Term loans are user specific. Every person takes term loan based on his set of requirements. There are two basic parameters in a term loan.
The rate at which one avails the loan depends upon the lending bank norms as well as the financial strength. The interest rates depend upon bank to bank.
Duration of repayment:
The repayment of the loan has to be made based on the lending terms as agreed with the bank at the time of availing the loan.
PURPOSE OF A TERM LOAN
The best use of a term loan is for construction; major capital improvements; large capital investments, such as machinery; working capital; purchases of existing businesses. Fortunately, the cost of such a loan is relatively inexpensive if the borrower can pass the financial litmus tests. Rates vary, making it worthwhile to shop.
We understand these needs and have a strong track record of assisting owners by providing a broad array of loan programs, competitive pricing, competitive loan fees and excellent customer service.
Banks look for 5 “C”s during decision making about term loans:
How the client has managed other loans (business and personal)? They also evaluate the client’s business experience.
The bank will conduct a full credit analysis, including a detailed review of financial statements and personal finances to assess the ability to repay.
This is the primary source of repayment. The bank expects this source to be larger than the amount borrowed.
The bank looks for those assets that can be quickly turned into cash if necessary that might work as an alternate repayment source like bonds, stocks, apartment buildings etc. “Banks like to lend to people who already have money.” Most likely a personal guarantee is also required to be added.
Comfort/confidence with the business plan:
The banks make a detailed judgement on the accuracy of the revenue and expense projections along with the condition of the economy and the industry.
The degree of financial strength required to receive loan approval can vary tremendously between banks, depending on the level of risk the bank is willing to take on.
Any person who is above 18 and willing to get Term Loan is eligible.
The basic list of documents required for the term loan is as follows:
- PAN Card Xerox.
- Address Proof.
- Income Tax returns, computation & Balance sheet for last 3 years.
- Brief profile.
- Quotations for Term Loan.
- Detailed manufacturing process.
- Bank Statement last 12 months.