business loan Archives - Business , Financial & Legal Consultant In India

September 14, 2020September 14, 2020

Tips to remember while applying for loan

These days there are several types of business loans and lending options. Therefore, small business owners can easily avail these facilities in comparison to others. Despite having myriad options, becoming eligible for a business loan can be a bit challenging. So prior to taking a final call regarding a business loan, it is advisable to gauge your eligibility to ensure that you are not walking down the wrong path. To secure cent percent loan approval necessary documents together with proper timing and a good CIBIL are required.

Answer properly on loan application form

Business loan application forms differ from one lender to another, however they have similar questions for which you should have appropriate answers. If the answer is found unsatisfactory then it can lead to the rejection of your loan application. The information normally sought by lenders are:

Reason for availing the loan
The way you are going to utilize the loan amount, in case it is permitted
The net revenue of your business
The inventories/machinery you are supposed to buy, and your suppliers
Your clientele
Any other business debt incurred by you
Staff information
Personal history

Sound business Planning

Lenders need a superior and successful strategy to be presented along with the loan application. The strategy has to have anticipated budget reports such as advantage and disadvantage, revenue, and fiscal record. The lenders will also require a credit report from every three important customer CIBIL score offices prior to accepting your loan application. Any negativity on your credit report can seriously affect the prospect of availing loan. So, prior to applying for a loan, just examine your CIBIL score yourself and rectify the problems (if any) before going ahead with the application.

Lucidity of cash inflow

A business with poor cash flow is normally construed as a risky proposition by the banks. This is due to the fact that the bank would think the business would give more priority to your professional expenses than repaying the credit. They would also evaluate bank statements of the business and personal accounts to understand your monetary position thoroughly.

It is possible to better your cash flow (if it is on the lower side) by performing a cash flow evaluation of your business, devising goals, and drawing a clear cut payment plan for your business.

Offering guarantee against loan

In order to be in the safe zone, banks will seek a collateral against money being lent. This is a good option to reduce risk factor. The collateral being offered has to a perfect cover for the money borrowed so as to convince them that their money won’t sink.

The collateral could be anything from a real estate property to expensive equipment or machinery related to your business.

Furnish right documents

You are required to give a few documents to showcase the strength of your business and your ability to pay back the loan. Documents to be provided again varies from lender to lender. The documents needed comprise certain legal and personal documents.

The legal documents needed are:

Business licenses and registrations critical to operating business
Articles of Incorporation
Copies of contracts entered with third parties
Franchise license/ agreement
Commercial Leases
Documents from the local body confirming the permit (in case of industry)
The application forms can be perfect to state your projected financial statements
Bank Statements
Balance Sheet
Income Statement
Cash Flow
Last year ITR documents

Compare your lending alternatives

Upon convincing yourself to go for a business loan, you are required to perform in depth research regarding the borrowing alternatives before you. There are nationalised banks to NBFCs and DSAs for the purpose of business loans. To take the first step, prepare a list of banks and lending institutions giving the type of loans you require. Then juxtapose these options with factors such as loan amount given, interest rate, flexible principle for approval and easy and convenient terms & conditions. In case you are still in a dilemma take the help of an expert.

September 7, 2020September 7, 2020

Is pitch-deck sufficient to receive financial aid from investors?

Raising funds is no child’s play. As for attracting Seed Funding from the Venture Capitalists (VCs), a robust pitch deck offered by highly ambitious entrepreneurs might look good. The excellent tones coupled with incredible presentations will go a long way in making good impact upon the investors. Each entrepreneur need to come out with stories that catch everyone’s fancy. However, is that sufficient? The answer is a strict no. A pitch deck might grab attention, however, that will not convince investors to jump into your venture. The pitch deck has to be accompanied by an excellent business plan. It is common knowledge that Venture Capitalists want those firms with solid foundation and an excellent track record. Also, they want companies that has the potential to increase the profits or Return on Investment. Mere lip service will not be sufficient to convince the investors and VCs want assurance that their money won’t sink in this venture. .

Things to factor in while investing in a company

Firms with streamlined operations

it is to be remembered that the angel investors do not want to put their money in a risky venture. So, a company has to prove its credentials. They want companies with attractive portfolios and highly skilled managers who have the ability to enhance the revenue potential of the business.

Promising outlook

In case your start-up looks very promising and it is trying to garner a large customer base, then the same can impress the investors and they might take keen interest in your venture. So indulge in an in depth analysis of the market conditions and the kind of traction you can gain among your customers. These things are appreciated by the investors a lot.

Products holding a lot of promise

As we all know that the market is crowded. In such circumstances one needs to have unique ideas and innovative skills to stand apart from the crowd. Further, you need to ensure the products or services offered by you provide viable and cost-effective solutions to the existing problem.

The strength of your team

Investors are highly likely to put their money into a skillful team with qualified members working in a close-knit surrounding. So, it is necessary for the organization to have a dedicated and hard working team that can perform any job efficiently. There is a perception among investors, which is cent percent right, that diligent and educated team members can script success stories constantly.

