Business Loan in Guntur

Guntur is a famous city in the southern coastal state of Andhra Pradesh in India. Guntur is world-famous for the chili trade. All major spice markets of Asia are replenished with the hottest commodities of Guntur spices. Guntur is also famous for the export of other key economic capital generating products such as cotton, tobacco and chili. Over the last decade, the city of Guntur has seen amazing growth in the main economic spheres of Agriculture, good processing, textile, Cement and Brand Apparel.

Small businesses are also in the race to achieve world-class recognition. In the digital sphere, the size of the company is not relevant when compared to the importance of brand recognition through social media advertisements. Small businesses and entrepreneurs are looking to get timely business loans that can be used to fulfill the following purposes:

  1. Short-term cash requirements and infrastructural facilities development can be achieved by availing the business loans from reputed financial lenders.
  2. Adequate financial support is the key issue that is being faced by small-time businessmen.
  3. Capital reserves should be replenished with funds from business loans to make sure that the business operations are carried out in a sustainable way in the economy.
  4. MSME loans in Guntur are one of the best ways to scale up the fledgling businesses in cotton raw material processing, chili trade and Information technology essential services.

What are the main benefits of availing of a business loan for medium and small enterprises?

  1. Budding entrepreneurs can scale their business efficiently in a productive way using the capital from a business loan. This is hugely helpful when the business in question has global supply chain implications.
  2. Global markets are heavily favored to those businesses who can exhibit flexibility and efficiency in delivering the products and services. The following are the key objecting when applying for a business loan in Guntur:
  3. Cash flows are crucial in maintaining the credibility of supply chains and meeting the bill payments of subcontractors and vendors. Working capital can be used to purchase the additional raw materials required to construct world-class product designs in local markets.
  4. The daily administrative needs of the company such as wage payments, raw material acquisitions and operational cycle requirements can be fulfilled by the additional influx of funds.
  5. Business loans can be used to upgrade the existing infrastructure and facilitate the harmonious working of factory operations. The opening of varying branches across the geographical expanse will result in increased market penetration.
  6. Brick and mortar branches can be opened where there is a perception of high customer sales. Product portfolios can be diversified using the appropriate business loan variant such as term loans or cash credit. For example, fast-moving consumer goods can expand their online presence by opening an online shop.

How Business loans can expand the social media presence of companies:

Social media management is the key to increasing product sales for organizations. Marketing techniques will launch the product into new markets. The business loan proceeds can be used to hire the services of reputed digital marketing exerts to enhance the brand image among the retail online markets.

How Business loans can meet the varied purposes of the enterprise?

  1. Machinery and equipment lie at the heart of an ideal manufacturing process. The sophistication of technology has a direct bearing on the final quality and demand for the product.
  2. The business loans in Guntur can be used to fine-tune the existing production processes, thus helping them to increase the productivity and efficiency quotient on the factory floors.
  3. Inventory management is another crucial area that has profit generation ramifications across the business cycle. The presence of the right inventory at the right time can make all the difference between profitability and bankruptcy.
  4. Enhancing the quality of production processes by deploying state-of-the-art machinery and highly skilled training to the employees can be done availing the proceeds of the business loan.
  5. Restocking the vital raw materials will preclude the incidence of any supply chain limitations and ensure a robust and flexible supply of goods and services.
  6. Brand awareness is an evolving management phenomenon in the online space. Gone are the days where brand recognition only belonged to the top corporate organizations. Now small scales businesses and start-ups are training their advertising guns to win the hearts and minds of the customers by showcasing their existing capabilities.

How do business loans infuse new ideas in Strategic Management and Customer Retention?

Strategic management of the company can be improved by taking the help of various data analytic software to understand the psyche and buying behavior of the customers. Business loans can help entrepreneurs realize the faster execution of their business plans and chart out the right path for future production expansion activities.

Customer retention is a vital component of a dynamic marketing department. The infrastructural facilities near the store such as interior decoration, parking and shelves can be built to increase the convenience factor of all the clients. Business loans can help enterprises to transform their corporate image and engage in customer-building activities.

What is the process of availing of a business loan in Guntur?

