Finance loans
Finance for business is raised by loans. A loan is an amount taken with an agreement that, it will be returned after stipulated time along with specific interest. Loans can be broadly classified as personal loans and business loans. Personal loans are also known as unsecured loans because they are issued on the basis of personal surety. Business loans are generally given on the basis of assets and reserves.
HOW TO GET BUSINESS LOAN:
Business Loans are obtained on the basis of Mortgage and Reputation.
Following things are mortgaged to get business loans:
Inventory in warehouse.
Goods in showroom.
Land and building.
Gold.
GOOD LOAN SCHEME:
A good scheme of finance has following features:
Its interest rates are low.
Loan is available anytime on demand.
Documentation formalities are less.
Procedure of obtaining loan is easy.
It has easy repayment options.
Mortgage rules are suitable to business assets.
GOOD LOAN CUSTOMER:
A good financial customer has following features:
The loan customer is running successful business.
He submits all the required documents.
He follows repayment plan as per agreement.
He has fixed deposits and holds shares.
He has movable and immovable assets which can be considered for security.
His account shows continuous flow of money.
ALTERNATIVES TO LOANS:
There are alternatives to loans while raising finance, viz.
Advances from Customers.
Short Term Sales Offers.
Deduction in Expenditure.
Advance deposits and advance booking of orders generate finance for a short period. Incentives on cash deposits are given to attract more and more deposits.
Short term investment offers are given with a time limit. Customers are supposed to make bulk purchase before stipulated instance of time.
Deduction in expenditure results in finance generation indirectly. Money saved remains with the company as a reserve, which can be diverted to required account of investment.
HOW TO DEVELOP FINANCIAL REPUTATION:
Continuous record of profitable business, higher rates of shares develop financial reputation. Hence importance is given to increase profits and decrease losses.
Cash Reserves help in building financial reputation. By means of advances and deposits, cash reserves are increased.
Regular repayment of loans creates positive image. It helps in future while taking new loans. Previous repayment record acts as a plus point and builds good financial reputation.
The financier foresees less risk while dealing with such a reputed customer.
FINANCIAL ADVERTISEMENTS:
Bankers and financial companies advertise various loan schemes. Details of various loan plans are given. Focus is on interest rates and ease of loan process. The advertisements are made through various media, which have reach and access to businessmen.
On the other hand, business organizations make advertisements for impact and image building. This helps in building financial reputation, which in turn helps while seeking loans. Annual profits, share values, welfare activities etc figure in these advertisements.
BUSINESS FINANCE IN USA:
American bankers and money lenders have different finance options. Please compare various loan schemes.
Following points are important while making comparison of the bankers:
(1) Interest Rates
(2) Mortgage Conditions
(3) Duration of Repayment Period.
SUMMARY:
Business Finance is made through loans, which depend on mortgage and reputation. Inventories and stored goods form the basis of mortgage. Reputation is developed by proper financial management.
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