In the maze and vast landscape of the loan market and the financial sector, every corporate entity needs to know the channels of getting loans through which a business can grow and thus have higher returns for the shareholders.
However, the process of opting for a small and medium-sized business is often not easy. For that, it needs to look at the options through which the entity can acquire loans and improve the operational costs and margin of the business.
Getting a loan is easy for a listed entity in the stock market as they have all the financials in place. Due to the regulation standard of a stock market, a company needs to maintain transparency, and for that, they get the easy leeway of getting loans as they have all the financials in public.
In this blog, we will address the problems faced by the non-listed entity, which often needs to deal with the challenge of the banking system to get loans and increase their business. We will also take a look at some pathways that are open for such entities to avail themselves of hassle-free loans from banks.
Understanding the Loan Landscape
In the Indian financial system context, the recent push towards financial inclusion has promoted a lot of schemes that a company can use to get access to some funds that they can use for the betterment of the business.
Now, a bank comes with a variety of loan options. Still, it places certain terms and conditions on the borrowers. For that, one needs to maintain the robust financials of the company so that they can go through it for verification and give the company the loan that the management requires for growth.
Assessing Funding Requirements
Now, before seeking a loan, an entity must first assess the funding requirement, which is paramount, and based on that, they can approach the bank. A company might require funds for expansion, working capital, or strategic initiatives, which shows the reason behind the capital need of the business.
It’s also important for the lending institution to get to know the reason behind the loan, and it can help the bank analyze the work, and through that, they can decide whether or not they need to provide the loans.
Building a Strong Financial Profile
Here, a company needs to show its robust financial statement, which shows that the company is true in its management style and the balance sheet, which helps to profile the financial constraints of the company.
A company must always produce an audited document for the banks, which will help the company to get the loan without hassle, making the efforts of the management a little less difficult, and they can access the funds to meet the company’s needs. A company must focus on factors like revenue growth and a healthy balance sheet, which will help the firm in the approval process.
Exploring Loan Options
The company when seeking a loan, one needs to assess the offers of various lenders, and to connect the borrower with multiple lenders, a company needs a DSA partner who can help the company to get the best deal and the ability to choose from the diverse offers a company might get.
A company can also check the options they are getting from an NBFC and assess the terms. NBFCs offer faster loans and require less time, thus increasing the loan processing speed.
Preparing a Comprehensive Loan Application
A company needs to correctly prepare the loan application as it decides whether the application will be accepted or rejected. Here, a company needs to highlight the business model properly, mention the revenue centers of the company, and provide a proper roadmap of how they can refund the financing done by the bank with the stated interest.
Since a wholesale loan is of a higher amount, a bank always looks for the safety of the loan amount and does high compliance so that they have the highest chances of getting the loan back from the borrower.
Navigating the Laon Approval Process
Once the application is submitted, a non-listed entity needs to keep a channel of communication open where they can stay in touch until the approval process. If the bank or the NBFC requires any additional documents, they can provide the supporting documents, which will make the approval process efficient and fast.
Following this stipulated guideline, a non-listed company can effectively increase the chances of getting loan approval within the stated time.
