Are you aware of these business loans myths?

As a small business owner, you would be required to finance an aspect of your business development. While there are plenty of options available, the small business loan is one such option.

It might be intimidating to obtain this loan, after all there have been rumours where loans for the business applications have been rejected. However, you shouldn’t believe everything that you hear. In fact, here are some of the common myths about getting this business loan that you should be aware of:

Myth #1: Getting the small business loan is the hardest thing

Obtaining financial for your business will not be an easy feat. However, it doesn’t have to be an insurmountable challenge. In fact, the best way to avoid any trouble is to prepare for any possibility of challenges that your applicant will face. In this way, a lot of frustration in obtaining financing can be avoided just by doing your due diligence. 

Myth #2: You will need the perfect credit score to get an approval

Previously, low credit score where known to preclude you from getting the loan your required. However, today’s financial environment is a bit more flexible to credit ratings. Most banks, both the upcoming and the traditional banks may still have a few restrictions when it comes to obtaining credit, however they will offer you plenty of alternate options, based on your business type, time in the business and cash flow.

Myth #3: The worst way to obtain a small business loan is through a bank

It is a belief that banks will only cater to the business that have shown prominent growth, or even have a strong reputation. In other words, there will be a chance of a loan application approval, only if your business is big and with a strong reputation. On the contrary, banks do offer custom loans that cater to the needs and requirements of small businesses. In fact, plenty of banks offer financial aid for local businesses, in order to help the, grow and develop, while matching their growing financial needs. If you can project your growth development, you can approach the bank as a financial lending partner, for a long term purpose.

Myth #4: Your application will not get approved if you opt for huge loan amount

This is one of the common myths that is associated with loan applications. While it may be alright to ask for funds, it is normally taken into consideration only if the funds will be used for personal requirements. However, for business loans most bans will offer large amounts, as the banks will in turn benefit from this loan. All you need to ensure that the cash flow of your business will match the requirements of the loan especially in terms of repayment.

Are you aware of these three factors about the NRO account?

More and more Indians are travelling abroad to earn a higher income through foreign currency. At the same time, these individuals would want to maintain the income that is earned through their residential country, especially through dividends or rent.

This is where the NRO account will prove to be beneficial. Through this account, both the foreign income as well as the residential income can be deposited in the account. The funds that are deposited in this account will be converted into the rupee value.

While plenty of individuals have this NRO accounts, it is still important for the holders of the account to know influential factors associated with the account. By being aware of the consequences of the factors associated with the account, it will have an impact on the manner in which the investor will deal with its various aspects:

Choice: When it comes to the NRO account, there are plenty of choices available to the investor, based on financial functionality. For incidence, if the investor only wants to deposit or withdraw funds, there is a choice between the saving account as well as the current account. In the case of the savings account, the funds deposited will earn interest, especially when not many transactions are necessitated. In the case of the current account, it will provide the account holder with the flexibility to undertake several transactions. However, no interest will be earned on the deposits. This extra deduction can be used for additional benefits. In terms of investment, a fixed or recurring deposit is available. In the case of fixed deposit, a lump sum amount can be deposited with the interest rate fixed to earn a return which will deposit at a fixed tenure. Similarly, with the recurring deposit, a fixed amount of the income can be deposited account on a monthly basis with the interest rate being fixed throughout the duration.

Taxation: Unlike the other NRI accounts, the NRO accounts are taxed. The entire amount of interest earned on this account is taxable. It indicates that no part of the income will be considered as tax-free. However, there is no cause for worry for non – residents as there is an exemption clause that calculates the total tax liability. This exemption limit is currently at Rs. 2.5 lakhs.

Tax deduction: The NRO account is liable for tax deducted at source for the income that is earned. In other words, any amount earned right from the first rupee will be taxable. The rate of deduction is at a general rate of 30%, which is considerably high. While there may be certain clauses where a lower rate may be applicable, it will differ based on the investing bank. However, the account holder may need to file a tax return and get the appropriate refund for this to be applicable.

Managing your wealth better with an NRE account

As an NRI who is earning in foreign currency, you have plenty of financial opportunities regarding investments and even conversion into the resident currency. However, before you can utilise your foreign earnings, you first need to deposit it in the ideal and government acceptable medium, namely the NRE account.

This NRI account stands for the Non-Resident External account, with emphasis on the ‘external’ factor. As an NRI or a PIO, you can open this account, and invest your foreign earnings in it. The following are the features of the NRE accounts and how you can benefit from it:

Features of an NRE Account:

Tax-free account: This is one of the main benefits of the NRE account. As an earning member, the last thing you would want is to let all your hard earnings get cut due to taxation. However, the earnings in this account is not a tax. This tax-free feature applies to both the principal and the interest earned. In this way, you get to earn funds without any worry about taxation.

