Understanding Secured Funding in India

In this growing world, everybody in some or another other way requires funding. i.e. to meet the expenses, also they may not have personal funds or savings to complete those. Such a need can arise for companies.

If we talk about a business, the need for finance can be for expansion, reconstruction or to pay the dues. At this moment the thought of a loan comes into the picture. Now the loan can be taken in two types-namely secured loans and unsecured loans.

Here, we will discuss getting secured funding in India.

What exactly are Secured loans?

Secured funding is a type of loan where the borrower has to keep collateral of assets or security against the loan. In case of default, the lender has the right to put the asset or security pledged on auction and recover the amount from it. The borrower here does not have personal liability towards the loan. The period of loan offered in secured is high with a low Rate of interest. 

We at Terkar Capital make an easy process of securing loans for our customers. Our team of experts analyzes each aspect properly and works accordingly.

Features of Secured Loan

• The interest rates in secured loans are lower than unsecured due to the presence of security.

• Customer credit is not the compulsory criteria here, banks may or may not ask for a CIBIL score. In the case of secured loans, the borrower gets a loan even if its CIBIL score is less.

• The period of the loan can be both fixed and variable. The borrower has the option to extend the period of the loan.

• In case of default, the lender can recover the amount from the mortgaged asset.

The disadvantage of secured loans

• If the borrower even after the tenure of the loan is unable to pay off his loan amount his CIBIL score will get affected. However, this will also influence his future loans.

• In case of default, the asset will be seized by the lender's company and an auction will be conducted to recover the amount. So, the borrower will lose its asset, which may affect its business directly or indirectly.

• The procedure or time required of a loan is lengthy as the lender has to inspect many things right from assets information to borrowers' business, etc. Heavy paperwork is another disadvantage of secured loans.

Who can apply for Secured Loans?

The businesses or corporates that have fixed assets and need money for expansion, reconstruction, undertaking new ventures, or paying dues can apply for secured loans.

Eligibility

• The applicant should be a Resident of India.

• The age of the applicant should be between 18 to 60.

• The applicant should possess a fixed asset.

• Many times there are income-based eligibility criteria for loans but there are no such fixed structure criteria, it varies. The companies have to provide certain income statements or financial statements as per the requirement of the lender.

Why Terkar Capital?

Terkar Capital is one such financial firm, that provides hassle-free secured as well as unsecured business funding in India. We are one of the most modernized and highly specialized loan facilitators which understand borrowers’ needs, strengths, and weaknesses and work hard to provide the best services. So whenever it is raising funds, it is us!

 

 

Myths About Debt Funding

Debt Funding

For starting, expanding, or running a business, funds are of prime importance. These funds can be raised in two ways, debt and equity funding. Equity Funding is raising finances by selling the shares of a company. Moreover, debt financing occurs when a company borrows money to be paid back at a future date with interest. This is available in both secured and unsecured funding. The funds can be sourced through Banks, NBFCs, or Financial Institutions.

But there are certain myths and misconceptions associated with how to obtain debt funding. Below are a few of them:

1. Funding requires high collateral

Traditionally, the debt instruments used to come up with collateral, but now it can be availed even without collateral. The collateral-free loans may have more interest rates as compared to secured ones. In the case of secured funding, the amount of collateral and the amount of loan should match. Whereas, in the case of unsecured loans, the funds are even disbursed based on the credit score of the borrower and his relationship with his banker.

2. The process of funding takes a longer time

The funding procedure depends upon various factors. The lender has to submit a variety of documents like KYC, financials, and specific documents. Even though the process looks lengthy, we arrange it as fast and quickly as possible. Now the clients do not have to wait for months for disbursement, it can be done in merely days.

3. Only the lower amount is financed

The clients now can avail a higher number of finances too. The only restriction is eligibility. Once the client has a creditworthy score and fits into the eligibility criteria, the higher amounts can also be availed through both secured and unsecured ways. 

4. The ROI is high in case of unsecured funding

The ROI majorly depends upon the availability of collateral, CIBIL score, and other economic criteria. The higher the ROI, the greater will be the risk, and the lower the ROI, the lesser will be the risk. Hence, the ROI totally depends and changes from case to case.

