Loan (Debt) Syndication FAQs

 

 FAQs Loan Syndication

Syndication is a concept that is in widespread use today. Syndication takes place when a loan asked by a business or corporate is too large for one financial institution to lend. There are different aspects of loan syndication including syndication and consortium. Here are some of the general Questions which customers ask about syndication:

What is meant by loan syndication?

Loan syndication is a process by which more than one lender is involved in funding a loan for a business or corporate. This group of lenders lends various portions of the loan. Loan Debt Syndication is generally undertaken when the amount required by the business is too large for one financial institution to lend or when the loan is not within the scope of a lender’s risk exposure levels. Various lenders form a syndicate and provide the business with the required funds.

 
What is the difference between syndication and consortium?

A consortium is successful when one single financial institution cannot fund the loan amount to the borrower. Various financial institutions club together to supervise the said loan amount. A consortium unlike syndication is not built to deal with international transactions. A consortium is usually bound by a legal contract that delegates responsibilities among its members.

Loan Syndication also involves multiple lenders and a borrower but loan syndication generally involves international transactions and sometimes different currencies. Loan syndication is usually headed by a managing bank that is approached by the business to arrange the credit. This managing bank is generally responsible for negotiations of conditions and arranging the loan.

 
What is a syndication agent?

A syndication agent is generally a bank or a financial institution that acts as an agent for a group of lenders in the process of syndication of a loan. The syndication agent plays a key role in the syndication of loans for businesses and corporations. The syndication agent should be reliable and can negotiate the rate of interest and other terms and conditions for the borrower, so the borrower can get the best deal from the market.

Why are loans syndicated?

Loans are generally syndicated because one financial institution cannot lend the entire amount of money to the borrower. For example, a business may need a large number of funds. If the amount is too large for one bank or financial institution, then the business can be given funding through loan syndication. Loan Syndication can be used in cases when the amount to be lent is too large and too risky for one financial institution to lend.

Why Terkar Capital for Debt Syndication?

If you’re looking for effortless and trustworthy debt syndication services in India, Terkar Capital is the best place for you. We provide expert analysis of the product and we choose the right lenders for the syndication. We also boast of quick turnaround time and provide timely and optimum availability of funds. Our expert team will provide you with the complete and perfect end-to-end execution of the syndicate process.

FAQs on Working Capital Finance

FAQs on Working Capital Finance

The businesses face a cash crunch frequently, the major requirements for funding are from Micro, Small, and Medium Enterprises (MSMEs). The need for funds can be for paying dues, purchasing assets, running the business, expansion, etc. To overcome such issues, working capital can be the perfect solution. This type of finance helps in short-term operations and allows them to run their operations smoothly and efficiently.

1. What is the tenure in working capital finance?

Working capital finance is a short-term loan that is majorly used for managing the operational expenses of a business. Normally, the loans are offered for a period of 12 months. The criteria depend upon the lender as well as the requirement of the borrower.

2. What are the benefits of working capital finance?

The major benefit for borrowers is that it smooths the fluctuations in the cash flows of business operations and processes funding quickly. The working capital instruments have flexible repayment facilities, which gives an advantage to the borrower.

3. What do lenders look for in a potential working capital borrower?

The major potential required from the borrower in the case of secured funding is the collateral, whereas, in the case of unsecured funding, it depends upon the creditworthiness of banks and the track record of the borrower.

4. How much is the interest charged on the working capital instrument?

The interest depends upon the amount of the funds, the credibility of the borrower, and the repayment history of the borrower. Hence, the interest differs from case to case and lender to lender.

5. Which working capital instruments do we offer?

Terkar Capital arranges a variety of products in debt funding and assists the clients in choosing the best suitable one.

Below is the list of our instruments of working capital finance:

• Cash Credit Facility

• Bill Discounting

• Factoring

• Letter of Credit Discounting

• Overdraft Facility

• Bank Guarantee

6. How is the repayment criteria in working capital finance?

The repayment criteria depend upon the mutually agreed terms and conditions between the buyer and the lender, it can be through EMIs or as and when the borrower gets cash.

7. Is collateral compulsory for working capital funding?

The type of funding, whether secured or unsecured, totally depends upon the availability of collateral. Also, if available, the amount of the fund and the value of collateral should be matched. The only difference between both fundings is the rate of interest. Secured funding will fetch low ROI as compared to unsecured due to the presence of collateral. Terkar Capital will help you with a reasonable cost of borrowing from their clients.

8. Who provides a working capital finance facility?

The working capital facility is provided by banks, NBFCs, and financial institutions. The eligibility, repayment terms and documentation varies according to the respective lenders. We help to bridge the gap between eligible borrowers and capable lenders.

