The present government has redefined the economic climate of the nation. By rolling out some effective steps, the government has changed the face of the Indian economy in the past few years. Though the swelling NPA’s are plaguing the nationalised banks and has stalled their growth a glimmer of hope is still there as the apex bank of India RBI mulling on several reform measures to deal with this crisis. Market pundits believe that the dull credit canvas might impact the lending mechanism of the nationalised banks. But other market experts hold a different opinion. They think that the identification of the NPA’s and defaulters would create a transparent credit ecosystem in the nation and will further fuel the economy in the time to come.
The small business and SME segment will bring a new lease of life for the entire economy of India. The army of young entrepreneurs is ready to brave all odds and hungry to do something new to propel the GDP growth of the country.
A recent report revealed that the country has already become a mega cradle of SMEs and micro- enterprises the numbers are galloping every passing day. Several government-backed financial institutions are targetingCommon Service Centers to increase the outreach of these schemes.
Tailor- made government funding schemes is constantly infusing funds to aid the small and micro industries. Observers say that this segment is expected to witness a whopping growth in the coming few years. According to reports, the Service sector occupies more than 70 percent of the global GDP. The MSMEs are a have turned into a powerful driver and contributed efficiently to the economic growth of the nation. By dodging major hurdles, the MSME and SME sector has witnessed growth. But still, this sector is highly unorganised and constantly combating some recurring problems such as lack of marketing platforms, lack of credit facilities, stringent regulations etc.
Though the government has started several tailor-made finance schemes to back these small entrepreneurs of the country.
Here we are charting few simple steps which one needs to follow before applying for a small business loan.
Do Your Homework, Seek Help
Selling your business plan backed by strong and apt data is the most important thing. A clear head and a brave face hold the key to your success. Before facing the investor or the lender (bank) for capital funding or business loan, one must have all the papers ready. A clear business projection, the detailed market analysis will help you to gain some brownie points. Never go overboard in front of the lenders as always remember they are wizards of finance and they know it all.
While curating a proposal, you can also take the help of an expert.
Count Your Numbers
Financial history or the credit history of a business can impact the disbursal time and amount of the loan. Apart from this the profit projection of the company clearly puts forth the repayment process which can further embolden the confidence of the lender. A clear and specific plan on how one is planning to use the money will pave the way for the borrower.
Avoid Loan Sharks
Entrepreneurs of the nation can reap the benefits of this bolstering economy, assure experts. The bullish market is signaling towards a better and brighter tomorrow. To aid small businesses government of India has rolled out some specific financial schemes such as the CGS (Credit Guarantee Scheme). Under this scheme, one can borrow a maximum amount one lakh as per the eligibility of the borrower. Before choosing the lender, you must be sure about the credibility of the financial organisation and must compare the interest rates with other loan lending organisations.
No need to hurry, inspect all the documents and loan repayment agreements properly before giving your nod. If the lender is asking for collateral, decide on what you can offer to the lender as collateral. Don’t always knock the doors of major banks as there are several other financial organisations such as credit unions and microfinance which also lend money to borrowers at a very minimal rate.
Protect Your Business Assets
Create and treasure business assets as much as possible as that will build your credibility in front of the lender. Even if your business profits are swelling and customers are queuing up never flush out your working capital. If you are on an expansion spree, then you need a loan to turn your dreams into a reality. Let an expert handhold you before tabling the final blueprint to the bank.
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