There are several government-recognized financial lenders who are offering business loans services to worthy entrepreneurs who fulfill all the laid out eligibility conditions. The digital revolution has brought in many paradigm changes in how the credit history and application of the borrower are evaluated. The loan company hosts all the information and contact forms on the websites of lenders. All the necessary eligibility criteria are listed as bullet points. Customers should research their credit requirements so as to select the right loan quantum.

The initial stages of the business loan sanction will only require fundamental details such as an Aadhar card and email address. Let’s go through a comprehensive list of the various eligibility criteria parameters for the different business loans.

MSME Business Loan Criteria for eligibility

Classification of MSMEs is important to understand their funding requirements, MSME Loan schemes and policy guidelines have been formulated by the Indian government to impart clarity to the financial lenders and make sure that their loan evaluation process worked to the benefit of the end consumer.

Microenterprise: If the market capitalization of the business firms lies between the ranges of 1 Crore and 5 crores, then it is deemed to be a micro organization.

Small enterprise: Every manufacturing or service firm with an investment threshold between the figures of Rs 10 Crore and Rs 50 Crore can be deemed as a small business organization for the purposes of evaluation of the loan application and determining the credit needs of the organization.

Medium enterprises are those which have capital and inventory investment above the 50 Crore mark.

General overview of the important business loan parameters:

Quantum of Loan amount

Up to a maximum of Rs 50 Lac

Tenure of the loan

The maximum tenure of 4 years

Rate of interest

16 to 22 percent

Fee for processing

Up to 7 percent of the previous loan amount

Apart from the internal classification, the loan evaluation processes also stipulate the existence of certain credit history requirements such as:

  1. Credit Score

The credit score of the entrepreneur and co-applicant should cross the 750 mark. This score will determine the rate of interest and tenure condition of the loan.

Credit history is derived from centralized repositories of Experian and Equifax. A good credit score will result when the payments of previous business loans are done without delay. Customers can go through the free credit history check-up offered by reputed financial lenders.

  1. Annual Income

This is another important parameter that has a direct bearing on the approval of the business slogans. The size of the balance sheet inspires trust among the financial lenders to sanction a loan o the companies. The greater the market capitalization, the more probability exists of its successful sanction. It is to be noted here that all annual income of the organization should be tax compliant. It is a generally accepted principle that for business loans to be granted without collateral, it is advised for the company to show an annual turnover of more than Rs 25 Lakhs.

  1. Vintage of Business

Lenders show a positive inclination towards sanctioning business loans to organizations that have a firm foothold in the existing markets. Businesses should be able to shoe their vintage credentials of at least 2 years. The profit and loss statements will be strictly securitized by the loan officers of the lender and only after verifying the incorporation details, only then the business loan will be sanctioned.

Business vintage is applicable mainly to manufacturing and service businesses that have a minimum threshold capitalization of at least 25 Lakhs.

What is the process of documentation?

The following is the list of documents that need to be uploaded to the website for the MSME business loan process to be completed

  1. Identity proof documents such as Aadhar card, Voter id card, passport and any other government-issued identity that will be validated by the central repository of identification
  2. Proof of residence certificates such as drivers license, Voter id card and rental agreements serve as the underlying connecting documents which serve as validation of the areas of incorporation of the business
  3. Income proofs constitute all banking-related information with respect to credits and debits for the last 6 months. The profit and loss statements and balance sheet also serve as suitable income proofs for arriving at the true market value of the company
  4. Taxation documents such as the returns for the last consecutive 3 years are mandatory as they transmit the right flow of credit information to the central tax department. GST sales tax returns should be filed if services are provided by the firm.

What are the best tips to achieve the successful sanction of a business loan in Guntur?

  1. Draw a repayment plan

Your repayment capacity is one of the important questions in the minds of lenders. Make sure that all the important finances are in order and lay out a realistic repayment plan. Lenders will be particularly impressed when your expenses are on the conservative side.

  1. Offer personal guarantee for the business loans

Entrepreneurs are not always in possession of the requisite collateral for the sanction of the business loans. The risk probability of the lenders can be minimized by furnishing a personal guarantee that will definitely increase the trust factor. Personal guarantees of the applicants, owners of the premises and the presence of additional guarantors will enable the faster processing of the loan.