9. How does Terkar Capital help you in Working Capital Finance?

Terkar Capital is one of the top financial firms and provides quality services to its customers. We help you with arranging loans in Pune and across India. We understand the customers' needs and tend to provide the perfect financial solutions accordingly. Here the executives are highly trained and work enthusiastically for providing services with ease. Our timely and confidentiality in service makes us different and unique from others. Working capital is one of our services in which we have expertise. So whenever it is funding, Terkar Capital is ready to serve you at best!

CGTMSE scheme FAQs

 

FAQs on CGTMSE

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a trust inaugurated by the Ministry of Micro, Small and Medium Enterprises, the Government of India, and the Small Industries Development Bank of India (SIDBI). Launched on 30 August 2000, the main purpose of the CGTMSE scheme is to provide credit guarantees to financial institutions that grant loans to SMEs and Memes.

What is CGTMSE Meaning?

The basic purpose of CGTMSE is to encourage first-time entrepreneurs to build SMEs and MEME, estimated to support the Indian economy by availing of collateral-free loans from qualified financial institutions. The guarantee includes default by the borrower to repay the advance. Thus, the CGTMSE scheme essentially considers the requirement of loans to first-generation administrators so that they can flourish in a competitive environment without the burden of security or third-party guarantees. In turn, the financial institutions are given cover for the lack of security to fund SMEs and Memes promoted by small Indian businessmen up to a certain limit.

CGTMSE – A Driving Force for MSMEs

What are CGTMSE Fees?

The fees charged by the trust fund are 1% p.a of the amount so approved:

1. 0.75% – for loans of up to Rs. 5 Lac

2. 0.85% for loans above Rs. 5 Lac but up to Rs. 100 Lac.

The credit guarantee available below this scheme is 75/80% of the amount so transmitted to a maximum cap of Rs. 62.5 Lac / 65 Lac for a loan facility of up to Rs. 50 Lac. The percentage guarantee implies 85% for micro-enterprises for a sum of up to Rs. 5 Lac. The percentage of guarantee is 50% of the amount so approved for a credit of above Rs. 50 Lac with a maximum limit of Rs. 100 Lac. The ownership of the guarantee is a block of 5 years.

Does CGTMSE cover retail trade?

CGTMSE Coverage extended to Retail Trade & Collateral Loans too – Now Retail Trades & partial collateral loans may be included under the Credit Guarantee Scheme of CGTMSE. A decision in this opinion was taken under “Rebooting CGTMSE” established by the Ministry of MSME and CGTMSE on February 20, 2018.

 Following modifications were suggested for implementation:

1. Charging Annual Guarantee Fees (AGF) on Outstanding Loan Amount somewhat than the sanctioned amount.

2. Extending the Coverage of the Credit Guarantee Scheme (CGS) to cover the MSE Retail Traders section.

3. Providing loans with Partial Collateral Security “Hybrid Security” under Credit Guarantee Scheme.  

4. Increase in the extent of guarantee coverage to 75% from the existing 50% for proposals above ₹50 Lac.

5. Intensifying the IT infrastructure of the Trust to develop operational efficiencies and reduce the turnaround time for claim settlement.  

6. Augmentation of the corpus of the Trust from Rs. 2,500 crore to Rs. 7,500 crore

7. To increase coverage of the loans covered under the credit guarantee scheme from Rs. 1 crore to Rs. 2 crore

8. To increase coverage of the credit guarantee scheme for loans being enlarged to micro and small enterprises by NBFCs also.

Understand CGTMSE scheme execution.

What is CGTMSE Loan Interest Rate?

All lenders impose a particular cost on the borrower. The important part of the cost to the borrower is the interest rate for the loan. The majority of the lenders recover the CGTMSE loan interest rate that does not exceed 14% PA including the guarantee cover. Most of the time the rate of interest varies as per change in the financial institutions and the facility which is available under CGTMSE.

What is CGTMSE Full form?

The full form of CGTMSE is Credit Guarantee Fund Trust for Micro and Small Enterprises which gives funding to financial institutions to help SMEs and MSMEs.

How to apply for the CGTMSE Scheme?

To apply for a CGTMSE loan, you are required to set up a business plan including business model, projected goal, etc., and obtain certain business documents if you have just registered your business. Once you have all the essential documents and business plans prepared by a professional, you can apply for the loan with eligible moneylenders. They will analyze your business model and application. If the bank is satisfied, it will process the request to CGTMSE for getting a guarantee cover and confirm the loan amount after CGTMSE approves your application and you pay CGTMSE loan fees.

It reaches out even to the rural areas. The application can be made particularly if the applicant is eligible for a loan under the CGTMSE scheme.

How does Terkar Capital help in getting CGTMSE Exposure?

For many years Terkar Capital has worked extensively and exclusively for raising the finances for the businesses. With respect to the company and its financials, we arrange the source of the funding for the company. And CGTMSE loan is among them. There are many financial facts, and figures that need to be considered before one shall proceed on the CGTMSE. We analyze the financials, and business and arrange the whole execution with the best suits facility under CGTMSE.