Know About
SME Loans
We are aware that every small business needs the right financial support to grow and succeed. Therefore, we put significant effort and skill into ensuring that our customers receive the greatest financial solutions. We offer small and medium-sized businesses in India MSME loans as one of the top MSME loan experts in Pune, giving them the much-needed financial boost. As one of the top MSME loan providers in India, Findestination has successfully disbursed loans totaling more than 1500 crore to over 1000 MSME clients throughout the country. We are regarded as the top MSME loan advisors in India because we offer individualised financial solutions to meet your demands as a business owner and realise your aspirations.
SME loans types
Working Capital Loan
SME working capital loans are available to help small businesses with their ongoing working capital needs. We offer this loan as a SME loan consultant in the form of an overdraft or cash credit for a 12-month period. It is often secured against the company's current assets and fixed assets.
Loans Covered Under CGTSME Scheme for SMEs
With this no-collateral service, you can get a cash credit or term loan up to Rs. 1 crore. Under the CGTSME Scheme, cash credit rates begin at 8–8.5%. According to the MSMED Act of 2006, this facility is created in accordance with the Credit Guarantee Fund Trust for Micro and Small Enterprises (MSE) (CGTMSE) scheme of SIDBI and the Ministry of Small and Medium Enterprises.
Project Funding
You are eligible for this financing if you are organising a new project. Up to 75% of the project's cost is funded.
Letter of Credit (LC)
To ensure that the seller will get paid, a bank offers a letter of credit with a limit. It is typically used to provide sellers with a guarantee or assurance regarding the availability of raw materials or any equipment or machinery. It is a capability that is required for importing machinery or raw materials, where sellers need confirmation of payment. The bank assesses an annual commission of up to 1% for this facility, which is a non-fund-based limit. Letters of credit often come in two varieties:
Letter of Credit at Sight
A letter of credit known as a "LC ar sight" is one that becomes payable right away once the seller satisfies the letter of credit's prerequisites. When sellers present the necessary paperwork to the bank, this letter of credit offers the fastest method of payment. If the buyer is from a country that is unstable or if the seller does not have a personal relationship with the buyer, sellers prefer LC at sight.
Usance Letter of Credit/Deferred payment letter of credit
It is a letter of credit that is settled a predetermined number of days following shipment or the delivery of the necessary paperwork. There is no draught involved, making it different from LC at sight, and the vendor cannot discount this LC.
Bank Guarantee
A bank or lending institution makes a pledge by offering a bank guarantee. The bank will cover the debt under the terms of the bank guarantee if the debtor is unable to pay off the obligation. The bank assesses an annual commission of up to 1% for this facility, which is a non-fund-based limit.
Financial Bank Guarantees
These assurances are only offered to fulfil financial responsibilities, such as paying earnest money or providing guarantees to the sales tax department.
Performance Guarantees
These assurances are provided with regard to the fulfilment of a commitment. In the event of a failure to perform, the bank will make up the beneficiary's loss.
Deferred Payment Guarantees
The deferred payment from the debtor is covered by these guarantees. The bank must give the money to the creditor in the case of a debtor's nonpayment.
Buyers Credit
Buyers Credit is a short-term facility provided by banks to importers to help them purchase the commodities or raw materials they import. It enables importers to access funds that are more affordable and connected to the LIBOR rate than local rates that are often higher and linked to base rates.
Suppliers Credit
An importer uses this facility to obtain funds at a rate that is lower than local rates tied to base rates and is based on the LIBOR rate. The importer receives it from the foreign bank of the seller's nation. Foreign bank reduces this LC for the seller in exchange for local bank issuing a usance bill under it for the importer.
Export Credit
Exporters can use this facility to obtain financing at a price tied to the LIBOR rate that is significantly less expensive than local prices connected to base rates. Export credit types include:
Pre-Shipment Export Credit/Packing Credit
The exporter typically uses this financing prior to shipment to buy raw materials and produce goods before shipment. Based on the letter of credit obtained from the importer, packing credit may be obtained.
Post Shipment Export
Exporters can use this from the time of the items' shipment to the moment the export revenues are realised. According to RBI regulations, exports must be completed within 12 months of the shipment date.
Bill Discounting
This facility is made available to create liquidity for the business in exchange for the security of customer bill receipts. Bill discounting refers to the process where the bank releases the balance after deducting the interest on the bill.
Factoring
A financial deal in which the borrower offers the lender discounted book debts in exchange for the loans. This is made available to create liquidity and is mostly used for working capital needs.
Reverse Factoring
This facility is used by a borrower to pay suppliers more quickly in order to receive cash discounts. In exchange for interest during the finance period, the finance firm pays the supplier according to the borrower's invoices.
Machinery Loans
This option is available for loans to buy machinery. This loan has a starting rate of 5.5% and a maximum loan amount of 75% of the machine's value for a maximum term of 5 years.
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What is the role of Banks Town in arranging working capital finance?
As MSME loan consultants in India, we assess your requirements and, according to our internal rating, advise you of various finance options available from banks. In addition, we have a team of professionals who guide the analysis of your financial performance, prepare CMA data, and disburse your loan. Also, we provide post disbursement services and assistance in your annual renewal of working capital limits.
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How is working capital requirement calculated?
As the best MSME loan provider in India, we calculate working capital requirements as Current Ratio = Current Assets/Current Liabilities Working capital is a difference between current assets and the current liability of the company. The company’s health is assessed with its capacity to pay off its current liabilities with its existing assets. The current ratio is one of the significant ratios to determine a company’s financial health. The current balance is divided by current liability. It is always advisable to maintain a current ratio above 1—the higher the current ratio, the better its financial health.
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How debt to equity ratio is calculated, and what is its significance?
Debt to equity ratio = Total liabilities/Total shareholder’s equity The debt to equity ratio helps to assess the company’s risk level. The lower the ratio, the lower is the risk. While higher ratio indicates, the company is highly leveraged and may be at a higher risk.
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What is ratio analysis, and are there fixed parameters at what ratios need to be maintained?
The ratio analysis is an organized way of assessing a company’s financial statement. It is the process of determining and interpreting the numerical relationship based on financial statements. At what level a particular financial ratio needs to be maintained may vary with each company and industry. Financial ratios allow us to compare the company’s strengths and weaknesses and allow us to compare companies across industries.
Eligibility And Documents Required
Eligibility requirements
The working capital deficit, loan repayment capacity, credit history, and other characteristics are among those that determine eligibility for SME working capital loans. As a result, determining a company’s working capital’s eligibility is a complicated procedure that differs between banks because each one has its own regulations and assessment standards.
Documents Needed for a Pvt. Ltd. Company, Partnership, or Sole Proprietorship
| Duly filled application | Documents |
|---|---|
| Photos | Passport size photographs of all applicants |
| Last 3 years Audited financials | |
| Last 2 years of income tax return of directors/partners | |
| Last 12 months bank statement of main operating account of the firm | |
| Identity Proof | Pan Card, Aadhar Card |
| Existing loan sanction letter/ Repayment track record (if any) | |
| Certified copies of MOA/ AOA/ Partnership deed as applicable | |
| Business proof | Udyam certificate, MSME Certificate and Shop Act |
| Address Proof | Light bill and Index 2 |
A well-known business with a reputation for building futures is Banks Town. Banks Town is a top loan provider with over 10,000 clients and ten years of experience, offering doorstep services. One of our main services is to offer loans to SMEs for operating capital, loans for enterprises to expand, loans for machinery upgrades, loans for education, and loans for homes to help you realize your ambitions.
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