How to qualify for a business loan in India?

 

FAQs to qualify for a business loan in India

Business loans are loans taken by businesses or corporations without collateral. These loans are convenient for businesses to manage emergency monetary requirements. The procedure to get Business Loans in India is easier and quicker. Thus your loan will be sanctioned faster. Here are some frequently asked questions by our customers:

What are Business Loans?

Businesses today face several challenges. One of those challenges is the requirement of collateral for getting a loan from financial institutions. Many small and medium-scale businesses today do not have collateral for loans. These businesses can take a Business Loan. An unsecured business loan is given solely upon the creditworthiness of the businessman borrower. To be eligible for an unsecured business loan, the borrower should have a good credit rating, a good credit history, and a good cash flow.

Why should you take a Business Loan?

• Helps your business grow at a faster pace

By taking a business loan your business can grow at a faster rate. You can also finish any stagnant projects or ventures with the help of a business loan.

• The value of the loan is not dependent on the collateral

When applying for a secured loan, the amount of the loan is dependent on the collateral being used. But while taking an unsecured loan, you may get a bigger amount of money because the lender is making decisions on the basis of your cash flow, credit profile, the health of your business, and so on.

• Faster Disbursement of Loans

As a business loan does not require collateral, the disbursement of the business loan is faster. The financial institution checks your documentation, proposal, and track record and then sanctions the loan. Less paperwork is required for unsecured business loans.

• Repayment in EMI

You can repay the business loan in the form of EMIs. The interest rate will be applied to the EMIs over the term of the loan.

• No risk to your assets

An unsecured business loan is a loan where no collateral is necessary. Thus, all your assets are safeguarded from any risks.

Eligibility Criteria for Business Loans

The Eligibility criteria for a business loan may differ depending on various financial institutions and the situation of the business. Here is a list of the general eligibility criteria for a business loan:

1. The business must have its previous year’s financials duly audited by a CA.
2. Borrowers must have a good credit rating in order to qualify for an unsecured business loan.
3. The business should have a vintage of at least 2 years.
4. The business needs to have its Income Tax returns filed for at least the past 1 year

How do you get a Business Loan in India?

Business Loans can be defined as loans given to businesses and corporations against any kind of collateral. It is one of the most convenient financial products for businesses to manage the emergency conditions of the business.

• Assessing the requirements of the client

We at Terkar Capital will first understand the requirements of the client. We will also talk to the client about the future of their business, their plans to expand, restructure so on, and so forth. After assessing the requirements of the client, we will make an application for the business loan.

• Application and Documentation

Many business people have experienced the tedious nature of the documentation that needs to be done for the bank loan process. We at Terkar Capital take care of the documentation. We understand what stakeholders require to disburse the loan to our clients.

Once we receive the required documents we analyze the financials of the company and choose the financial institutions that best suit the client's requirements. This helps to avoid unnecessary inquiries to cibil and mess up while raising the finance.

 

Get your loan

After your proposal and documentation have been reviewed by the financial institution, your loan will be sanctioned. During the process, whenever the financial institution is in need of any clarification or any documentation we arrange for them. Our association with the client doesn't stop with the disbursement of the amount, rather it starts. We make sure the client should not have any problems while dealing with the respective financial institutions during the loan tenure.

 
What are the Documents Required for Business Loans?

Business loans are one of the most convenient types of loans for growing businesses. The documents required for Business Loans differ from one financial institution to another and as per the constitutions of the business. Reach out to us for documents usually required for a Business Loan.

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!

Frequently Asked Questions on MSME Loans

FAQs on MSME

The micro, small and medium enterprises (MSME) sector is one of the largest providers of employment and industrial output in the country. As much as 45% of industrial production and 40% of India’s exports come from the MSME sector. Hence, the need for business finance is also higher in this sector.

What is MSME?

The Government of India understands the value of the contribution of the MSME sector. There is a dedicated ministry working on this segment. As per the Ministry of MSME – Micro Enterprises are the ones where the investment in plant and machinery is not more than Rs. 25 lacs. Small Enterprises are the ones where the investment in plant and machinery is more than Rs. 25 lacs and less than Rs. 5 crores. Medium enterprises are the ones where the investment in plant and machinery is more than Rs. 5 crores but exceeds Rs. 10 crores.

Who is eligible for MSME Loan?

There is a standard definition given by the government of India.

1. A stabilized business that has been in operations for more than 6 months.

2. A minimum turnover of ₹ 90,000 or more in the 3 months heralding your loan application.

3. The business should not fall under the blacklisted/ejected list for SBA finance.

4. The physical location of your business should not be on the negative location list.

5. Trusts, NGOs, and charitable organizations are not acceptable for small business loans.

If you are not aware that your business falls under a restricted category or location, you can contact us to confirm your eligibility.

How can I get a loan for MSME? OR How to apply for an MSME loan?

