What Is Business Loan in India
Recently, the demand for loans to create a business has grown significantly. In the last year alone, according to statistics, business lending volumes grew by about 50 percent, but still the need for loans to create and develop a business, loans for the execution of a contract, was satisfied by only 20-30 percent.
Business Loan in India
According to banks, the development of lending is hindered, firstly, by the “lack of transparency” of certain types of entrepreneurial activity, the fairly frequent illiteracy of entrepreneurs in economic and, especially, legal issues, as well as the absence of liquid collateral and high levels of risk of loan defaults. If everything is in order with this, then many banks may offer to open an account for the LLC urgently and issue loans.
Entrepreneurs, however, believe that the whole point is that loans are too expensive, harsh conditions for obtaining loans, long terms for considering applications and the inability to get a loan to start a business from scratch.
First of all, enterprises that work in such a sector of the economy as:
- public catering,
- services sector,
- transport,
- building.
But the first applicants for refusal are organizations working in the field of gambling or some intermediary firms.
Most often, money is needed to modernize production, new equipment and the like. But those who want to get a loan to start a business have a tight time: almost all credit organizations require that the business exist for at least six months.
Importance of Business Loan
What should be paid attention to those who want to get a loan?
- First, banks usually lend to those customers who are on the cash management services of a credit institution, or in other words, their regular customers.
- Secondly, a credit institution always requires a security deposit for a loan. This can be real estate, equipment, transport and any liquid property. Today, the value of collateral should be twice as high as the loan.
- Thirdly, before issuing a loan, the bank must check the solvency of the client. To do this, provide the bank with financial documentation. Documents should reflect the real turnover of the company. Annual revenue should not be less than the loan amount.
- Fourth, a business plan. To write it you need to approach with all responsibility. There are quite frequent cases when he does not pass the examination at the bank. Usually the reason for this is that the basis of the business plan is based on indicators that do not correspond to real indicators or financial expenses are too high.
- Fifth, we must remember that in the banking community there are “black lists”, if the company was previously included in it, then he will not see a loan.
In conclusion, I would like to mention auto payment, which is becoming an increasingly popular way to replenish the balance of a mobile phone. Everything happens automatically and also without commission fees.
