Your bank is also a business Your business needs to make a profit, so does a bank. When you approach a bank for financial assistance, you are asking the bank to go into business with you. While applying for a business loan in Pune, you want a bank to consider your business plan and agree to your business strategy followed by approving your expenses and accepting some risks.

Banks are in the business of supporting sound and viable financial decisions, therefore every request must be considered on its own merits.

Banks have to consider risk

The bottom line for a bank is: how much risk do we take on with this project? Will we make a profit, or are we more likely to make a loss? Each bank has its own guidelines to help it decide if a business proposition is worth pursuing or not.

Many of the applications a bank receives will not be approved, simply because the risk the bank is required to carry is too high, or because it believes the applicant can not support the risk either. A bank may decline to loan to a viable business based on the fact they are overexposed in the sector the business is in.

Understanding loan products

In a competitive market, banks will package finance products under different names and introduce a range of features to differentiate themselves.

In matching a debt product and selecting the appropriate features to suit your business requirements, you need to determine the following about your business:

•What the funds are going to be required for and how long do you require the funds for– for example, to fund the purchase of inventory or to fund a building extension?

•Be realistic about the amount of funds you require and can afford.

•What level of security can you offer? How will the bank view the value of the security?

•How the bank or other financial institutions assess your business risks?

How to appeal to your banker

So what is the bank looking for in your loan application? Three things – information, security and experience.
The more quality information the bank has about your business, your plans and your industry, the more likely you will be successful in your application.

The Loan Application Package

The reason to draft a loan application to get business loan in Pune is to show the bank that you run a viable business and therefore providing you with a business loan is a low risk proposition. Riddhi Siddhi Multi Services can help you draft these reports.

One of the most important aspects of your loan application is to demonstrate to the bank that you can organize your thoughts and ideas in writing and can support them with financial information. Make sure that you understand all the information that is being presented in the loan application. Respect the bank’s need to ask what appear to be personal questions. Remember, they are going to be your business partner!

Types of securities

Often small business people will offer their family home as security for a Business Loan in Pune. Depending on how much equity you have in the property, this may require changing your mortgage arrangements. The bank also wants to ensure you are committed to repaying the loan, so the requirement of security binds you to the business, and the bank.

Alternatively, business assets may be provided as security in lieu of residential assets, at higher interest rates.

There also exists the option of a more expensive unsecured loan for small businesses that may be willing to pay higher lending costs in exchange for not risking their personal assets.

Banks may also ask business owners and directors of companies to provide personal guarantees (depending on the circumstances of the business) as part of receiving a loan.

Author's Bio: 

You can call Riddhi Siddhi Multi Services Executive any time to seek help for financial queries