modified their lending programs to suit the monetary requirements of organizations. Many lenders have an online presence, thus making the application process simpler. They also provide business loan quotes and have a business loan calculator online. This assists businesses in verdict how much they can afford and how much has to be paid in EMIs periodically. Such benefits go a long way in making loan application process simple and hassle-free.

24 Jan

Eliminate Your Fears and Doubts about Business Loan Rates

Finheal
Business Loan
Tags: business loan, lower interest rates, secured business loan
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Fears and Doubts about Business Loan Rates

Capital is a vital part of the success of commerce today. Irrespective of whether a firm is in proprietorship or a big organization, finance holds the key to its growth, and managing finance is surely not a child’s play. Keeping all this in mind, more than a few institutions have come up with business loan to help budding and accessible entrepreneurs.

Very frequently, every business has to face a make-or-break situation which calls for instant savings to reap long term benefits. If one does not having the funds at that time, he may well opt for a business loan which is designed specifically to fulfill urgent business necessities. These loans not only help in expanding a business, but also take part in a vital role in modernizing and improving small as well as medium scale business.

Business Loans are offered in two types, Secured and Unsecured.

For a Secured Business Loan, the borrower needs to vow something as collateral or security against the loan amount taken. Be it as a raw material or finished products, land or machinery, anything can be kept as collateral in agreement with the lending party. The borrower can also offer cash advance as collateral as it offers more liquidity and the loan can be availed at lower interest rates and flexible repayment options.

In case of unsecured Business Loan, here is no prerequisite of any security from the borrower. However, while availing an unsecured business loan, the borrower wants to pay a high interest rate. Moreover, the loan amount is taken for a lesser tenure when compared to a secured loan. According to the tenure, business loan can be further diversified.

To meet the provisional needs of a business like short term working capital, a short term loan is most then suitable one, with the refund time period of a year. An Intermediate Loan is essential for starting up business to buy inventory, equipment and also add to working capital.

A Long term is necessary for well recognized business houses who wish to get bigger, increase their fixed assets or linked business acquisitions, with terms that run for a period of 3-5 years.

In addition, drawing the thin line between critical requirements and expenses that can be put off till a better financial situation prevails hold the input to prevent one from any financial predicament. Making a single hasty choice without any idea of its impact in your business may prove to be damaging in the long run. Therefore, one has to be very clear of his actual need and requirements for enhancing and improving his business by borrowing the rights loans with a detailed insight of its pros and cons.

18 Jan

How to Get a Business Loan for Your establish

Finheal
Business Loan
Tags: business finance, low interest, startup business loans
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Unsecured and Secured Business Loans for any Purpose

Most entrepreneurs find it tough to secure funds. Startups may fund their ventures through angel investors or bank finance. Before making a choice, entrepreneurs must recognize the advantages and disadvantages of both these options.

One major benefit of availing bank funding is that startups do not need to give up equity in their business. Moreover, angel investors require higher returns, which may result in the entrepreneurs having to part with more equity in their business.

Here is how to prepare your field while approaching banks for business finance:

Develop a Plan
Preparing a plan, explaining the income and business model, promoters’ backgrounds, estimated sales and profitability, and expected returns are recommended. The return on investment is a key metric used by institutions while deciding on whether to finance the business or not. Therefore, it is significant for entrepreneurs make known they with key information to respond any query raised by the institutions.

Recognize the Banks
After preparing the ground in a presentable format, the entrepreneurs must make out the institutions that offer startup business loans. Promoters are advised to structure their requests in a framework that is approvable by the Reserve Bank of India and the lending institution.

Know the Types of Loans Accessible
Banks offer different types of loans to startups. As well, financial institutions may offer exact schemes for startup funding. Studying the different types of loans and schemes presented by each bank before approaching it is significant to keep away from rejection.

Now are some few Advantages of availing startup funding from financial institutions:

Cost Efficient
Unlike angel investors and venture capitalists, financial institutions do not need an equity stake in the business. In addition, the institutions provide funding at a pre-determined rate of interest, whereas equity investors expect huge profits on their investments.

Easier to Avail
Financial institutions have a wider presence in various parts of the country, which makes these easier to access. On the other hand, approaching venture capitalists and angel investors is tougher.

Structured Framework
Institutional funding is prepared with a recognized evaluation structure. Moreover, the whole evaluation and approval process is finished much faster than availing money from equity partners.

No Share in the Business
After servicing the loan interest and principal repayment, the promoters are able to retain the entire profits of their businesses. However, if funding is availed from an equity investor, the promoters would require sharing the agreed profit share with them.

Approval is quick and depends on certain factors, such as management experience, robust business model, experience and expertise, and estimated profits from operations. Entrepreneurs are recommended to approach institutions to avail affordable and structured funding to grow their businesses.

31 Dec

How to get a Business Start-Up Loan?

Finheal
Business Loan
Tags: credit report, line of credit, start-up loans
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Individuals who desire to start their own businesses but do not have the requisite funds to begin operations can move toward banks to meet their financial needs. Startup loans are an immense way to obtain funds that can be repaid to the lender at a later date. In this article, we will take a look at two of the most admired types of startup loans, viz. Line of Credit and Equipment Financing.

