By : M.S.Yatnatti: Editor and Video Journalist Bangaluru : Avoid defaulting on the loans .It will affect your credibility and credit score. It is personnel finance (Personnel life is also a project) or Project Finance for organizations basic rules of getting loans are same. Turn your good ideas and projects with cheaper loans and equity finance into money spinning businesses and bring idea to market place by making every employee and person in the organization a business person and turning them as Money makers.
Reportedly Expansion and generation of capital for smaller but aggressive companies can be realised through use of world legal banking practices that legally circumvent the web of securities regulations.These regulations were initiated ostensibly to discourage fraud in securities and exchange transactions.One cannot at this point determine to what degree those lobbying for such legislation may have had the interests of the smaller businesses in mind.In any case, the result is a regulatory nightmare that would discourage even the most stout-hearted. The current system succeeds magnificently in keeping small business just that small. Fittest will forge ahead and the industry leaders who have capabilities beyond difficult times and are geared up with skills and options like e-powered empowerment and proved turn around strategies and they don't fear the risk and change ,they embrace it to take the world head on , can never be behind in the progress of the rare order .Finance is the backbone of business.No trade or industry can run without adequate finance.The internal resources of a business organization are often insufficient for meeting all its needs.It is also not always possible for the owners, promoters or the entrepreneurs to mobilize finance from their own resources.Therefore promoters raise capital through borrowings, keeping in view the short term, medium term or long term requirements of the trade or industry. Every industrial project requires finance in the form of risk capital, long term, medium term and short term or working capital and/or machinery on hire purchase/lease basis. All these types of financial assistance are provided by various institutional agencies, commercial banks, co-operative banks, Regional Rural Banks, State Financial Corporations and InternationalFinancialInstitutions and Syndicated Loan Market and NSIC etc,.
According to experts in finance industry A great emphasis has been placed by the government to ensure that all viable projects are provided adequate finance (Capital) for a sustained growth of trade and industry.The borrowed funds have enabled many promoters to realise their dreams and to bring their project to an actual shape. Timely availability of Institutional and bank finance at reasonable rates is essential for successful implementation of any commercial project. This requires thorough and upto date knowledge of lending schemes of various financial institutions likeIDBI, IFCI, ICICI, IRBI, SCICI, Exim Bank, Commercial Banks, RCTC, SIDBI, UTI, LIC, SFCs etc., particularly with reference to the preparation of project report, appraisal by the lending institutions, assessment of financial requirements as per RBI norms, terms and conditions on which finance is available, procedure for filing application for finance, execution of documents and charging of securities.Besides the financing has to be done as per the RBI Credit Policy & Instructions contained in its various Circulars & Committee Recommendations. Special RBI instructions have also been issued on bank finance, for Leasing & Hire purchase Concerns, Diamond Exporters, Consortium Advances, Housing Finance, Priority Sector Advances, Export Credit, Commercial papers etc. Incorporating these we are presenting revised book.
Borrowed capital is cheaper as the interest rate is low; also because the interest can be deducted from taxable income of the business organization as compared to the owner's funds.i.e., equity capital, as the dividend paid to equity shareholders is not deductible from taxable income.Earnings on borrowed money substantially exceed the net cost of borrowing.This, the benefit of the low cost of borrowed capital is ultimately shared by equity holders in terms of higher dividend and appreciation in market and book value of equity.
Back to basics .Eliminate excess and go with only what is required. Stop buying things which you really do not need. Spending and earning are most important aspect of life. Improve and re-skill yourself. Improve your health of credit score .Reportedly Your credit score -a numeric summary of your credit health -determines your credit eligibility .Whether you want or do not want credit but you will have one "the credit score” .Whether you are planning a project finance or to buy home or any other consumer product like a car or an LED TV , it is your credit score which ultimately determines your credit eligibility. A credit score is a 3-digit number that shows numeric summary of your credit health and is derived by credit bureaus--like CIBIL, Equifax, and Experian-by analyzing your credit history, which is a record of how you have used and managed credit in the past .According to industry experts, the score usually ranges from 300 to 900 points, and the higher the score, the more is the chance of getting your loan application getting approved. "A score above 700 usually suggests good credit management, but every bank has its own criteria of determining the credit worthiness of an individual.Whatever be the case, if you are one of those whose loan application has been rejected in recent past, it may also be because of poor credit score