Month: May 2019

An Overview on Small Business Funding

You may be new to the world of Small Business funding, with little or no knowledge of availing a fund in business but the wish to explore options. Here is a comprehensive guide to help you understand and work upon the right funding options in the right way.

Small Business Funding Challenges

Small business owners are often bogged by various challenges, some of which catch them off-guard. From hiring employees to paying them their deserved salary for their hard work but the most intimidating challenge that is faced by the budding entrepreneur is finding the right financial method.  It is necessary to make an informed decision in whatever sphere of life you wish to work on. A survey was conducted that showed people use personal checking and saving accounts to fund a business maximum of the time.

Small Business Funding Challenges by Loan On Phone

Misconceptions that cloud small business funding

Some common misconceptions that exist are, firstly, the funding is all about business. People often think that they need to only start looking for financing when they find their business niche. Whereas, If experts are to be believed funding methods take into account the credit history along with business history righteously. The right business niche can definitely not guarantee efficient financing. The second misconception is that independent business and franchise are differently funded and envisioned. The likelihood of success depends on your business plan and how much in-demand that niche is.

Business funding options:

  • Bootstrapping business startup- Self-funding is also known as bootstrapping. It is a financing option that is safe and hassle-free. Since startups and budding entrepreneurs are often faced with the issue of ‘what would they show as their credibility to avail any loan?’

  • Crowd funding- It is another way to get funds for investment; It is essentially opting for a loan, contribution, investment, or pre-order. In this arrangement, the entrepreneur will put up a detailed description of a Crowd funding platform. There the goals and detail working of the business will be clearly defined. Anyone interested can contribute money towards the idea of business they believe in or relate with in any way.

  • Angel investment in a startup- Individuals with surplus cash are known as angel investors. People may offer to mentor or opting for alongside capital. Angel investment option has one major drawback that not many are willing to invest humongous amount, this means less capital gets invested. When you consult a private financer in Delhi NCR, you will be guided with the best options.

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  • Venture capital- The big bets can happen here. These capital arrangements are managed professionally. The business invested upon is against equity and exit when there exists, an IPO or acquisition. VC will be greatly beneficial for businesses with fast revenue generating capability. Companies like Uber, Flipkart can avail millions of investment due to a pre-devised exit strategy.

  • Funding from Accelerators & Incubators- Every major city has this option with the program assisting hundreds of startup businesses. The incubator is essentially a parent to the child that pledges to nurture business with training and tools. Accelerators help take a giant leap with connections and great investment options with reputed investors. A private financer in Delhi NCR will help you gain better understanding.

  • Bank loans- Loans are generally the first thing that an entrepreneur goes to for funding. Working capital loans and funding are the two options of financing for the business. The process of getting a bank loan involves sharing the business plan and valuation details of all sorts.

  • Microfinance providers- If bank loan seems like a work you may resort to trusting NBFCs that provide banking service without any legal requirement or definition of a bank.

  • Government startups- These are another great option for availing the loan. The awareness that has emerged within the government to help the small business entrepreneurs with much needed monetary support is also a great option to avail.

 
If you wish to grow your business fast then you will have to look for funding options. Find the one option that works well for your business idea.

How to Avail Home Loan Against Unapproved Property?

The property which isn’t part of the city’s master plan is called ‘an unapproved property’. Unapproved properties can’t be bought or sold with ease. It is because of the lack of legal and clear documents that lending partners refrain from indulging in any dealings on the property. Delhi NCR area witnesses plethora of unapproved colony or areas. Generally, these unapproved colonies or areas share an efficient connection with the urban cities of Delhi & NCR. The reason for the popularity is better connectivity and low property price. Due to an upsurge in demand, construction practices prevail in unapproved area and colonies. To fulfill the rising demand and popularity of the unapproved colony, there exist a few lenders who agree on providing home loan on the unapproved property.

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Home loan against unapproved property can be borrowed on different types of properties. Independent house of the unapproved area is one such arrangement. You may also lend from bank to purchase a single flat in an unapproved are up to the 3rd floor. You may also opt for a loan when you wish to construct a home post buying the plot. A fresh construction is also funded by the bank. In case of fresh construction, the loan is disbursed only after the property papers are duly checked and in custody of bank for record and assessment purpose.

For any home loan application to get approved or disapproved the bank, there are some key factors that require checking:

  • Age is the first factor that must be considered, the loan applicant must be of 21 years or above and shouldn’t be any more than 60 or 65 years. Repayment of loan must be completed before the age of 60 to 65 years.

  • It is required that the individual must have 3 years of working experience in the business or private sector. This is imperative since the regular income defines the repayment power of the EMI.

  • The Cibil score is a must to maintain, having a decent Cibil score will help you avail loan quicker. It aids as a deciding factor for sanctioning or rejecting the applications of home loans.

