April 2019 - Loan On Phone Blog

Commercial Loan Tips for Small Business Owners

With the growth of the business, utilizing a loan can turn to be a great move in the betterment and further progress of the business. This is particularly because every business entity requires to spend more, for more profit. But, managing or availing commercial loan can be quite challenging.

As a lender looks at your application for loan, they pay attention to certain crucial components. It may include a cash flow analysis to check whether your respective company is able to repay the loan, the amount of capital you are investing into the venture, assets guaranteed to secure the loan. The lender may also keep a check of the borrower’s personal commitment to repay the loan. Therefore, you need to be prepared well in advance so that you can enjoy the benefit of loans without any difficulty.

Here are the tips that can help you with availing the commercial loans:-

Try getting associated with various lenders – It will help to simplify the borrowing process, at the same time, it will make you work together towards your business goals on a regular basis. It definitely makes sense to keep working with the same lender rather than going for the new one and starting the entire procedure again.

Apply for a Loan Irrespective of the urgency – Applying for a business loan at a time when there is a shortage of money will not serve the right purpose. Since the Lenders are bothered about you repaying the loan and you might have to pay higher interest rates later on. Therefore, applying for a loan in a weak financial situation should be avoided. Thus, it is better to plan your loans earlier and do not wait for the urgent requirements. Being proactive with decisions such as commercial loan is the right way to go about handling your business.

You need to be clear about the different loan options available: In order to make a wise decision with respect to the loans, you must be aware about the different Commercial Property Purchase Loan options available. You can seek the assistance of the professional brokers to have an idea about the same. This would enable you to apply for the loans required by you.

Go for a Distinct Business Bank Account: For the purpose of granting you the loan, usually, any lender would require to get into the details of your finances. Therefore, having a separate account and books for your business involving loans becomes important.

Creating a corporation: If you wish to get approval for a loan from a small business lender, forming a corporation would be helpful. It would permit your business to build up it’s own financial records. In case of the failure to repay the loan, your home and personal property would be protected. There may be few non-traditional lenders who work with you on a personal level too if in case you possess a sole proprietorship or partnership. It can be an important step towards enhancing your potential for liability issues

You Need To Be Aware About The Credit Scores: Knowing the credit score makes the lenders trust you with your financial health and habits. Thus, it increases the chance of you availing the loan from the lenders. You must analyze the scores and check whether it meets the defined requirements.

All the Necessary Documentation Should Be Arranged: While applying for loan, you might require to be prepared with the essential documents. So, you need to meticulously review the papers that would be required to avoid any last minute hassles.

Conclusion:-

Getting a loan to manage your business at the right time is hugely beneficial for the successful functioning of any business. Hopefully, the tips mentioned above would provide you the appropriate help with regard to availing loan for purchase of commercial property, which could be used by the business entities.

How Balance Transfer of Home Loan is Beneficial for You?

What is Balance transfer of home loan?

It can be defined as an important financial tool that can help to minimize the burden of EMI’S. It is usually initiated when the complete unpaid principal loan amount is transferred from one to another lender for a lower rate of interest. These lenders may be banks, other financial institutes etc. Generally, all the banks offer such facilities. If one is capable of paying the EMI’s regularly, then it is all sorted and the process becomes easier. It works best if you are in the initial stages of your home loan.

While making the decision to go for a balance transfer of home loan, few essential factors needs to be kept in mind. It becomes crucial to analyse the lenders who are involved with offering the home loan balance transfer. You may choose to go for deal that seems to be appropriate in terms of the cost effectiveness as well as is a time saving option.

Here mentioned are some of the benefits of Home Loan Balance Transfer to other bank:-

It helps to lower the monthly payable EMI since there is a transfer of home loan from one lender to another lender. The reduction in the EMI can be quite relieving.

It provides an opportunity to save money. This is because it brings about a reduction in the interest rate at which the home loan is offered.

Transferring your home loan can also prove to be of great help as far as increasing the credit score is concerned.

While you opt out for a home loan balance transfer you can choose as per your suitability and also make the needed negotiation with your new lender.

In case of a home loan balance transfer, one can also make changes in the tenure period with the new lender.

No processing fees are included in Home Loan Balance Transfer and the new bank will strive to provide you with the better customer service.

While transferring home loan the financial institutions can offer top – up loan too. It can be availed at lesser rates and you can make use of them to pay off the debts.

Conclusion:-

After an overview of the benefits, the conclusion that can be derived is that the home loan balance transfer is a very useful financial tool offering higher tenure of the home loan. With this tool, the home loan burden can be reduced to some extent, because through this availing relatively low rate of interest is possible. A low rate of interest makes it a popular choice amongst the business entities or individuals.