5. Debt funding come up with heavy risk

The loans used to be risky earlier, but today if you are doing it with the right lender, then there is no need to worry. We at Terkar Capital help to bridge the gap between eligible borrowers and capable lenders. We understand the needs and requirements of the clients and work accordingly with arranging quality and transparent procedures which vanishes the risk in funding.

6. Fewer products available in debt funding

This is not the truth, as there are several debt products available in the market that one can opt for and avail of services. There are conventional as well as non-conventional debt funding options. The products are chosen depending upon the financials and credit score of the clients.

7. No flexibility in funding

The debt funding has flexible options to carry out. Also, many services provide smooth repayment options which makes the funding work hassle-free.

8. You cannot use mortgaged property or assets.

Most borrowers worry about whether they can or cannot use the mortgaged property. Moreover, the property for a mortgage is either a residential or commercial one, which cannot be kept vacant or unused. As long as the borrower does not default on his or her loan payment EMIs, he or she can absolutely use the mortgaged property.

Why Choose Terkar Capital?

We at Terkar Capital understand the customer's needs, strengths, and weaknesses and with respect to the edges, we arrange the best funding solutions. Our trained executives will assist you in the entire procedure while applying for loans. Even after the disbursement of the loan, if the client faces any issues, we are available to help until the end of the tenure of the loan. We have expertise in the analysis of the market and offer a reasonable ROI to borrowers. Apply now at ease!

 

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.

How to get Project Funding?

 

Project funding in India

Project Funding

A lot of us have a dream of making our project successful and known to the world. All we need is a little push, it could be motivation, it could be one missing bit of a brilliant idea, or it could be the lack of funds. Project funding in India is one of the most important yet not widely known aspects of aspiring entrepreneurs. Before going ahead with the process to get a project financed, it is essential to understand what exactly project funding means.

What is Project Funding?

There are different kinds of requirements at the time of starting a project. Project funding is among the most basic yet significant parts of any business venture. These are the funds that are generated in order to pay for the initial labor, capital, and other requirements. A project loan is provided for new business setups, reconstruction, or expansion of an existing business enterprise.

What are the Criteria for Project Funding?

Project finance is provided considering certain important aspects on which the amount is decided. The criteria that matter at the time of proposing project finance are as follows:

1. Project Viability Analysis:

The viability of the project is decided based on its economic merits and demerits. If whatever benefits are to be made from the project economically are higher than the costs and expenditure, then the project is considered viable. Such an analysis will allow the funding agency to know if the project is worth financing and if the proposing entity is capable of paying off the loan.

2. Mortgage Available:

In the case of project funding, the mortgage is generally the project itself and the revenue to be generated from it. A loan is provided by the concerned financial institution if there is enough mortgage available on the project. The lender has to see potential in the venture to be able to sanction the loan.

3. Payback Period of The Project:

If the project seems to take too long and there is no sooner way to generate revenue, there are chances that the proposal may even get rejected. There are certain professional consultants who will help you in drafting a proposal that will increase your chances of obtaining project funding.

4. Personnel Profile and Experience:

In other words, the businessperson’s ratings are considered at the time of deciding the amount of funding that can be provided. If the proposing personnel has considerable experience in the commercial world, the chances of getting the project finance sanctioned are quite high. If there are any issues found with the personnel or the project, the project may get rejected. Acquiring professional assistance can help you get through to the funding agencies conveniently and help get your project approved.

Location and Market Demand for Product

The location and the requirement of the product or the service the project seems to sell must be well enough to give the lenders assurance that the project will be successful and the borrower will be able to repay the loan in time as well. If the product is common and easily available, there are chances that this can get the proposal rejected.

Who can provide Project Funding in India?

Even though there are multiple agencies operating in the debt market, there are limited sources to acquire project funding. Mainly, the government and the cooperative banks are the ones that provide such kinds of finances if your project is pleasing enough for them. Else, there are quite limited project funding agencies in India. It is essential to find a trustworthy yet providing funding agency for the project proposal in India as these generated funds are the backbone of your dream project.

