How to get financial support for your business?
On a basic level, business loans are like overdrafts. The only difference being that interest is charged only on amount utilized for business instead of the entire sum. There are different kinds of business loans you can avail of.
Trade loans can be obtained for sums ranging from Rs 25,000 to Rs 25 Lakh by Partnerships, PLC’s and sole proprietorships. The Banks will sanction the loan based on criteria like age of applicant, financial standing, loan repayment capabilities and the duration of the loan. Maximum tenure of such loans is 5 years.
The bank may also ask you to produce security like land mortgages and property mortgages. Govt Bonds, NSC (Saving Certificates), approved shares are other acceptable forms of guarantees.
If you have a good track record and solid financial balance, the banks will give you fast business loans. If you can manage to provide the necessary documents quickly and do a little paperwork, your loan is sure to get passed faster.
You will need Identity proof of your business entity (Sales Tax receipt copy/VAT/Excise Registration Receipt/Water and Electricity bills/MAPIN number.
You will also need to submit individual identity proof like voter’s card, pan card, passport copy or driving license. The third important document on the list is partnership deeds and bank statements (at least 6 previous months).
Government Support schemes
The GOI has a scheme through which various short term training courses are provided to first time non technical entrepreneurs. Three important sources of entrepreneurship support are MSMEDI (Micro, small and medium enterprises development institute), District Industries Center and National Small Industries Corporation. Visit http://dcmsme.gov.in/howtosetup/guidenewssi.htm for further details.
You can contact government sponsored financial corporations, regional banks and the Small Industries Development bank of India. All banks will look at your business plan and project report before sanctioning funds so make sure you have a top class business plan.
Land and property needs for entrepreneurs are met by State Finance Corps to some extent. There are some qualifying conditions you have to fulfill in order to be eligible for the loans.
PMRY or the Prime Ministers Rozgar Yojna has been designed to create new entrepreneurship opportunities amongst the educated yet unemployed youth. The aim is to provide employment to 1 million youths.
You can get complete details at http://megindustry.nic.in/citizen2.htm. Micro projects are actively encouraged and sponsored under this scheme. The GOI gives out subsidies at the rate of 15% of the total project cost and easy loans of upto 1 lakh are given out.