Anyone who wishes to utilize this financial tool should firstly analyze the internal rate of return from the transfer. In those cases, where the amount to be paid is lower it is always better to keep away from the home loan balance transfer. This is particularly because a person might mistakably pay a much higher amount of money in comparison to the lender. This might not be a correct financial decision in such scenarios. In fact, it can result in losses to the business.

While in the financial situations, where the unpaid amount of loan is really high and the person is in the initial stages of the loan, the deal is good enough, opting for Home Loan Balance Transfer would be the right financial decision.

You should maintain a good track record of repayment with the current lender whenever you wish to go for home loan transfer.

Always remember that a meticulous and correct decision with regard to the finances can benefit you in a number of ways. So, think before deciding on using any financial tool.

Why is Overdraft Limit Better Than Long Term Business Loan?

What is Overdraft and Loan?

An Overdraft can be described as a changeable amount of borrowing that has been agreed by the bank on a certain set limit. It allows you to borrow money whenever you wish to. This is what makes it ideal for the short term financial situations, such as immediately required purchases or expenses. You are required to pay interest on the amount borrowed only.

A loan is not variable and it can be defined as a fixed amount of borrowing over a set term with the regular repayments. With loans, fixed terms and repayment schedules are attached. Though, it can help an individual or business, plan their expenditure and cash flow, but are not as flexible as an overdraft. However, these are usually preferred for purchases that involve huge expenses. There is a possibility of damaging the credit rating; one might also get involved into financial trouble if the loan is not paid back. There are loans that are secured and unsecured as well. The personal loans are unfortunately not secured while the secured loans are certainly secured against your asset.

Disadvantages related to taking out a loan:-

You need to consider the challenges or difficulties while you plan to takeout the loan:-

It needs to be noted that the interest charged on a personal loan can be quite high if you are willing to borrow a small amount of money. So, you may consider it only if it is financially feasible. Otherwise, paying a higher interest amount can be quite difficult at times.

The loans are generally associated with the high value assets; therefore, there is a greater chance of losing out a costly property, in case of failure to meet the repayments on a secured loan.

Another disadvantage is that the loan repayments are generally not very flexible. This can turn out to be problematic if one is not able to make the payments within the stipulated time.

You might have to pay an early repayment fee if you wish to repay the loan early.

Why Should You Opt For Overdraft?

There are certain reasons which make overdraft a better option as compared to the loan such as:-

An Overdraft loan facility is involved with the flexibility in borrowing and the repayment options. This allows you to set a specific amount that you want to pay on a monthly basis. Thus, you can pay as per your convenience without having to worry much.

For the short-term borrowing, it can serve to be a relatively cheaper option.

It can turn out to be a good choice to access any kind of emergency funds. However, it is important that you choose to go for an overdraft that doesn’t charge any interest or fees.

One can receive the overdraft loan easily from the banks be it a private or government bank. It gets transferred easily as the application is approved.

Apart from the various benefits of overdraft, there are few downfalls associated with it as well. These are:-

In certain circumstances, the amount of money you can access can be lower as compared to the personal loans.

If you go beyond the agreed limit, it can turn out to be an expensive method to borrow.

Conclusion:-
Even with a few disadvantages, Overdraft facility for business is a better choice over long term loan if you need to borrow a small amount, for a short time. This makes it great for use in the crisis situations or critical financial situations which can occur at any time. While considering any of these options, you need to analyze which one would be suitable for you as per your requirement and circumstances.

Tips for Availing a Loan Against Property Without Income Proof

Financial crisis or upheaval is sure to occur and tamper life at one point or the other. Our list of to-do tasks keeps increasing and we are often perplexed with the thought of where to get money from? It is in such grave situations that availing personal loan is the only option that is left. In some cases, you might think of selling the property in your name, why does that when you can instead avail a loan on that property. To avail Loan against Property (LAP) the market value is assessed before sanctioning the loan. After careful assessment of every legal encumbrance, the loan is provided at a certain percentage of the property’s present market value.

There are some essentials that need to be checked and worked upon prior to availing the loan. One of the major constraints is that the property and the title should be in the name of the loan applicant. Basis the lender and the market price of the property, the amount of loan can range from 40 percent to 60 percent pertaining to the assessed market value. Since LAP is a secured loan, the interest rate is comparatively low as compared to a personal loan.