If you are looking ahead to avail and make the most out of this ambitious initiative by the management, you must consider Terkar Capital for availing the MSME Loan Scheme, it is a trustworthy lending institution, and even if you are uncertain about the scheme; the executives in Terkar Capital will explain you the complete procedure, client privacy and requirements are prioritized here and it has been helping such small and micro enterprises to flourish over the years.

What are the products under MSME Loan?

Identifying that business loans can be used for setting up a new enterprise or climbing up (expansion, diversification, modernization, technology up-gradation). These can be for the following:

• Acquisition of Plant and Machinery including lab equipment, testing equipment, furniture, electric fittings, etc

• Meeting working capital requirements would be as raw materials, stock-in-progress, finished goods, etc

• Trade Finance (Bill discounting) — for paying the creditors while anticipating payment from debtors

• Launch of new product variety, expansion of business, warehousing need, credit for marketing and advertising purpose

• Additional monetary compensation for any eligible purpose.

What is the interest rate for MSME?

The rate of interest for MSME is always cheaper compared to the loans. However, still, the rate of interest varies and depends upon the end use of the funds and the life of the business.

How Terkar Capital Helps in getting MSME Loan Funding?

Terkar Capital is one of the well-established MSME loan providers in Pune. and working across India. With a highly skilled and dedicated team at Terkar Capital, we ensure that we fulfill our client’s needs and requirements. We provide multiple solutions to our clients with the best interest rate options. However, the relationship doesn’t end with the sanctioning of the loan. We maintain a lifetime relationship with the customer to be of help whenever required.

CGTMSE – A Driving Force for MSMEs

Loan under CGTMSE scheme

CGTMSE scheme

All the emerging businesses in India, be it micro, small, or medium are in constant need of finances. Such a need can arise due to several reasons such as expansion, purchase of heavy machinery, payment to creditors, working capital issues, or paying off business dues. But many times due to less knowledge of finance they do not receive proper guidance on the cause. Hence, Terkar Capital comes into the picture for providing consulting on raising finances. We have a variety of products available in secured as well as unsecured funding based on the requirement of the borrower. CGTMSE can be the best option for Small and Mid-size enterprises to raise finance which acts as a major source of funds for them

Features of the scheme

1. The initiative was launched to help small businesses grow in a competitive market and assist entrepreneurs to build their businesses and avail of collateral-free loans easily and conveniently.
2. The scheme also aims at strengthening the credit lending facility to developing industries and helping them raise funds for the same.
3. Being a collateral-free loan, the process is quite quick and convenient.
4. It has the facility of guarantee cover for their lenders which will cover their loss in case of default by the borrower. The guarantee cover will exist until the total tenure of the loan credit.
5. The guarantee coverage of the scheme ranges from 70 to 85% in case of non-payment by the borrower.  
6. CGTMSE has a guarantee cover of 50%/75%/80%/85% as per the diverse eligibility criteria.
7. The maximum number of funds availed in this scheme is Rs. 200 Lacs.
8. CGTMSE

provides good guarantee covers to North East Region Women Entrepreneurs as well and encourages them to expand their businesses.

The rate of interest may differ as per the market conditions

Procedure for CGTMSE scheme

1. Prepare a project report/ business plan

The crucial step is preparing the project report or a business plan. It has to be submitted to the lending company. Here the lending company will scrutinize whether the company is eligible under the scheme or not.

2. Scrutiny of documents

The lending institution or company will do a thorough investigation of the required documents and proceed with loans.

3. Sanction the loan

The lender will sanction your loan after duly verifying your documents

4. Obtain CGTMSE cover

Once the loan is sanctioned by the bank, the bank will apply to the CGTMSE organization and obtain CGTMSE scheme cover for the loan sanctioned. After obtaining the loan, the customer will have to pay services charges or fees as per the requirement.

Eligibility for CGTMSE (Borrower)

1. The applicant must be categorized as micro and small enterprises.
2. CGTMSE cover is available for Loans to Micro and Small Enterprises (MSE) engaged in manufacturing or service activities.
3. CGTMSE cover is not available for loans to enterprises engaged in retail trade, educational institutions, training centers, self-help groups, and agriculture.
4. The business must have at least 3 years of continuity

Eligible Lending Institution:

CGTMSE has designated Member Lending Institutions (MLI) which can provide loans to MSMEsIn this list, there are Government Banks, Scheduled Commercial Banks, Regional Rural Banks, NBFCs, Financial Institutions, etc. who have signed an agreement with the CGTMSE ministry.

Why Terkar Capital?

If you are looking for a reliable consultant for raising finance, Terkar Capital can best suit you. It is one of the most modernized and highly specialized finance facilitators in Pune, Mumbai, and India. We understand the borrower's needs, strengths, and weaknesses and work hard to provide professional services. Our timely and professional services make us different from others. Apply for a CGTMSE loan with Terkar Capital.