Business loans serve as a backbone for an organisation. With them, you can efficiently manage your cash flow, upgrade business equipment and grow the business. It is specifically intended for business opportunities and should be repaid with added interest.
When you purchase a business loan in India from banks, it may be either secured or unsecured. In secured loans, banks will ask for collateral, which will be lost if repayments are not made. The bank will possibly wish to see the business’s balance sheet, accounts and business plan, as well as studying the principals' credit histories.
Following factors play a significant role in determining how easy or difficult your loan raising process would be.
1) Stage of your business:
This factor is similar to an individual getting a loan. If your business is at an early stage and has been in existence for a short period, banks may hesitate to lend. You might need to apply for new business loans. However, a business that has been around for some time with a proven track record of operation is likely to find the loan raising process much simpler.
2) Competition:
The nature of competition that your business faces impact the decision for lending institutions. Bank may look at your competition to figure out where you stand among your peers. If you are at par or do better in the market, getting money becomes easier and vice-versa. If the competition is intense, applying for business loans will be tad difficult, because banks may not be to gauge your repayment capacity.
3) The amount you need:
If the amount you need is relatively modest, it may be easier to get a loan. However, for higher loan amounts banks may ask for additional details and set provisions that may make the loan processing tougher. Small amounts that are in sync with your earnings or cash flow may be easier to raise, but anything that goes beyond your financial position may make a bank think twice.
4) Relationship with the lending institution:
It is always easier to raise a business loan in India if you have good relations with the bank. Choose a bank or bank that have greater visibility of your business, a good understanding of the state of your finance and may have already extended a loan previously. It gives better comfort to your bank in arriving at a lending decision and may make your loan processing easier.
When you purchase a business loan in India from banks, it may be either secured or unsecured. In secured loans, banks will ask for collateral, which will be lost if repayments are not made. The bank will possibly wish to see the business’s balance sheet, accounts and business plan, as well as studying the principals' credit histories.
Following factors play a significant role in determining how easy or difficult your loan raising process would be.
1) Stage of your business:
This factor is similar to an individual getting a loan. If your business is at an early stage and has been in existence for a short period, banks may hesitate to lend. You might need to apply for new business loans. However, a business that has been around for some time with a proven track record of operation is likely to find the loan raising process much simpler.
2) Competition:
The nature of competition that your business faces impact the decision for lending institutions. Bank may look at your competition to figure out where you stand among your peers. If you are at par or do better in the market, getting money becomes easier and vice-versa. If the competition is intense, applying for business loans will be tad difficult, because banks may not be to gauge your repayment capacity.
3) The amount you need:
If the amount you need is relatively modest, it may be easier to get a loan. However, for higher loan amounts banks may ask for additional details and set provisions that may make the loan processing tougher. Small amounts that are in sync with your earnings or cash flow may be easier to raise, but anything that goes beyond your financial position may make a bank think twice.
4) Relationship with the lending institution:
It is always easier to raise a business loan in India if you have good relations with the bank. Choose a bank or bank that have greater visibility of your business, a good understanding of the state of your finance and may have already extended a loan previously. It gives better comfort to your bank in arriving at a lending decision and may make your loan processing easier.
No comments:
Post a Comment