Fully repatriable: At some point in time, or even on a monthly basis, you may want to repatriate your funds. While this process may be seemingly complicated, you can get to remit funds abroad from the account without any headaches. Moreover, unlike the NRO account, there is no cap to the amount on the repatriation or any evidential requirement from your CA if you exceed a particular amount for repatriation.

Higher interest rates: As compared to the residential bank accounts, the interest rates for the NRE accounts are considerable higher. Added to the fact that you will be earning in a foreign currency which has a high currency conversion, it makes for an ideal investment. This is especially crucial if you have a steady and high income with a requirement to remit on a regular basis.

Power of attorney: Managing your NRE account may be tedious. But you can always appoint a mandate to operate the account on your behalf. This will ease off the burden on your back while allowing the funds to be transferred to the appropriate party, especially if it is for your family member in your home country. You only need to inform your bank about a power of attorney and take the necessary steps to appoint a mandate.

Investment can be made from this account: While the value of the foreign currency is high abroad, the financial market conditions of India are quite favourable for investments. Foreign funds are a good way to get a promising return, especially if the funds from the NRE account can be used. Once the funds are invested in the account, you can invest the appropriate funds in appropriate sources, such as the Indian mutual funds and stock.

How to add a joint account holder to your NRI Account?

More and more Indians who have settled abroad are taking advantage of a double income. This includes earning an income through the foreign currency and investments in the home country.

This multiple complex financial functioning has been made possible through the introduction of the rules and regulations of the NRI account. Non – resident Indians are now allowed to open either the Non-Resident (External) or the Non-Resident (Ordinary) account based on one’s requirements. However, the repatriation rules for each of these accounts are different. For example, the NRE accounts are freely repatriable, whereas the NRO accounts are conditionally so.

Similarly, the requirements for adding a joint account holder to the account is also different. An NRI can be a joint holder with any resident Indian only on a former or survivor basis. However, the NRI can only add a non - resident mandate holder to his NRE account. In the case of the NRO account, an NRI or resident account can hold a joint account holder.

But why should you add a joint account holder to the different NRI account? There are several reasons, which includes convenient access and management of the account. It could also make the transfer of funds easier, especially of the recipient is a member of the family, where the funds repatriated are used for household maintenance.

In order to add a joint account holder to your NRI bank account, here are the steps you will need to follow:
Form: You will need to approach the bank where you have opened the NRI account, and request for a joint applicant inclusion request form. You can either get a physical form or down the form from the bank website. Follow the instructions on the form and fill up the respective details. If the customer is already an existing customer of the bank, he/she should also include the customer ID. 
Documents: As a part of the application process for the NRI bank account, the following self-attested document copies must be provided:

• Passport: Normally the first and the last page of the passport is required.
• Visa: Current visa is required
• OCI/Resident Permit
• Overseas address proof
• Initial paycheque of the joint applicant’s overseas account. If unable to do so, the passport and visa copy must be duly attested. It should be done by a foreign notary or Indian consulate general in the foreign country.

In the event the documents cannot be provided, alternate KYC documents permitted by the bank can be submitted.

Submission: Once all the forms have been completed and signed, along with the necessary documents, it can be given either at the overseas bank branch or the Indian branch. Alternatively, the documents can also be dispatched to the bank at its head address in India. In this case, most of the banks provide a PO box facility for these overseas activities. Once the documents are received and ascertained to be in order, it would take around 10 days for the process to be finalized.

Stay smart with your education loan with these 5 factors

No individual should begin their earnings with a debt to repay right in the beginning. In fact, this is a primary fear that prevents students from applying for a loan, in order to achieve their potential. After all, to start one’s earning paying off a previous debt will not leave one with sufficient funds for any other crucial expenditures.

On the hand, the education loan offers plenty of benefits, especially since it elevates the burden of spending one’s saving to gain a high education degree. By opting for this loan, a student can easily get the financial boost to apply for an education degree, which will not only promise a potential return but also put one above the competition.

Furthermore, the loan will help the student to save funds for any unforeseen or additional expenditures without putting a financial burden on them.

But while the educational loan will seem like debt, it, in fact, takes a proper requirement and strategic planning to efficiently afford the loan and repay the borrowed funds back. In order to ensure that your savings are kept safe, here are a few factors to keep in mind before you begin the application process:

Factor #1 – Availability: The education loan is normally available to Indian nationals only. These individuals must have a secured admission to a professional or technical course in India or even abroad. The selection process must be done through a merit-based procedure.

Factor #2 – Loan amount: Most banks offers a loan amount of Rs. 10 lakhs for courses in Indian colleges. For courses abroad, the amount can go up to Rs. 20 lakhs for studies abroad. However, the amount that will be finally provided will be in line with the norms provided by the Indian Bank’s Association.

Factor #3 - Co-applicant requirement: For the application of the education loan, a co – applicant is a must. It can include either parent, spouse or sibling. This is a precautionary step for both the applicant and the bank so that the combined financial profiles will offer a higher loan amount, and the bank will receive an assurance that the funds will be repaid back eventually.

