InvestorQ : Zenith is a company dealing in woodcrafts and cutlery. It is relatively a new company in the market and is in need of finance for the following purposes: a) expanding its store; b) purchasing raw materials; c) payment of labour wages
Charitr honavar made post

Zenith is a company dealing in woodcrafts and cutlery. It is relatively a new company in the market and is in need of finance for the following purposes: a) expanding its store; b) purchasing raw materials; c) payment of labour wages

Answer
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Priyanka N answered.
1 month ago


In order to raise finance a company has several options, such as:

1) Short-term Loans: These loans have a smaller size and shorter repayment window. This loan is generally given for a period ranging between 3 to 18 months, as they can be obtained for working capital finance and limited capital investment. However, some lenders offer short-term business loans for an extended period.

2) Bank Overdraft: This facility is available for both banks and online lenders. Under this, a customer can withdraw up to a sanctioned limit from their business account even if the actual balance in his account is lower. Interest shall be charged on the excess amount withdrawn and shall be repaid along with the excess sum withdrawn.

3) Factoring advances: There are companies who factor your advances and pay about 70-90% money in advance. However, this arrangement needs the involvement of both buying and selling companies to work with a factoring company.

4) Equipment Finance: This is one of the popular means of improving cash flow and working capital. In this, the loan amount is used for purchasing or leasing the assets for the company. It is in the nature of a secured loan.

The process to obtain a business loan is simple but requires a lot of documents and compliances by the company, here’s how you can get a business loan:

1.Collect relevant documents: These are some documents that you will mandatorily require and other documents as required by the lender:

  • Business’s Financial Statement
  • Financial projections for 2-5 years.  
  • Business Bank statements
  • Business Tax returns
  • Business licenses (if any)
  • PAN card of the business.

Check your eligibility and credit score: It is important to check the credit score for your business and to get that in shape before applying for a loan could help to obtain a loan easily.

Look for options: Reach out to various lenders, inquire about their terms and conditions, and choose the option whichever is most feasible for your business in terms of cost and compliance.

Apply for a loan: After keeping all your documents and choosing the right lender, all you have to do is to simply apply for the loan either by visiting the bank branch or visiting their website online. You just need to fill the relevant details and the bank’s sales executives will get in touch with you.