Reason Of Disapproved Home Loan Image

The rate of interest for the home loan against unauthorized property differs depending on the bank. The Unapproved area property varies. The standard home loan is slightly lower in the rate of interest as compared to home loan against unauthorized property.  Rate of interest varies between 10% p.a. to 15% p.a. It is suggested that before you commit to a lender, you must explore. Compare interest rates offered by various financial institutes and banks. There are consultants too, that vow to help you make the right choice. They strive to provide you all the information that you need to make the right decision. Loan taking procedure is stringent and must be done with careful assessment. You have to look into plenty of things before committing to a financial institution.

Loan on Phone is your trusted partner which is reputed and accredited by banks and NBFC’s. The association with high-end clients has helped earn the trust of borrowers. The consultants are qualified experts who are well aware of their work and tasks. The consultants assess the borrower through every stage of loan availing. The loan arrangement will be taken care of on a daily basis.

Loan on Phone takes pride in fulfilling property aspirations of all different people. Whatever your requirement and desire is, we help you in realizing those aspirations with the help of our network of money lenders. We help you assess everything, Loan to value ratio, civil score, the income of borrower and general financial status, thereby providing you fitting loan solution.

How to Fix your Credit to Purchase a Home?

A poor credit history can be a major hindrance in the process of purchasing a home. However, the credit report and adequate credit score plays a crucial role in determining whether the home loan would be granted or rejected. The reason behind this is that the credit report provides particulars about the economic or financial history of the debt payers. Therefore, if the credit report is not good enough or does not look favorable, it can be quite difficult to acquire a home loan.

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The home loan consultant in Delhi suggests that before you proceed with the home shopping, you need to analyse the credit report and manage it in a way that it facilitates home loan. An increase in the credit score and upgradation of your credit report might take about few months to even a year. But, it will surely increase the chances of you moving to your dream house.

Low credit score

As you apply for a home loan, you will be charged a much higher interest rate if the credit score is low. In the present scenario, almost every mortgage company now has distinctive programs designed to help those with bad credit receive loans for the purpose of home purchase. One might also be required to pay a higher down payment of cash as a result of low score.  In the low score situation, there exists a probability of loan being repudiated as well.

Low Credit Score Image

Ways to Fix your Credit to Buy a Home

  • If you are working to improve your credit in order to buy a home, it is important that receive a copy of your credit reports from the respective credit reporting agencies. There are only a few creditors who send information to all the agencies. If the mortgage lender pulls your report to check your credit history, they will use the middle score obtained from the different agencies to decide whether or not to qualify you for a loan.

  • You need to collect information on the report and verify that everything is correct such as the name, address etc. You might notice errors on the credit report, which could be responsible for bringing down the credit score. These errors could be due to various reasons which need to be carefully observed and resolved.

  • The improvement of the credit report essentially requires altercation of letters through the certified mail. You may seek the support of a trustworthy credit repair agency in case you cannot invest too much time on it. The expert professionals of such agencies can very well manage the financial repair work of this nature.

  • Once all the disputed aspects are eliminated from the credit report, you can request the credit bureau to mail you the rectified copy.

  • It needs to be noted that there is no easy and instant way to repair the credit report. Therefore, keeping patience with the process is imperative.

  • It is possible to get a pre-approval for a home loan. But, firstly, you must get your credit card report clean, pay off all the unsettled debts and try to enhance your credit score to the extent it is possible. Once you are through all these essential process, you can avail a pre-approval certificate from the mortgage lender or broker.

Conclusion:-

If each and every concerned aspect is worked out well as you apply for the loan, you need to be cautious about not complicating the other things. Do not invest on any other expensive thing in that period. Since, it can damage the entire loan process. In order to be on the safer side, avoid applying for any other loan in such a situation. Or else, you could lose out on the house you wish to purchase.

What is the Difference Between Cash Credit and Overdraft?

Business Organizations require the movement of funds for their smooth functioning and in order to meet the entire financial requirement. Individuals have now resorted to short term loan facilities that are cash credit and overdraft facility. Both are credit facilities that are pertaining to credit with a lender. The words credit and over indicate that you can withdraw more funds than usual capacity. Overdraft and cash Credit account is generally considered more or less similar, but yet some differences suffice.

Here are some of the differences highlighted:

Cash Credit limit facility holds a certain bar, the borrower is allowed to appropriate a fixed sum of money, whereas in Overdraft Facility the customer is allowed to debt only to a specified limit. The loan is made with the current account. This clarifies one important aspect of Cash Credit an Overdraft facility that they are mid-term loan and short term loan respectively.

The loan amount in case of Cash Credit is withdrawn all at once or when it is required, whereas in Overdraft the borrower is allowed to draw and repay multiple times, with the clause that the amount is never drawn over the limit defined. When we consider Cash Credit, the borrower isn’t required to withdraw the whole sum of money all at once; instead he has the liberty to withdraw as and when required. An overdraft can only be withdrawn in circumstances where the borrower requires lending more money than available in the account.