  1. Make sure your debt levels are under acceptable horizons

The lenders will focus on your existing credit and your capacity to honor the financial contracts. Any loan will be granted only when the total EMI payments from the salary do not exceed 50 percent.  

  1. Be candid and frank about the existing condition of your finances

There is no shame in admitting the true scenario of your financial conditions. Having done so, the lender will be able to trust you in your word and ensure that your credit history can be rebuilt by offering the business loan in favorable conditions. The credit history of the applicant can be shown beforehand and negative incidents such as late payments and other default penalty conditions can be explained to the loan officer.

  1. Integrate realism in your expected loan quantum

The only thing loan officers hate is the inflation of the loan quantum. Selfishness has no place in making a technical financial decision. Make sure that the loan quantum that you indicate follows a rationally arrived thought process so that there is no heartbreak at a later time when the loan application is rejected.

  1. Design the basic purpose of running a business

Profit thought is the main motive. The crux of running a business should be more ideal and should appeal to the true and differentiating talent of the business owners. For example, a retail shop owner should be able to discern between the various cool drink brands to attract customers. The purpose of the business should have the most important component of the correct design so that lenders can make a reasonable decision regarding the profitability of the company.

Business loans in Guntur FAQs:

1. Which class of people is eligible to avail of a business loan?

Business loans in Guntur are offered to both classes of professionals and non-professionals. Self-employed people form a special category to avail themselves of business loans. The following customer segments are covered under a generalized financial rule scheme: * Partnership firms and Sole proprietorships * Public Limited companies which are closely held * Trusts and Societies * Pathological labs, Diagnostic Centres and Hospitals

2. What are the various options available for repayment of a business loan?

Repayments into the loan account can be done using various offline and online mechanisms. Online avenues include Electronic clearing services. Post-dated cheques and Direct Debit instruments. Customers can always visit the nearest branch and remit cash into the loan account.

3. Can a business loan in Guntur be granted without the incidence of collateral?

Business loans are a variant of unsecured loans. For businesses that can prove their vintage status and those with already good credit history, they can get business loans without the incidence of collateral security.

4. What is the applicable rate of interest as well as the processing fee on the business loans in Guntur?

Two types of interest rates are applied in the loan. Fixed and Floating. The general range of interest rates that is applied on business loans is between 16 to 23 percent. The processing fee is charged as a percentage of the total loan quantum. The processing fee of 2.5 percent is applied to the loan amount. Some banks depending on the area of operations of the business firm will also insist on taking collateral.

5. What is considered as the maximum and least amount of business loans that I can get after pledging assets?

The quantum of loans primarily depends on the customer’s requirement and criteria of eligibility. Apart from that, the market value of the collateral pledged as well as the repayment capacity of the firm and borrower will also play a part in determining the total market value of the loan. The minimum amount of loan is Rs 2 Lakhs and the maximum amount is Rs 5 crore.

6. What is the maximum allowed period of tenure that is applied in a business loan?

The maximum tenure that is allowed on a business loan of an unsecured type of loan is 48 months.

7. Are there any interest rate reductions when the loan is pre-paid by customers?

Preapproved loans are the privilege of existing loan account customers. Since there is a low risk of default in the case of pre-approved loans, the interest rates are charged at a lower bracket when compared to fresh loans. The interest rate is decreased by 1 percent on the total base rate.

8. Can entrepreneurs and business owners make massive purchases from the proceeds of business loans?

Outstanding debts and massive debts will always carry a negative gain of function on the creditworthiness of the customers. Hence it is advised to avoid massive purchases to avoid the incidence of low credit rating.

9. Is there any stipulation that the loan account should be in operation for a minimum amount of time?

As a general rule, there are no prepayment penalties that are applied to the loan account in case of closure. However, some lenders insist that on closure, a pre-payment charge of 1.5 percent to be applied on the business loan account.

10. What is considered as the average approval time period of the business loan?

Beginning from the input of details in the contact form on the website, it takes a maximum of 3 days for the amount to be credited to your account, contingent upon all documentation being in order.