Sources Of Finance
Micro loans refer to the small loans given to set up new small businesses
. Running a business is always a difficult task to perform. One does require loan whether there is a new generation entrepreneur collaborating into a new business or an established businessman planning for a business expansion. The Government undertakes several steps like setting up of banks and financial institutions, specifying various policies and schemes, etc.
Banks: The public sector banks are the major source of financial assistance to the small business sector. There are many banks that provide loans for small scale businesses. They not only provide loan for business expansion but also to new business entrepreneurs to survive in the market. There are number of banks that provide loans, but the specific loan depends on the business standard and requirement.
EMIs: The bank provides loan for certain period of time with certain amount of interest to be paid by the borrower per month which is generally referred as EMI.
ROI: The rate of interest and number of EMIs depends upon the amount the borrower borrow or as per conditions prescribed by the bank. Lending of loans does involve lots of paperwork and precious documentation failure to which the loan is withheld. The loan is sanction after the formalities and verifications are done by the bank.
Security: Every bank has their different rules which does not imply in other banks. One does need to have security against loan which safeguards the loan lent by the bank.
Documents required by bank: Application form, A Business Plan, Bank pass book, Balance sheet (if any), Security, Photographs, etc.
Financial Institutions: A financial institution is an institution that provides
financial services for its clients. There are many financial institutions that provide finance to small scale industries. Most financial institutions are regulated by the Government and some by private bodies.
EMIs: The Financial institutions provides loan for certain period of time with certain amount of interest to be paid by the borrower per month which is generally referred as EMI.
ROI: The rate of interest and number of EMIs depends upon the amount the borrower borrow or as per conditions prescribed by the financial Institution and is generally more than Banks. Lending of loans involves lots of formalities more failure to which the loan is withheld. The loan is sanction after the formalities and verifications are done by the bank.
Security: Financial Institutions needs security against loan which safeguards the loan lent by them.
Documents required by bank: Application form, Business Plan, Bank pass book, Balance sheet (if any), Security, Photographs, etc.
Private lenders: The private lenders are bodies that provide loan when banks and financial institutions are not able to provide finance due to any sort of problem. It can be in terms of documents or business plan. Private lenders will not only fund projects which the banks reject, they can also structure loan repayment. Lending of loan involves lots of paperwork and documentation even more than Banks and Financial Institutions.
ROI: The rate of interest and number of EMIs are more as compared to banks and Financial Institutions.
Security: Private lenders require security against loan in order to safeguards the loan.
Documents required by bank: Application form, A Business Plan, Bank pass book, Balance sheet (if any), Security, Photographs, etc.
by: Patrick85
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2024-12-4 15:35
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