Factor #4 – Provision of collateral: If the educational loan is less than Rs. 4 lakh then no collateral is required. For any loan amount that is higher than this amount, a personal guarantee is required from an individual who has an acceptable income and repayment capacity. For loan amounts higher than Rs. 7.5 lakhs, the lender will require a collateral security

Factor #5 – Repayment commencement period: The repayment procedure is not initiated right in the beginning. The process will begin six months to a year after the completion of the course. This is to keep the simple interest charged during the moratorium period.

Investing a portfolio investment: All you need to about investing

A portfolio investment scheme comprises of a passive investment of securities in a portfolio. This portfolio is made with the expectation of earning a return, in direct correlation with the portfolio’s expected risks.

Most of the schemes for the portfolio investment in India span a wide range of asset classes which includes, stocks, government bonds, corporate bonds treasury bills and real estate investment trusts. It also includes real estate investment trusts, exchange-traded funds, mutual funds and certificated of deposits.

The investments made in a portfolio depend on the investor’s individual circumstances or certain factors. These factors such be weighed against the investor’s goals and time horizon. In most cases, the factors include the following:

Creating a portfolio investment scheme roadmap: Before making any investment, you need to be aware of your entire financial situation, especially as a first timer. You need to understand your goals and risk tolerance. As there’s no guarantee that you will make money from all your investments, getting the right facts and details about your savings and investing will help you create an intelligent plan backed by the right financial security. In this way, you can enjoy years of benefits of managing your money.

Evaluate your comfort – risk zone: All investments, including the portfolio investment in India, involves some degree of risk. In the event you need to invest in a portfolio, it is important that you understand all the influential factors before you lose some or all of your funds. Not all investments schemes are protected by insurance. In certain investments, you could lose your principal. However, the reward for taking on risks offers a great potential for higher investment returns. If you have a financial goal with a long time tenure, you will have a chance to make more funds by investing in asset categories with fewer risks, as compared to investing in assets with fewer risks. Alternatively, you can also invest in cash investments that are appropriate for short term financial goals. However, there is a concern that investing in these cash equivalents will also include inflation risks, which can outpace and erode returns over time.

Consider the mix of investments: A portfolio scheme comprises of different investment categories, whose returns variate under difference market conditions. With this different conditioning within a portfolio, you can get the ideal protection against significant losses. In reality, the returns of three major asset categories such as stocks, bonds and cash have not fluctuated at the same time. That is because, market conditions will cause on asset category to do well, causing the other asset category’s returns to be reduced. By investing in more than one category of asset, you will help balance the investment risk and ensure an overall investment return. In this way, asset allocation, is important, as it will go a long way to meet your financial goal.

Advantages and disadvantages of sending money to India through mobile apps

When making a money transfer to India, there are various options you can consider. Some of the traditional channels of money transfers include in – house bank accounts, wire transfers, email transfers and even cheques.

However, with digitisation take up a prominence, more and more banks are offering services to send money to India through specialised apps. These apps are designed to be specifically used on the smartphone platform.

Some of the benefits of this platform includes:

Easy to use: It’s like a one touch pay, with no requirement to fill in your card numbers and passwords every single time. You can easily link your banking card or account details to the app and make the payment immediately.

No inconvenience regarding transfer amounts: When you make a money transfer to India through these apps, you need not worry about making a money transfer with amounts that have to be fixed. You can send any amount of funds, as per your requirement. This can be in even or odd amounts.

Make instant payments: It will be possible to make instant payments. This is especially useful for cases where a financial emergency occurs. Additionally, it also eliminates the lengthy waiting periods, which normally occurs during the traditional money transfer channels.

Everything under one roof: Through these apps, all your data from multiple platforms will be synchronised through one channel. Right from your bank accounts, banking cards, mobile accounts and bills, they will be interconnected on one platform. This will make it easier to manage and access, as it will be all under one roof.

Some of the disadvantages of this app include:

Mobile network connectivity: Mobile network connectivity is always the biggest impediment. Furthermore, both the sender and the receiver will need a fast, secure and reliable network connection to make a successful money transfer.

Mobile security: Alongside connectivity, security issues are also now on the forefront. Plenty of occurrences of money being misused through these apps has to make rounds, creating doubts and suspicion in the minds of users.

Insufficient support infrastructure: Indian still has to reach its peak potential when it comes to its infrastructure and financial literacy. Unless this requirement is met, there is no use in focusing on advanced technologies when the base is not strong enough.

Customer service is not up to mark: India does not have such a solid dispute resolution process. In the event an individual as an issue with the app, considerable time and effort will be taken to resolve the issue. Furthermore, the experience of most individuals with the customer service agents hasn't been encouraging.

While there may be disadvantages present through this channel, the advantages overweight them. By being aware of these disadvantages, you will know how to make the most of this money transfer services and make the most of this service.