Category: Articles

Categories
Articles

Factors affecting CIBIL score

Factors Affecting CIBIL Score

The following are the main factors affecting the CIBIL score:

Repayment History   

This is a main factor that directly affects your CIBIL score. Every time a person avails credit or a loan, the lender is bound by duty to report the same to the CIBIL. The bank takes note of whether an individual repay their debts on time. If an individual makes an effort to repay in advance, it is considered as a positive sign. This indicates that the person can be trusted to repay the amount he owes.

Drastic Increase in Credit

Every earning individual would have a certain credit limit, whether for a loan or a credit card. However, utilising the available credit in its entirety would come off as credit which is seen as a red flag by banks. If an individual maintains their certain credit level for all the months but is seen spending significantly more financially, it may result in a dip in the score.

Debt to Income Ratio (DTI)

Typically, lenders do not encourage people to take more debts than roughly 40 per cent of their total income. So, DTI is a measure that is used to estimate the ability of a loan applicant to repay their debts based on their salaries. DTI is considered to be a useful metric to inculcate financial discipline in one’s self so that one would be able to repay one’s future EMIs without any trouble.

Multiple Loans

It is also a concern to banking authorities when an individual has many loans such as home loans, personal and vehicle loans and various credit cards registered in their name. It is always a good sign to close one before moving on to avail another one.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Our reports are accepted by all public and private sector banks working in India. Click to create your report.

Categories
Articles

Cibil score for bank loan

TransUnion CIBIL is a premier credit rating agency among the top four agencies in India. CIBIL has affiliations with almost every other bank in India, estimating the creditworthiness of millions of enterprises and individuals. A great CIBIL score denotes that a person follows great financial discipline and integrity. Every time an individual applies for a credit card or a loan, their recent rating is reviewed. Usually, any score above the value of 700 is considered good enough although some banks have raised the bar while others don’t.

CIBIL Score Meaning
850 – 900 Indicates that one has never defaulted on their payments even once and is an excellent score.
750 – 850 80 % of loans are approved for people who have a score above 750. This gives them the advantage to bargain for a better rate on credit cards and personal loans.
700 – 750 This indicates that the person is good to go for secured loans. However, for an unsecured loan, the bank may impose a higher rate or investigate further.
500 – 700 This indicates that a person has defaulted on their payments a few times. Personal loans would be hard to obtain, and a private financier may levy a massive interest.
300 – 500 This is considered an inferior score and indicates too many discrepancies in loan repayments to ignore. Unless the person works on improving their score, it would be close to impossible to obtain any credit from any bank in the country.
Categories
Articles

How to Improve CIBIL Score

If you have a low CIBIL score, then don’t think it’s the end of all loans, you can improve the score and go for credit. You can improve the CIBIL score by following the given steps & it takes over six months and more for such improvements to reflect in one’s credit report.

Avail a recent credit report
Availing a recent credit report will give an individual an idea of their current position and where they went wrong. For example, if their score had dipped due to a couple of delayed payments, they should ensure that it does not happen again. Keeping targets for at least 6 months or so would help one to correct their errors if any.

Never delay payments
CIBIL score greatly fluctuates even when a minimum due is paid. One has to pay their full dues and EMIs on time to keep improve their score. It is a good idea to automate payments at the beginning of a month to avoid unexpected delays.

Creating a diverse credit-folio
This can act as evidence to any lender that one is capable of handling different kinds of credit. Creating a blend of secured loans and unsecured loans can achieve a diverse credit-folio. A high number of unsecured loans would not look favorable in any person’s name. You can lend money through gold loan, credit card etc…

Getting rid of unused credit cards
Keeping one or more credit cards idle is never a good idea. If there is no use of a credit card, one must make sure to close it with the bank.

Efficient debt handling
An individual’s score can improve well if they know how to handle their debts efficiently. For instance, a credit card works on the concept of revolving credit and may go out of control if not managed properly. In such cases, closing off credit card dues with a personal loan is a great move. One would have to pay less interest and also, can solve an issue efficiently.

Stop credit before it reaches the limit
Don’t use credit card till it reaches the maximum limit. Keeping to the Debt to Income Ratio would help one to stay on the safe side of using credit cards.