Project Funding at Terkar Capital

Terkar Capital provides services of project finance in India. It is known to provide maximum finance with minimum collateral letting even the young and beginner entrepreneurs build an eminent commercial organization. The funds can be generated as per the requirement, be it periodically or all at a time if the project proposal has influenced the provider enough.

Services are confidential and the level of integrity in the utilities is well-maintained. The processes are not hidden from the customer and the services are in the best interests of the clients including HNIs, SMEs as well as startup companies. The safety of the transactions is ensured by helping the seekers build a future for themselves.

A Brief Description of Lease Rental Discounting

Lease Rental Discounting

 

The leased properties can source you funds! Yes, you read it correctly. The leased properties can, however, give you funds that can be used for either expansion, purchase of assets or paying off other loans. Such loans can be obtained through a debt product called Lease Rental Discounting (popularly known as LRD). LRD is a type of term loan which is offered against the rental receipts of the property. The property must be leased for 5-10 years and the lessee or tenant should be a well-known brand.

Benefits of Lease Rental Discounting

• LRD serves as a multi-purpose loan and can use the funds for business expansion, financing for the purchase of an asset or new property, or paying off loans.

• The owner of the property does not have to pay the bank, but in return, the tenant of the property directly pays the bank the loan in the form of rental receipts through an escrow account every month.

• This facility gives a long-term solution to cash flow management as the lease/ repayment is for longer tenures.

• The Rate of Interest in LRD depends upon the value of property, repayment tenure, the credibility of the lessee, etc.

Lease Rental Discounting Eligibility

There are no fixed criteria for eligibility, as it differs from institution to institution. Below is the most preferable one,

• Age criteria: The applicant must be 21 years or above but not more than 60 years in case of a salaried person and 65 years in case of a self-employed person.

• Criteria for Borrower: The borrower must possess a property that is leased to a known brand or corporation. The loan is provided to individuals who are salaried, professionals, or even self-employed.

• Lease Agreement Period: The lease agreement period is a very critical and important factor for taking a lease rental discounting loan from a bank or NBFC. The bank may or may not provide a loan if the lease period is less than 5 years. Rented properties with leases from 5 to 10 years are provided with this loan.

• CIBIL score: LRD provides a loan to a borrower who has a creditworthy CIBIL score. CIBIL score and track record is decisive factor for sanctioning or rejecting major loan applications.

Prerequisites to Lease Rental Discounting

The following pre-requisites should be taken into consideration before applying for LRD.

Corporate Tenants: The tenant for LRD should be financially fit to meet the obligations of the bank, which allows banks to ascertain whether or not future payments are likely to come. The banks only discount lease rentals belonging to renowned corporations or brands with a good credit rating.

Longer repayment period: Secondly, the tenure of LRD is usually between five to seven years or can even go up to 10 years. Banks generally do not make short-term lease rental discounting loans. It is for this reason that the amount of loans and the repayment period is usually large, and it is not possible to get paid off within small tenures. Thus, LRD holds larger tenures of repayment.

Repayment Criteria

For the repayment of the loan, an escrow account is created where there is the participation of two or more parties like the borrower, the tenant, and the banker.

The tenant will be asked to transfer their rent to this account and the EMIs will be withdrawn from the same.

How is Loan against Property (LAP) different from Lease Rental Discounting (LRD)?

A Loan against Property is the borrowing of a loan against the whole property as collateral and getting funds against the loan. LAP utilizes the higher amount of loan against the value of your property and can use the same for business purposes.

Whereas, in the Lease Rental Discounting, you get only a certain amount of loan against the lease amount the lessee will pay. The loan is provided against future expected rentals which should have a fixed and regular rental receipt.

Why choose Terkar Capital?

Terkar Capital is one such institution that provides a wide range of products to clients after studying all the aspects of financials, CIBIL score, business plan, industry, sales, etc. We arrange conventional and non-conventional debt and equity funding solutions at a reasonable cost of borrowing. So whenever it is raising funds for corporates, Terkar Capital is ready to serve you at best!