Venture has to be risk-free

Anyone wanting to invest would be wary of the risk factor involved in the venture. If the venture is fraught with danger then no one would like to part with their hard-earned money. So, any negativity regarding your new venture makes it difficult for you to find Venture Capitalists’ funding.

Display a proper illustration of your capabilities

The commercial viability surrounding your venture can only be established if you and your team members showcase your ideation capacity and problem-solving skills clearly. Hence, an overall planning to make things work and provide the right solution go a long way in convincing investors about your business strength.

No legal issues

Nobody wants to touch a business having legal complications even with a barge pole, least of all investors. Hence, an organization mired in legal issues would be a strict no for investors or VCs. Your credibility is at stake and that is akin to suicide mission for fund investors.

Last but not the least

It does not matter whether you are an upcoming entrepreneur or an established one, putting up a good show is imperative. A pitch deck is a must to break ice with the angel investors, but this alone won’t suffice as your skills and expertise also matter. You have to convince the investors that you have it in you to go the distance. So, consider all these aspects before looking for an investor.

Frequently Asked Questions

Q. Is seed funding relies solely on pitch decks?

Ans. Not really. Seed funding requires a lot more than pitch decks. In fact, commitment on the part of entrepreneurs to take business to greater heights and dedication to convince investors that their money will not go down the drain are also required.

Q. If my company has a legal issue will the investors put in money?

Ans. No way. No investor would love to invest in a company fraught with legal complexities.

Q. Is a team must while initiating a project or a plan?

Ans. It is not mandatory but desirable as people tend to get impressed by a group of people working together for a common goal. A unified outfit comes across as very ideal to the investors.

Q. Can I dabble upon something that nobody has done before?

Ans. Yes, you can. A fresh idea with a vibrant approach can trigger interest among investors. However, the plan has to be convincing and very much in the realm of possibility.

January 18, 2020January 18, 2020

What is a Business Loan?

Business Loan is a kind of financing you can avail to meet the business needs of your growing business.

In short if you need funds to expand your business, or you need to buy machinery or boost production then you can opt for business loan.

Different types of Business Loan

Following are the types of business loan and they are as follows-

Working Capital Loans- When there is a need of Short term business liquidity, they need to have an adequate and constant cash flow. Then working capital loans comes in the picture.
Machinery Loans- When there is a need to purchase a machinery or are planning to upgrade their plants and machinery, so it requires a funds in both the situations. Machinery loans are one of the types of business finance that provides capital for your fixed asset needs.
SME and MSME Loans- Loans are provided to small businesses owners who are looking to expand their business operations and market each.

Things your Business Loan Application must include-

Whoever needs a bUsiness Loan is required to give an application with their Business Plan. By submitting a business plan to any Bank authority it is easier for them to evaluate whether that business is economically viable business or not and that decides the repayment capacity loan of yours to the Bank. it is obvious to translate your ideas on paper and the bank can see your vision. Here are some of the principal sections to include-

Executive Summary- an Executive summary gives a short summary of your entire plan. This allows banks and other lenders to evaluate the economic viability of your business.

Business Description- After Executive Summary, them comes Business description. Make sure that it includes all the main aspects of your business.

Human Resources- It is important for a business before seeking for business loan that they have a strong team behind the business. Principle this should include the profiles of the executive team which includes, CEO and CFO and anyone else involved in the higher level. Make sure to add their previous achievements to demonstrate their ability to run their business.

Budget and Finance- this is one section that bank will scrutinize in every possible detail. While the idea is important to them they really want to see that how much you want to invest, what your regularly expenses would be and how will you be making revenue.

Promotional Plan- lastly, it should include the Business or Promotional Plan. how will you get you services or product out there.

Supporting Documents requirements-

Following are the supporting Documents that are needed-

Identification
Bank Statements
Proof of address
Business Registration Documents

FAQs

What are the things which you need to know before applying for a business Loan?

Prior to starting you application with Bank, it is always advisable to be well prepared. Here are the following things which you should consider before submitting an application

Check your credit rating- A large portion of investors decides to give loan to you by checking your CIBIL score. So before applying for the loan it is a good idea to check your credit score.
Every time you apply for a loan, your credit report registers this. If you have too many applications then your credit score could go down. So the best option is to shop around first before submitting an application.
Lastly, you should consider hiring someone to help you with the application process. Often times business owners are really good at their side of the business or are not the best at Finance and writing. The business plan is an essential section in your application, so it might be a good idea to have someone help you out in writing of the business plan. It may also be helpful to hire a finance analyst to aid with the budget section of your Business plan.

July 18, 2018

THINGS TO KNOW ABOUT PERSONAL LOAN

What are personal loans?
Loans which are used for personal use like for medical, education, vacations or
for the purchase of household items are known as personal loans. These are
different from the business or commercial loans. These can be unsecured or
secured by putting up the assets by co-signing the loan. The unsecured loans
are also called signature loans. When you apply for the loan, all your
information like the past credit history and credit score is checked. Personal
loans are brilliant when you need quick cash. Here are the things that you need
to know about the personal loan.

