To get a small business loan, a firm requires submitting an appropriate application form. There are different types of application forms for different categories of loans. The information furnished in the application covers, inter alia, the following: the name and address of the borrower and his establishment; the details of the borrowers business; and the nature and amount of security offered.
The application form has to be supported by various ancillary statements like the financial statements and financial projections of the firm. The application is then processed. This primarily involves an examination of the factors like ability, integrity and experience of the borrower in the particular business. General prospects of the borrower’s business, purpose of grant, requirement of the borrower and its reasonableness are also taken into perspective when granting loan.
Once the application is duly processed, it is put up for sanction to the appropriate authority. If the sanction is given by the appropriate authority along with the sanction of loan, the bank specifies the terms and conditions applicable to the loan. These usually cover the amount of loan or the maximum limit of the grant, the nature of the grant, the period for which the grant will be valid, the rate of interest applicable to the grant, the primary security to be charged, the insurance of the security, the details of collateral security, if any, to be provided, and the margin to be maintained.
Working capital advances are provided by commercial banks in three primary ways: cash credits/overdrafts, loans, and purchase/discount of bills. In addition to these forms of direct finance, commercial banks help their customers in obtaining credit from other sources through the letter of credit arrangement. Under a cash credit arrangement, a predetermined limit for borrowing is specified by the bank. The borrower can draw as often as required provided the outstandings do not exceed the cash credit limit.
Related Articles of Interest :
-
Small Business Grants
10 August 2010 8:30 PM |
No Comments
Working capital grants by commercial banks represent the most important source for financing current assets. A firm seeking small business grants is required to submit an appropriate application form. There are different types of application forms for different categories of grants. The information furnished in...
-
Minority Small Business Loans
10 August 2010 8:30 PM |
No Comments
The first procedure for getting Minority small business loans is to submit an appropriate application form of the financial institutions/banks. It is worth mentioning that there are different types of application forms for different categories of grants. The information furnished in the application covers, inter...
-
No Credit Check Business Loans
10 August 2010 8:30 PM |
No Comments
Banks grant business loans for different periods- short-, medium- and long-term. Short-term loans are granted to meet the working capital needs of the businessman. These loans are granted against the security of tangible assets – mainly the movable assets like goods and commodities, shares, and...
-
Commercial Real Estate Loans
10 August 2010 8:30 PM |
No Comments
It is common for businesses to need commercial loans both at the start-up phase for equipment and later on, for expansion, or special projects. Real estate has become a major sector of the loan business. A significant fraction of the nation’s total wealth is in...
-
Payday Loans
10 August 2010 8:30 PM |
No Comments
A payday loan is a short-term loan offered to customers by some lenders. It is also called a cash advance, as it is cash provided against a prearranged line of credit. Payday loans help borrowers take care of their expenses until their payday. People use...
-
Small Business Start Up Loans
10 August 2010 8:30 PM |
No Comments
Small business startup loans are usually given in the form of term loans. Term loans, also referred to as term finance, represent a source of debt finance which is generally repayable in more than one year but less than 10 years. They are employed to...
-
Business Lines Of Credit
10 August 2010 8:30 PM |
No Comments
Banks constitute an important institutional source of financing the working capital requirements of business. Banks consider various aspects such as production and marketing plans of the customer while determining the credit requirements. The amount so determined by the bank is known as credit limit. Bankers...
-
No Credit Check Student Loans
10 August 2010 8:30 PM |
No Comments
Under no credit check student loans, credit is given for a definite purpose and for a predetermined period. Normally, these loans are repayable in installments. Funds are required for single non-repetitive transactions and are withdrawn only once. If the student needs funds again or wants...
-
Secured Loans
10 August 2010 8:30 PM |
No Comments
A secured loan is a type of loan where the borrower offers an asset as collateral to the lender. In case the borrower fails to repay the loan, the lender can take control of the asset. This is different from a credit card loan, which...
-
Small Business Loans For Women
10 August 2010 8:30 PM |
No Comments
Small business loans for women involve a number of procedures. Firstly, they have to submit the loan application that seeks comprehensive information about the project. Specifically, the application form covers aspects like promoter’s background, particulars of the industrial concern, and particulars of the project (capacity,...