The only downside one is sure to face is the need for you to present legal proof of your income. Presenting mere property documents as collateral is not enough; you have to prove it to the bank that you are capable enough to repay the amount promptly. For the freelancers and unemployed with no work at the moment, who can’t show any income proof whatsoever, these tips might help in availing Loan Against Property without income proof.

A Relationship Manager is assigned to you if you have a savings bank account with any bank. The manager will be the sole point of contact, who will be handling all concerns pertaining to your loan. Once your relationship manager has been assigned to you, it is required that you make the payments promptly and ask if your loan can be processed without income proof.
You can add a family member as your co-applicant, a member with valid credit history and a regular source of income. Adding such a member will help increase your chances of getting a loan approved.
Before any acceptance or rejection of your loan, the bank officer will visit for inspection. This is the time for you to make the officer understand all about your income sources. The officer will take into consideration all that you have informed and then calculate the annual income and the capacity of repayment.
All the banking habits will be checked and paid a look at. The lender will definitely look at the banking habits of the person. If you exhibit good banking habits consider high chances of availing the loan. Good banking habits are one when you have always maintained sufficient funds.
Loan to Value (LTV) indicates the loan percentage that will be provided by the bank. For instance, LTV 90% means the borrower will be required to pay the remaining 10% and the remaining 90% of it is funded by the bank.
Peer to peer lending is also increasingly getting popular these days. The funds are raised through the method of crowd-funding in such an arrangement; the eligible borrowers can disburse with an interest rate. Basis the risk factor that comes with the P2P lending method, you may be charged at a higher interest rate.

Getting a loan without income proof in Delhi can be an uphill task with loads of obstacles making the smooth ride a rough one. Lot of convincing, explaining, patience is required along with the right guidance.

The Relationship of Cash Credit and Business

Every business irrespective of the scale faces critical financial problems that occur due to the shortage of working capital. Entrepreneurs find they exhausted and worked up in search of money to keep their business on track. To cater to the sudden shortage of money, banks have come up with credit limit, called as cash credit. A current account is the cash credit account which business people use to meet any sudden financial crises.

What is Cash Credit?

It is a short-term loan that is offered to the company by the bank. This arrangement enables the company to withdraw a certain sum of money from a bank account with no credit balance stress. Interest is charged on the amount borrowed. To understand cash credit better, consider an example of a business, where the owner invests his money to purchase raw materials. The business owner’s investment in goods doesn’t start to immediately yield results. Even after the raw materials are converted to finished product, it takes time for the product to reach the market. After reaching the market the product doesn’t immediately contribute to return in investment. The capital still exists in the form of inventories the situation worsens when the business people suddenly find themselves stuck with the loss of funds or the working capital to purchase more raw materials. In order to cater to the businesses’ need for capital, banks deploy cash credit facility.

Features of Cash Credit that business people must know before opting for it

Business owners can’t opt for credit limit from more than one bank. Once you have availed it from a bank you can’t opt for any other bank.
The stock statement is a must to submit, as this shows stocks, creditors, debtors, and balance on a monthly basis.
Prior to CC if you have opted for any other loan, then you must inform about the same to the cash credit banker.
Collateral security helps uphold the cash credit facility.
It is also under the norms of some that the name of the bank that has agreed to grant its CC facility must be placed ad hung on the premises of stock of client.
Stocks and receivables once hypothecated to the CC banker can’t be hypothecated anywhere else.
The bank holds the authority to hold periodic inspections of business and stocks, these inspections include financial audit, stock audit, compliance of returns to the bank, etc.

When entrepreneurs wish to expand the business, they look out for cash credit facility. There are certain calculations that are incorporated by the bank to fix the cash credit limit. The bank checks both, stock and the receivable of the company. The assessment is then attempted to match the cover period. Based on all the assessment and preemption, the bank fixes the cash credit limit for the business.

Advantages of Cash Credit

Cash credit is a great source for business people to help meet sudden financial crises so that the business activity doesn’t stop.
Interest is charged basis the amount is withdrawn and not the entire limit, this helps lower the interest cost.
The principal amount is required to be repaid since there exists no monthly installment payable.
The credit line can be used by the businessmen in case of emergency, as an amazing standby option.
The cash credit acts as a temporary source of raising fund, which can act as an alternative to capital deployed. This helps business people avail hassle free capital amount.
Business people benefit from this arrangement, as this acts as supporting hand to help them carry out their day to day business activity.

In India, there are plenty of banks and financial institutions that offer lucrative deals on loans for various purposes like personal utilization, business loans, etc… Availability of plenty of options might be perplexing. Loan on Phone helps ease the heavy task by acting as your financial consultant that is committed to procuring the best loan solution for your specific need and requirement.

Month: April 2019