Avoid prolonging tenures
The tenure of an individual loan or credit is an essential factor that can improve one’s score. For example, if a person has taken a personal loan with a tenure of 3 years, and have raised the tenure midway for a smaller EMI, it may affect their CIBIL score.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your report.

Categories
Articles

How to get a business loan?

A business loan is sanctioned to start a new business, expand an existing business purchase assets etc. Most entrepreneurs don’t know how to apply for a bank loan or what are the procedures. Here we are explaining the procedures for getting a bank loan. If we can make it
much simpler, an entrepreneur must know what the expectation of a bank is from the entrepreneur.

Before you approach a bank you should prepare the following documents:
  1. KYC documents – Your identity details – Always take identity cards such as PAN, AADHAR, Election ID card, Ration card, Driving license, Passport etc. Please take at least 3 photocopies of any of the same ( preferably Aadhar and PAN) also you should carry the original too
  2. Company registration details – Your identity details of the business like registration details whether it is currently operating or going to start a new one, you should complete the registration procedure to get a loan– MOA/AOA, Partnership deed, Panchayath/Municipality/Corporation registration details, Licenses issued for your business like FSSAI, pollution, boiler license etc whichever mandatory needed for your business. Rent agreement, GST registration (if applicable) etc.
  3. Project report – You should carry a project report for getting a bank loan which will clearly explain the details of your business, why you need the funds, how you are going to repay the loan, your business location and infrastructure facilities, projected profitability, balance sheet for the next 3-5 years etc should be there.
  4. Photograph – You should carry your photograph in order to apply for the loan. If it’s a group of people, then carry all the stakeholder’s photographs.
  5. Source of capital – The bank will issue only 75% of the total project cost, and the entrepreneur must contribute 25% of the money, commonly known as margin money. Sometimes, you need to submit the details of the margin money. Eg: Funds from friends or family etc.
  6. Personal Credit score – This is historical data about your previous bank loans, financial liabilities etc and how better you are repaying that. People typically refer to it as a CIBIL score, Experian score, etc. You don’t have to bring this, the bank can check this using your Aadhar details. If you need to know about this you can also check the credit score for free from Cibil or experion sites.
  7. Due diligence certificate – The bank manager prepares this document by cross-checking your details from other entrepreneurs or from society. Your background, experience etc will be recorded in that.
About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. All public and private sector banks working in India accept our project report. Click to create your report.

Click here to view a sample project report for a bank loan 

Categories
Articles

Second Installment under MUDRA Loan/PMEGP

Project report for mudra loan

From 2008 onwards the PMEGP loan scheme is there in our country. Those who availed MUDRA loan and PMEGP and also if you are repaying the loan properly, then you are eligible for getting another loan up to 1 crore.

Exiting isn’t? MUDRA and PMEGP are two prominent MSME loan scheme available in India and millions of MSME has taken it up and become a beneficiary of the same. So basically these loans are for the entrepreneurs to kick start the business. But the 2nd phase of MUDRA & PMEGP is for helping established entrepreneurs to flourish better. Just have a look at the eligibility criteria. Along with the loan, you may also get a subsidy of up to 15%. So just have a look at the eligibility criteria and benefits of the scheme.

What are the Eligibility Criteria?
  • The enterprise should be exponentially increasing its revenue and running in profit for
  • the past 3 years
  • The enterprise should not be a defaulter in previous loan amounts
  • Enterprises should generate employment opportunities during expansion
  • The manufacturing industry can avail of a loan of up to 1 crore
  • Service industry & trading can avail loan up to 25 lakhs
  • The manufacturing industry is eligible for subsidy up to 15 lakhs
  • The service and trading industry is eligible for subsidies up to 3.75 lakhs
What are the Documents required?

You need to fill up the application form from http://kviconline.gov.in and discuss the possibility with the District Industrial Center (DIC). Need to submit the audited balance sheet and profitability statement of the past 3 years, KYC documents, and a project report for your business with the projected balance sheet and other financial statements.

A project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our project report. Click to create your project report.