Purpose and eligibility of the personal loan
The main purpose of the personal loans is the expenses like loans for wedding,
home renovation, children higher education, other personal financial needs
etc. There are lots of eligibility criterions for the personal loan and each bank
has its own set of rules like minimum age, credit score, income, occupation,
assets, place where are you resigning etc.
Maximum possible loan tenure and disbursal of loan amount
A loan can be given maximum for five years. It is not possible to have a loan for
more than 5 years. When the loan is approved, it gets disbursed in 7 days of
work. As soon as the loan is approved, either you will get a cheque or
equivalent amount of money will be transferred into your bank account.
Maximum amount you can borrow from bank regarding personal
loan
The maximum amount which one can borrow depends upon on the past loan
which one has taken. If the person is already having a huge loan then it is very
difficult to get your loan approved. Make sure that the loan which you are
applying for has an EMI 50% less than after paying the current EMI. Then only
you can have your loan approved.
What is the minimum loan amount?

It all depends upon the institutions and banks. Some banks have the minimum
amount of 30000 while some has no minimum amount.
It is always great to compare different loan schemes. These can be compared
using loan tenure, processing fees and other factors. Choosing the right bank is essential and it must be selected according to your requirements.

Maximum loan amount which you can get
There are many factors affecting the maximum loan amount you can get from
the bank. These factors include credit score and salary. If you have good credit
score, close to 900, then you are more likely to get your loan approved.
If you do not have a good salary, it may happen that your loan will not get
approved. So it is crucial to have a decent salary before applying for a loan.
There is no maximum limit as such.
The necessary documents
Some of the common documents that are required for applying for the loan
are as follows:
 Income confirmation documents
 Address proof documents
 ID proof
 Copies of degree

Loan repaying process
There are various options that are involved in the loan repaying process. It
depends on bank to bank. It can either be completed through post-dated
cheques or through the Electronic clearance system (ECS). You have the
provision to pay the loan before the end date of loan tenure.
The loan is generally approved by the loan sanctioning officer. First of all, you
will have to submit all the documents, and then the verification of the details is
done. If the officer finds all the information appropriate, then only he/she
sanctions the loan. Once your loan is approved, you will get your loan within
the seven days.

Loan interests
As the personal loans are unsecured, banks generally charge you a higher rate
of interest. These interests rate varies from bank to bank.
You can even get you loan with a co-applicant. As the salary bracket rises, the
chance of the larger loan also increases. Make sure that none of you have a
poor credit score or you will have difficulty is getting large loans. Good credit
score is also essential because if you have a good credit score around 900, then you have more chances of reducing the interest rate of the loan.

BIATConsultant is leading business loan provider . Contact us now to avail our service of Financial Advisory .

July 15, 2018

THINGS TO CONSIDER BEFORE COSIGNING A LOAN

What is meant by co-signing?
A co-signer is a person who agrees to pay the debt of a borrower if he/she fails
to pay the loan and this process is known as co-signing. A co-signer generally
have huge amount of credits which increase the loan approval chances of a
borrower. Co-signers play a huge role in this world as many people will find it
difficult to get their loan approved without the help of co-signers.
People generally co-sign a loan to assist the family members, siblings, friends
and others. However, helping the family member by co-signing for a loan can
feel rewarding but it come with its own drawbacks. Let us look at some of the
things to consider before co-signing a loan.

”Why would someone ask me to co-sign a loan?”
It is very important to think about the question- why would someone ask me
to co-sign a loan? There might be possibility that the person has a very bad
record of past loan credit, missed EMI etc. However, there can also be a case
where a person like you own children, who are new to credit or who haven’t
taken a loan before may need you to co-sign a loan.

“How does co-signing a loan affect your credit score?”
Co-signing a loan is a very important step and it must be done cautiously. You
have co-signed for the loan means that you have good credit score. When the
borrower fails to pay the loan, you will have to pay the loan. If you also fail to
pay the loan or miss the EMI, then it will impact negatively on your credit
score. On the credit score, it will add to your debt. More debt means that it will
reduce your credit score and you may face a problem while taking another
loan.
However if you pay the loan and pay the instalments timely, it will improve
your credit score. It will help you in taking loans in future. You can always
check the credit score online.

“What are the disadvantages of co-signing a loan?”

Here are the following disadvantages of co-signing a loan
 If the borrower fails to pay the loan, you will have to pay the remaining
loan
 If the borrower defaults the loan, your credit score will decrease
 In case of default, if a loan donor like bank file a suit for the loan, they
are likely to sue the co-signer due to their high credit score
 Co-signer cannot take the name off the loan agreement once the loan is
approved
 If the borrower delays the instalments, it will decrease your credits
“How to be safe while co-signing a loan?”
You can never feel safe while co-signing a loan, there is always a danger lying
around. However, you can take following precautions to reduce risks
 Always co-sign for a person who you know better. Ensure that they are
capable of paying the loan by themselves.
 Be prepared for paying the loan if the borrower defaults the loan
 Ensure that you have all the copies of everything related to the loan
agreement.

Contact BIATConsultant.com to have a consigning loan services in India.