Every entrepreneur thinks
differently. One may think to start business with his own funds or collecting
the funds from friends and relatives; naturally the scale of such business
remains miniature in nature. One may think to go for financial support schemes.
Once they start dealing with the support mechanism the experience the roller costar
which gives them the feelings of up & downs. It requires persistence to get
loan sanctioned & disbursement from the financial institutions.
The
financial needs of MSME can be classified into the following types.
-
Long term or medium term loans.
-
Short term or working capital
requirements.
-
Risk capital.
-
Seed capital/marginal money.
-
Bridge loans.
There
are varieties of institutions that provide financial assistance to MSME. The
important ones are as follows:
1)
Credit Co-op societies / Co-operative
Banks /Regional Rural Bank / Commercial or Nationalized Banks.
2)
Private or non-govt. financial
institutions and venture capital schemes.
3)
Small Industries Development Bank of
India. (SIDBI)
4)
State Financial Corporations / State
Industrial Development Corporations, etc.
All
these Financial Bank/Corporations provide finance for Long / Medium term loans.
Such loans are needed for purchase of land, construction of factory building / Shed
and purchase of machinery & equipments. This loan is also known as fixed
capital.
Then there is requirement of working capital
for running the business. It is needed for purchase of raw material and
consumables payment of wages and other immediate manufacturing and
administrative expenses. Such working capital is generally available from
Commercial / Nationalized Banks.
The
loan known as composite loan is also available. The commercial banks sanctions
composite loan which comprises of fixed capital and working capital together.
One
may go for composite loan scheme or the separate schemes as mentioned above.
The
documentation needed with the loan application forms are as under:
-
Formal application form.
-
Balance sheet & profit loss
statement for last three consecutive years of firms owned by promoters.
-
Income Tax Assessment Certificates of
Partners/Directors.
-
Proof of possession of Land/Building.
-
Architect’s estimate for construction
cost.
-
Partnership deed/memorandum & Articles
of Association of company.
-
Project Report/Loan application.
-
Budgetary quotations of plant &
machinery.
-
Statement & regulatory NOCs.
-
Provision of power/water, etc.
Loan
is disbursed according to the phased implementation of the project.