Categories
Articles

Check list for MSME Loans upto Rs.10 crore

The following is the Check list for MSME Loans up to Rs.10 crore:

  1. Proof of Identity: Aadhaar Card / Voter’s ID Card / Passport / Driving License / PAN Card /Signature identification from present bankers of proprietor, partner of director ( if a company)
  2. Applicant should not be a defaulter in any Bank/Financial Institution
  3. Proof of residence: Aadhaar Card / Recent telephone bills, electricity bill, property tax receipt/Passport/voter’s ID Card of Proprietor, partner of Director (if a company)
  4. Memorandum and Articles of Association of the Company / Partnership Deed of partnership firms, etc.
  5. Proof of Business Address
  6. Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
  7. Rent Agreement (if business premises are on rent) and clearance from pollution control board if applicable.
  8. SSI / MSME registration / Udyog AADHAAR Memorandum, if applicable.
  9. Projected balance sheets for the next two years in case of working capital limits and the period of the loan in case of a term loan.
  10. All the properties offered as primary and collateral securities require copies of lease deeds/title deeds.
  11. Certificate of incorporation from RoC in case of a company (CIN No. and DIN no. of directors)
  12. Bank Account details wherever applicable (with details of outstanding in case of existing loans /limits)
  13. GSTN No., if applicable.
  14. Credit Rating details and report, if available
  15. ZED rating, if available.
Check list for MSME loans with exposure above 25 lahks.
  1. Profile of the unit (includes names of promoters, other directors in the company, the activity being undertaken addresses of all offices and plants, shareholding pattern, etc.
  2. Last three years’ balance sheets of the Associate / Group Companies (if any).
  3. Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like capacity of machines, the capacity of utilization assumed, production, sales, projected profit and loss and balance sheets for the tenor of the loan, the details of labour, staff to be hired, the basis of assumption of such financial details, etc.
  4. Manufacturing process if applicable, the major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major competitors and the company’s strengths and weaknesses as compared to their competitors, etc. The checklist serves as an indication and is not exhaustive. Depending on the local requirements in various places, you can make additions as necessary.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. Also, a well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your project report.

Categories
Articles

Step by Step Procedure to avail PMEGP Loan and Subsidy

PMEGP is implemented by the Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centers (DICs) and banks. Here’s the step-by-step guide to avail PMEGP loan and subsidy:

1. Conceive a business idea to start a new enterprise in the manufacturing or service sector.

2. Identify a suitable location, building, plant & machinery etc. for your venture.

3. Make a Project Report/ Business Plan, so that you can enter the details in the application.

4. Apply online through www.kviconline.gov.in

5. Participate in the interview by DLTFC (District Level Task Force Committee) who will evaluate your project and if found eligible, will forward it to the banks concerned.

6. Contact the bank with relevant documents and convince them about the potential of the project, so that they will sanction the loan and you have to deposit the beneficiary’s contribution.

7. You have to attend a mandatory EDP training (FREE) for 10 days.

8. You will get the subsidy/ margin money on the production of the training certificate at the bank. The company will keep the subsidy amount in a TDR (Term Deposit Receipt) for 3 years.

9. The subsidy will be credited to your account only after three years of the first disbursement, after ensuring the unit is still working. Still, you don’t need to pay interest on this amount from the receipt of the subsidy.

General category 15%(Urban), 25%(Rural), Special 25%(Urban), 35%(Rural)
(including SC/ ST/ OBC/ Minorities/Women, Ex-servicemen, Physically handicapped, NER, Hill and Border areas, etc.)

PMEGP in Detail

The Government of India introduced this scheme in 2008. The nodal agency of the scheme is the Khadi and Village Industries Commission (KVIC). At the State level, State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs) will implement the Scheme.

The objective of the Scheme

The main objective of the scheme is to generate employment opportunities in rural as well as urban areas of the country through the setting up of new self-employment ventures/ projects/ micro enterprises.

Eligibility Conditions of Beneficiaries:
  1. Any individual, above 18 years of age
  2. There will be no income ceiling for assistance in setting up projects under PMEGP.
  3. For setting up a project costing above Rs.10 lakh in the manufacturing sector and above Rs. 5 lahks in the business /service sector, the beneficiaries should possess at least VIII standard pass educational qualification.
  4. Assistance under the Scheme is available only for new projects sanctioned specifically under the PMEGP.
  5. Self Help Groups (including those belonging to BPL provided that they have not availed of benefits under any other Scheme) are also eligible for assistance under PMEGP.
  6. Institutions registered under Societies Registration Act,1860;
  7. Production Co-operative Societies, and Charitable Trusts.
  8. Existing Units (under PMRY, REGP or any other scheme of the Government of India or State Government) and the units that have already availed of Government Subsidy under any other scheme of the Government of India or State Government are not eligible.
Rate of Subsidy (of project cost)
  • Location of Enterprise General Category Special Category
  • Urban 15 % 25 %
  • Rural 25 % 35 %
  • Special Category – SC, ST, OBC, Women, Minorities, Ex-Servicemen, Physically challenged, NER, Hill and Boarder areas etc.
Beneficiery’s Contribution:
  • General Category- 10 %
  • Special category- 5 %
  • The maximum cost of the project/unit admissible under the manufacturing sector is Rs. 25 lakh.
  • The maximum cost of the project/unit admissible under the business/service sector is Rs. 10 lakh. Banks will provide the balance amount of the total project cost as a term loan.
Bank Finance