Line of Credit

A business startup loans in the form of a line of credit works in an alike manner with a credit card. However, the card is joined to the individual’s business in its place of their personal credit. One of the most outstanding reimbursements of a small business line of credit is that customers will have no compulsion to pay interest on the borrowed sum for the first nine to 15 months, thereby making it easier to cover expenses whilst getting their business to a good start.

For instance, if the line of credit availed is Rs. 10, 00,000, and the customer draws Rs. 2, 00,000 to cover starting expenses. In this case, the customer will only have to pay back the Rs. 2, 00,000 along with the applicable interest rate. The interest will only apply to the Rs. 2, 00,000 and not the entire sum of Rs. 10, 00,000.

Customers who look for a line of credit for their new business are necessary to have a credit score above 700. Moreover, approval from the bank can take approximately a month after the customer has furnished a thorough credit report. Though, customers need not vow any asset as security for this kind of loan.

Equipment Financing

In this type of loan for start-ups, the equipment that is bought when initial the business is pledged as collateral, thus enabling the lender to accuse a relatively low rate of interest with slightly higher risk. The customer is expected to pay back the sum used to buy the equipment as revenues are generated from their business. Similar to a line of credit, applicants are expected to have a high credit score (680+), and the documents required to avail equipment financing include a vendor quote, a detailed credit report, and a declaration viewing the manner in which the customer intends to make use of the equipment. The main advantage of equipment financing is that the reduction of the equipment can be used by the customer as a tax benefit for many years.

23 Dec

Business Loans can obtain your business to new heights

Finheal
Business Loan
Tags: capital loans, eligible for this loan, equity loans
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Entrepreneurs and business owners be acquainted with that a business runs on working capital. The capital necessary to take your business to the next level is accessible through a business loan. As a Small and Medium Enterprise (SME) owner in India, you can obtain the benefit of a variety of options through the different types of the business loans in India targeted especially to your particular industry and type of business. Whether your objective is to increase working capital or make bigger your business – help is at hand with a robust business loan to fund your venture with the following types of business loans:

Types of Business Loans in India:

SBA Business Loan: The SBA loan is a loan offered by banks and NBFCs who have been guaranteed by the SBA (Small Business Association). The lenders are typically in the private sector and help finance small businesses. The SBA does not have the funds to finance long term businesses, thus it works with these lenders to help give fixed rate financing for lands and buildings and other equipment that may be requisite.

Working Capital Loans: Working Capital Loans are loans taken in order to finance daily activities in order to keep the business running. These loans are of two types – secured and unsecured working capital loans.

The Secured Working Capital Loans are business loans given by the lender against assets such as equipment, buildings or accounts, as security or collateral. The lender assesses and then decides the sum that can be known against these assets. Sometimes personal assets such as homes or shares may also be required to be kept as collateral.

The Unsecured Working Capital Loans are loans that are given with no any assets or collateral for security. These loans are as such hard to attain as there is no security against these loans.

Commercial Real Estate Loans are loans given on commercial real estates. Commercial real estate’s are properties or real estate’s used only for business purposes such as apartments, office complexes or retail centers. The commercial real estate loans are usually procured for the development, acquisition and construction of these lands or properties. These loans can generally be secured from banks or private sector lenders.

Start-up Loans as the name suggest are loans that are usually availed to establish a new business venture. In order to be eligible for this loan you be supposed to have your business ideas on paper and they should be believable. This loan can be typically procured from banks and private sector lenders and sometimes requires personal assets to be kept as collateral.

Professional loans are loans obtainable to professionals such as dentists or lawyers or doctors or other such professionals who are starting their own practices or firms. These include CPAs also.

Hard Money Equity Loans, Multi-Family Real Estate Loans and Business Acquisition Loans are offered by the banks and other lenders according to the need and qualification of the consumer.

Hard Money Equity Loans are loans that are given on specific real property. These credits are usually given by companies or private investors. They are usually given for projects that are of short duration, such as for a few years or a few months only. Due to this the rate of interest on the loans is higher and they have a high risk factor.

Business Acquisition Loans are loans taken from banks or other private sector lenders or investors in order to acquire a business that already exists. We can call it a takeover or expansion by a businessman who currently owns a running business and is looking to expand it.

Now that we know the various business loans available in India, we can dive deeper into the types of small business loans as well. Business can be broadly categorized into two types, namely small scale and large scale businesses. Similarly, there is a subcategory to, business loans that offer loans to small scale businesses as well and are called small business loans.

Types of Small Business Loans:

Term Loan
Loan against Property
Gold Loan
Loan against Shares and Mutual Funds
Cash Credit Facility
Letter of Credit Facility

Apart from loans, there are other financing options also available to finance the business or for its expansion or other needs that need considerable capital to create or buy.

Types of Business Financing Options

Bootstrapping
Family and Friends
Crowd funding
Equity Financing
Debt Financing
Angel Investors
Leases

Government Programs

These are a few alternate forms of financing that can be opted for in case you are not eligible for business loans or do not wish to apply for business loans from banks or other lenders. We believe it is imperative for a business owner to outline his / her vision and business needs before applying for a particular business loan and we wish you all the very best in your efforts to take your business to new heights as it so rightly deserves.

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