For starting a business that requires capital more then a person can afford, a loan is a good option, but as I am fairly new to this field, I would like to fire up a discussion here on Loans and the Risk factors inside it.

Should a person take a loan? Under what circumstances? should loan be avoided? What is a better option then loan?

Thanks for reading, please reply.

"Roopin"

hello roopin,
please before taking a loan forecast your profit and business growth, if you feel you will make up fast and able to repay the loan then go for it, keep in mind of a back up and possiblity that what can you do if your business fails.

In my opinion you can only take a loan if you have done all the required planning of what will you do with the money and how will you use all of it, how will you generate the money back to pay? and what stuff have you kept for emergency payments(when you are unable to pay the installment of loan back) etc. Senthil's advice is as good though

Obtaining a loan is difficult for a starting business. You will be most likely required to use your personal assets as collateral.

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if you are applying for a working capital loan ( this is called business loan), this means you are asking for a overdraft facility on your current account.

the overdraft limit is sanctioned based on the following information you give to your bank :

- cash flow statement for the next six months
- details of running projects / contracts
- repayment schedule
- balance sheet of your company for last two years (in case you are a new
company then your projected financial data )
- hypothecation as collateral /a personal guarantee of the owner to cover
the value of the loan.
- assignment of receivables from running projects .

once you meet the criteria and depending on how you perform on ur account, this facility arrangement is reviewed on an annual basis.

in between, if you have a large project which requires an increase in your existing working capital requirement, a seperate application can be made to the bank who can temporarily enhance your limit upto the period of completion of the project.

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JENNY

Cash flow for plaintiffs in commercial litigation is critical to maintain financial stability with their business and/or personal endeavors. Yet ensuring adequate cash flow can be difficult when your business is involved in a lawsuit.

Litigation expenses can drain personal and business assets, News of your litigation can scare away new and current customers. Your investors pull their financing due to the uncertainty of litigation and its impact on future business returns

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Refinance Car | Bad Credit Loan | Mortgage Lead

whether its personal loan or business loan the main objective should be to use it in proper way in your business so that you can get returns from it to pay it back to bank.

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Yes very true... its very essential to utilize in right way...

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Loans are not met to be paid off asap...

They are service which should be enjoyed...

for example :

you are planning to setup a business and you require a starting capital of Rs 10 lac..
You plan to take a loan and you need to pay an EMI of some Rs 15000 / month.

If your are confident for your business and earning substatially more than Rs 15000 / month then you must reatin the loan as :
1) For every Rs 1 lac you pay 15 % premium (interest) but the same money is fetching you 30 % premium after investing into your business.. hence you are in 15 % profit

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Business loans Commercial loans

its good to take ;loan for business as with it one can reestablish one's business and can also
expand one's business. When one takes loan then one should also think in advance about repayment of this loan.If one has capacity to pay back loan only then one should go for a business loan.

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