The Bank will sanction 90 % of the project cost in the case of the General Category of the Beneficiary /institution and 95% in the case of the special category of the beneficiary/institution, and disburse the full amount suitably for the setting up of the project.

  • The bank will finance Capital Expenditure in the form of a Term Loan and Working Capital in the form of cash credit ghostwriting.
  • Negative List of Activities
  • The following list of activities will not be permitted under PMEGP for setting up of micro-enterprises/ projects /units.
    • Any industry/ business connected with Meat(slaughtered), i.e. processing, canning and/or serving items made of it as food, production/manufacturing or sale of intoxicant items like Beedi/Pan/ Cigar/Cigarette etc., any Hotel or Dhaba or sales outlet serving liquor, preparation/producing tobacco as raw materials, tapping of toddy for sale.
    • Any industry/business connected with the cultivation of crops/plantations like Tea, Coffee, Rubber etc. sericulture (Cocoon rearing), Horticulture, and Floriculture. Value addition under these will be allowed under PMEGP
    • Any industry/business connected with Animal Husbandry like Pisciculture, Piggery, Poultry, etc.
    • Manufacturing of Polythene carry bags of less than 20 microns thickness and manufacture of carry bags or containers made of recycled plastic for storing, carrying, dispensing or ghostwriter agentur packaging of foodstuff and any other item which causes environmental problems.
About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your report.

Categories
Articles

Project Report Tool for Financial Professionals

Perfect project report tool for Chartered Accountants, Company Secretary, Tax consultants, Advocates/Attorneys.

Finline is the first online platform tool to create project reports for bank loans. With Finline professionals can create a perfect report within a very short time. The application will help create a company profile, business profile (we provide sample content), and financial projections more easily. While inputting the financial fields, the application will automatically create the profit and loss, cash flow, and balance sheet for certain years in the future. At the same time, the application will provide the financial ratios based on the financial sheets and suggest the firm’s viability in the long run.

Important ratios covered in inline report are DSCR, Current ratio, Quick ratio,Interest coverage ratio, Debt equity ratio,TOL/TNW , Return On Capital Employed, Net profit Sales Percentage, Gross profit Sales Percentage, BEP in % of installed capacity, BEP in sales.

Major sections in Finline reports are as follows

  • Project at a glance
  • Feasibility Ratio of the project
  • Project Feasibility graph
  • Introduction
  • Scope of the project
  • Promoter(s) details
  • Location, Land, Building & Utilities
  • Product/services & process
  • Raw materials / Consumables
  • Plant & machinery/equipment
  • Market Potential & Strategy
  • Manpower requirements
  • Project Cost
  • Working Capital Computation
  • Annual Sales / Revenue
  • Total Monthly Expense
  • Application of Fund
  • Means of Finance
  • Profitability Statement
  • Cash flow statement
  • Balance sheet
  • Repayment of Term loan
  • Debt Service Coverage Ratio
  • Depreciation
  • Break Even Point
  • Assumption
  • Conclusion

SEE IF THE FINLINE IS RIGHT FOR YOU

  • Pricing as low as Rs.688 / report
  • Reduce your time spent on report writing
  • Ratios and projections included automatically
  • Beautiful, dynamic reports for printing
  • Sample text contents to use
  • Save, duplicate any number of reports
START NOW

FINLINE SAVES YOUR TIME

  • Transform your business processes
  • Provide comprehensive action-based analytics
  • Maximize your ROI
  • Boost your workflow
  • Lead to Successful Technology Adoption
  • Let your business scale up at any time
VIEW A SAMPLE REPORT
Categories
Articles

