Overview:
Becoming a self-employed entrepreneur is a big reputation in society but the problems that entrepreneurs face from the very first day of their business are huge. Overcoming all obstacles is a big challenge for a person to become a successful businessman. The biggest problem facing everyone is financing. Even great entrepreneurs in various industries have faced many financial crises to establish their businesses and conduct their daily business activities. Thus money plays a big role in the life of traders. Successful business ventures require the financial support needed for great ideas.
Introduction:
There are various sources of capital for traders for their business. The most reliable source is from the bank. There are various reasons why people choose banks as the best source of capital for their business. Banks provide low-cost funds in the form of business loans. Business people have different types of business loans at different interest rates to help them solve their financial crisis.
Types of business ans:
Businesses are different and require money at different stages of their business activities. The need is also different, banks help to provide different types of business loans which help to raise capital for various small and medium enterprises.
New projects – Banks are interested in financing new business and existing business new projects. There are different criteria for getting a new project loan and it varies from bank to bank. Project loans are also allowed against the collateral of individuals such as residential property, commercial property, or vacant land.
Top-up on existing and – These loans are issued for expansion, replacement, diversification of an existing business. These loans are approved on a short-term or long-term basis for the purchase of goods, equipment or any fixed assets for the company.
Effective Capital – These loans are for resolving sudden financial crises for businesses and repaying in short term. Banks are more interested in providing working capital than their inventory, stock or company bills.
Secured Business Anne – Business loans where companies raise their capital against any security of the bank. This may include plots, residential or commercial premises, gold, shares, bills, insurance as collateral to get funds for their business. Interest rates are probably lower.
Unsecured Business Anne – Not every businessman can guarantee a business loan, so bankers help with their loans without any protection based on bank transactions and income tax returns. These loans are charged at higher interest rates than secured businesses.
Bank Requirements:
Various steps and procedures are followed by the banks for the disbursement of funds. The procedure and documents for submission to the bank are as follows
Company Proof and Address Proof – Proof of address and identity of the partnership or proprietary business.
Legal Registration of the Company – Whether the company is legally registered under government rules and has followed all the legal procedures for setting up a business.
Company Financial Statement – Each bank is interested in viewing the company’s recent 1-year business transactions.
Income Tax Return – ITR helps bankers to verify business performance, skill level, assets and liabilities of the company, and the tax that the company pays from their current earnings. It also plays a major role in determining the amount of loans for traders.
Financial Security – This includes the company’s fixed and movable assets which help the banker to consider providing business loans based on the value of the assets along with the business transactions. This protects the bank from the failure of traders who fail to pay the amount.
Tracking of previous payments – This is a very important issue that banks consider which will help them to assess the financial condition of their business and check the past payments.