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Cash Credit is offered against speculation of goods, on the other hand, Overdraft Facility is offered against securities. For current account holders there exists a limit for the overdraft amount which is agreed upon, whereas, cash credit is borrowed for only a certain limit which is based on the need of the customer. The cash credit is broadly divided into 2 subcategories, Key Cash credit, and Open Cash Credit. Key Cash Credit is the facility in which the borrower keeps the goods in possession of the lender. The key to the room with the products is handed over to the borrower, hence the name. Open Cash Credit facility doesn’t require the borrower to hand over any product to the lender. The overdraft facility is divided into two types, i.e. Secured and Clean Overdraft. In overdraft facility for business some security is involved, this is called secure overdraft whereas the one with no security involved is called clean overdraft.

Important points to keep in mind while opting for CC or OD facility.

    • Processing fees– The bank usually charges a fixed amount which is about .5% to .75%.

 

    • Interest Rate- The rate is higher the generally fixed loans, for instance, LAP, hence, if you don’t have extra bucks to spare then you must go for LAP.

 

    • Account shutting charge- Some banks impose charges on the CC and OD account if not used up to a certain limit.

 

    • Minimum usage clause- Some banks charge you for not using CC or OD account. For instance, for an OD account of 10 Lakhs with an average use of less than 30%, INR 3 lakh is levied.

 

    • Interest Servicing- Some customers are required to deposit the interest in cash or Cheque deposit.

 

An entrepreneur who wishes to set up his dream business is compelled to take a loan. You can either go for long term funding like LAP or go for flexible funding like Cash Credit and Overdraft. Funding for the long term is generally carried out at a lower interest rate whereas the flexibility funding provides the opportunity of saving some extra funds and thereby paying an interest amount for only the particular amount required.

All You Need to Know About Industrial Property Loan?

An industrial property purchase loan opts when one wishes to buy an industrial building which is ready to move-in. The loan amount is agreed upon by the bank. There are some parameters that are checked and assessed before agreeing upon the amount, they are, the income of the borrower, purchase value, the present market value of the property. The purchased property must comply with all the rules and regulations legally as well as technically.

Industrial Loan Image

The prominent factors that need to be assessed are ‘Loan to Value ratio’ and the ‘income eligibility’. Loan to Value (LTV) ratio is expressed in percentage and is essentially the ratio of the loan amount required to the property’s market value. When considering Industrial Property loan this ratio normally ranges from 50% to 60%. The LTV depends upon the property type and the ultimate use of it.

Income Eligibility is another crucial point to be considered. The main focus of this parameter is deciding and agreeing upon a fixed loan amount that can be extended to the lender, based on his income. There exist particular eligibility calculators that can help ease this hefty calculation task.

The rate of interest in industrial property loan is higher than other secured loans. The floating term is also variable rate.  The margin decided at the time of the loan is agreed upon and made constant through the whole loan term.

Loan Against Industrial Property by Loan On Phone

The amount of loan is repaid with the help of EMI (Equated Monthly Installment). Equated suggests that the fixed amount is paid for the entire term of the loan. The interest and principal amount are both encompassed in the EMI amount. Depending on the duration of the loan, the amount varies. An EMI calculator helps find the fixed and defined monthly installment amount that you must pay.

In case, your property is owned by multiple people, then it is mandatory to keep them all as co-borrowers on the loan. Co-applicants are added to increase the income eligibility, and also in case, the property is on a co-ownership basis. Some banks offer you the provision to pre-pay the amount of loan at any stage. There are different percentages defined for the banks on the same lines. There are benefits of utilizing Industrial Loans:

  • Manufacturer looks out for business expansion; it involves a large amount of capital being invested. To meet the capital demand one can opt for a loan against industrial property as this will allow you to lend money.

  • Consolidation – The heavy EMI from previous loans that you had opted for in the past must be sucking up liquidity from the business. Banks offer Loan against the property at a comparatively lower price hence, one can opt this.

  • There may occur a time when the expenditure gets out of hand, or some new ones arise which you were not prepared for. These can be taken care of with borrowing money from the bank on behalf of the property you own.

  • Industries are ever so evolving with introducing new and advanced technologies every now and then. Reduction in operating expense and increment in the production is both aided and upheld by the loan variant. You can opt for a loan against an industrial property when you wish to upgrade your place of work.

If you are an entrepreneur who runs a company on his own expense might find the industrial property loan arrangement worth trying to meet the financial requirements of the company. Loan against industrial property or industrial property loan is a beneficial loan type. For instant upgrades, acknowledging heavy unintended expenses, and catering to all the other requirements of capital, utilizing loan against property is the right thing to do.