MUDRA loan Scheme

Micro Units Development & Refinance Agency (MUDRA) Limited is an institution set up by the Government of India for development and refinancing activities relating to micro units. The Hon’ble Finance Minister announced MUDRA in the 2016 Budget. Under MUDRA, loans are provided under three schemes namely ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth and funding needs of the beneficiary micro unit. Micro Units and Entrepreneurs in India can avail this loan. The prime aim of the loan is to help the Micro & small enterprises in India, which are the backbone of the Indian industry. The actual name of the project is Pradhan Mantri MUDRA Yojana (PMMY). The Mudra loan extends its support for a variety of purposes, which contribute to income generation and employment creation in Manufacturing, Services, Retail, and Agri sectors. Allied Activities

What is the purpose of MUDRA?

One of the biggest bottlenecks for SMEs in India is the lack of financial support from the formal banking or financial sector. Many times the lack of formal financing hampers the growth of small businesses and makes them ineffective at competing with larger players. To remove this bottleneck and provide finance to micro units or Entrepreneurs, MUDRA Bank has been set up as a subsidiary of SIDBI. MUDRA will take responsibility for refinancing all financiers or financial institutions that participate in financing Small Businesses, Societies, Trusts, Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks, and Rural Banks involved in lending to micro or small businesses engaged in manufacturing, trading, and services activities.

L0an Schemes

The loan is currently provided under three schemes in the Pradhan Mantri MUDRA Yojana. The three schemes are as follows:

  • Shishu: Loan of up to Rs.50,000/
  • Kishor: Loans of above Rs.50,000 to Rs.5 lakhs.
  • Tarun: Loans of above Rs.5 lakhs to Rs.10 lakhs
What are the Eligibility criteria for MUDRA?

Any Indian Citizen who has a business plan for a non-farm sector income-generating activity such as manufacturing, processing, trading, or service sector and whose credit need is less than 10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY). The terms and conditions of the lender would have to be followed for availing of loans under MUDRA. The lending rates adhere to the RBI guidelines issued in this regard from time to time. As MUDRA is a refinancing institution, it does not offer loans directly. Instead, existing NBFCs, Financial Institutions, Banks, Primary Lending Institutions, etc., provide loans through MUDRA.

The target audience for MUDRA loans are millions of Proprietorship / Partnership Firms running small manufacturing unit or service sector units like shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors, and others, in rural and urban areas.

What are the Documents Needed for MUDRA loans?
  • MUDRA Loan Application
  • Project Report
  • Proof of Identity: like PAN / Drivers License / Aadhaar Card / Passport and more.
  • Residence proof like recent telephone bill/electricity bill or property tax receipt and more.
  • Applicant’s recent photograph which is less than 6 months old
  • To purchase machinery or other items, provide a quotation.
  • Name of supplier or details of machinery or prices of machinery
  • Proof of identity/address of the business like tax registration, business license, and more.
  • Proof of category like SC/ST/OBC/Minority, if applicable

It is important to note that there is no processing fee or collateral requirement for obtaining a MUDRA loan.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your project report.

Categories
Articles

Why do you really need a Project Report?

The world has changed a lot since the idea of a project report was formalized decades ago. Things move much faster now and it’s easier than ever to get a business started. So, it’s rational to think that startups don’t need project reports anymore. After all, you could just dive in and start building a business without spending much time thinking about your goals or how your business is going to work.

However tempting, starting a business without a plan is not a great idea. Why?
  • It’s not just about funding. Planning is still a critical part of starting a business, but not for the reasons you might think. Most people think that the plan is all about showing it to other people to raise money or get a loan. But, that’s not the real reason planning is so important.
  • The process is what’s valuable. Writing a project report is important because of the process you’ll go through when you put the plan together. When you plan, you discover what you need to do to start your business and what it’s going to take to be successful. Writing a plan is all about you, and clarifying your business idea for yourself and your business partners.
  • Get clear and specific about your idea. After all, before you’ll be able to explain your business idea to friends, family, and potential investors, you’ll need to be able to explain your idea to yourself. The value of writing a project report comes from going through the process, not from printing a document.
  • Reduce your risk. And, spending a little time on planning before starting your business reduces the risk that you’ll lose money and make silly mistakes. Your plan will help you discover if your business can make money and what you need to make it successful. