An Expert's Book to Taking Business Loans - All About Business Finance - Tata Capital

BUSINESS LOAN

This is why flexi EMI plans are suitable for you!

Sep 04, 2018

Every year before Christmas, Sandeep's cake shop gets huge business as customers throng the outlet for bakery products. At present, he is looking for a business loan to accelerate growth and branding, but the lack of a regular and assured income, except around festivals, worries him. Will any financial institution give a loan knowing his small business is cyclical?

For small businesses like Sandeep’s, it is often difficult to avail business loans from the bank. The main reason being that the flow of income generally tends to be higher during particular periods and not throughout the year. However, such businesses shouldn’t lose heart.

For borrowers, like Sandeep, a flexi-business loan is the ideal solution. This unique offering allows borrowers to plan their EMIs as per the state of their finances. Financial institutions like Tata Capital offer flexi-business loans that are true to label when it comes to flexibility. It understands that though borrowers may need to take loans, sometimes the repayment scenarios can be very difficult even though the borrower wants to start paying back.

This is why it lets you decide EMIs for your business loan basis the state of your finances, growth plans for your business and cash flow requirements. Like your business, this loan is also flexible. To suit your requirements, there are three types of flexi EMI loan plans - step up flexi EMI, step down Flexi EMI & bullet flexi EMI.

So, there is no pressure of repayment if your cash flow requirements are steep. Let us find out about the eligibility and benefits of step up flexi EMI loan.

Eligibility

Here are a few situations which are ideal for flexi-business loan:

If you are just starting your business, you can consider a flexi-business loan. This is because any new business requires some time to stabilize. However, your loan requirements need to be met. A flexible business loan with a step up flexi EMI loan plan would ensure that the EMI increases annually in step with your business' improving finances.

Often some businesses hit a purple patch. In such times, the business is generating a good amount of money and very regularly. This type of scenario allows you as a borrower to pay higher EMI for your business loan so that the burden of long-term payments is reduced as you are giving more money at the start. So, a step down flexi loan EMI plan is the best option as the EMI reduces each year. If in case your business hits a rough patch later, you can rest easy because a substantial portion of the loan has been repaid.

For businesses that are seasonal or cyclical, money is generated in lumps. Business may be quiet for most parts of the year, but swings into huge activity in short periods of time. A bullet flexi loan EMI plan allows you to take advantage of such lump sums. So, you can repay large blocks as and when you receive, while significantly reducing your EMI commitment.

Benefits

A flexi-business loan, with different plans, is crafted to suit all business cycles.

  • A step up flexi EMI loan plan allows you to wait after large investments that often take time to bear fruit. So, you pay lower EMIs initially and then follow it up higher EMIs later.
  • A step down flexi EMI loan plan is built to let you take advantage of situations where the payoffs happen quickly. As you realize the immediate benefit of your business payoff, you also repay higher EMIs.
  • A bullet flexi EMI loan plan is in sync with business realities exhibiting sharp ups and downs. When the going is good, you repay in big amounts, thus lowering liability much quickly and allowing you breathing space during downturns.

Flexi-business loans from institutions like Tata Capital provide the right monetary help for small businesses. With its flexible EMIs, it becomes simpler and easier for these businesses to manage their cash flow without denting the financial structure.

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Plan to start a small business? - Here's a quick launch guide

Sep 04, 2018

It is a known fact that many skilled professionals today are thinking of starting their business. It is also another well-known fact that there is nothing better than being your own boss. Plus, all the hard work, time and energy spent on your very own small business is much better than doing it all for a salary that doesn't even justify your potential!

Let’s take a minute and review how times have changed. There was a time when the need to start a business was not enough. You needed money. Ask any company that has been in business for more than 20 years and they will tell you the difficulty they had in raising money for the start-up.

Most of the time, business loans for small businesses was not something banks were comfortable with. However, with NBFCs like Tata Capital coming into the picture, a business loan or an SME loan has become easier to avail.

Now, with blazing-fast technology, rising customer awareness and easy finance such as business loans, starting a small business is a hassle-free business if you plan it well. If you are thinking about or have been planning to start your own business. here is a quick launch guide for all the future entrepreneurs wanting to make it big by doing something of their own.

Business Idea

Every revolution starts with one powerful thought. When it comes to starting a business, a good business idea is all you need at first. Starting a service based company or product based firm is also a part of that decision. Your business idea should be scalable, which means you can grow and managed higher demand without affecting profit. Also, your small business must solve a problem -- either it improves an existing solution or solves a problem no one has been able to do.

Do remember that product based businesses may require upfront investments; if that is what your heart has set its sight on, explore the startup investment landscape. No one can immediately get equity investors, so debt will be your first port of call. Thankfully, today financial institutions are ready to offer credit in form of MSME loan or SME loan for small businesses. Do some heavy-duty research on your chosen business idea before jumping in.

Business Plan

Once you have sharpened your small business idea, it is time to make a good plan for the idea to work. You may be a doctor, a salesman, a housewife or a person laid off from their job, everyone no matter how intelligent or rich they might be will need a good business plan. There is no need to make a 100-slide power-point presentation or a heavy file containing thousands of pages.

Every small business needs a location, target customers, strategies to capture the market profitably, a team and initial financing. Each of these points needs to be well-thought, or else you may struggle if you take a plunge without considering all the factors. For instance, starting a food truck without electricity connection can mean thousands of rupees wasted on a diesel generator.

Also, do remember that the only thing that will make your small business a grand success is lots of revenue. Focus on sales from the first day of the startup. Find paying customers and then keep on repeating the process. If you have taken a loan for small business, repaying the money along with interest will need sales. So, understand that sales come first, and everything else comes second.

Founder Muscle

When you launch a business, make sure it is in a segment/sector that you fully understand. The Wright brothers are famous because they built and flew the world's first successful aeroplane. What would have happened if they tried to open a restaurant or hotel? When you are an expert in the business area, automatically life is simpler. Be it arranging business loans or getting together a skilled team, a knowledgeable founder is one of the top ingredients for a successful small business.

Once the enterprise becomes big, you can hire experts to run it for you. So, try to explore business ideas in segments that you truly understand well. A founder with a good track record and experience will also be a hit with financial institutions when it comes to arranging MSME loan or SME loan at the start, and also later when the business starts expanding.

Financing

For small businesses, the budget is limited especially when you start. Every rupee matters. This is why businesses start from an apartment or a garage.

There is no shame in this.

Micro and Small and Medium Enterprises (MSME) are run by small entrepreneurs. They provide various services or important goods within the community. Companies like Tata Capital offer MSME loan to help start a micro business or improve an existing business. You do not always need to have an existing business.

Any entrepreneur intending to start a small or medium enterprise is eligible for SME loans. While setting up your business, you can avail a business loan amount above Rs 3 lakh and up to Rs 50 lakh. The lender will offer the loan for small business if the MSME/SME can show income and ability to repay.

The loan tenure can be between 12 and 36 months. After getting funds, do not go for a swanky office, hire too many people, spend excessive money on marketing etc. At the initial phase, it is important to do work and make the small business stand on its own feet.

If your dream is to be a business owner, the right steps can help you get there. After all, the journey of a thousand miles always begins with a single step.

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Meet Three Indian Sibling Dream Teams Who Made It Big

Aug 25, 2018

Read this Business Loans Tata Capital blog to know some examples of successful entrepreneur sibling duos in India who started their business together.

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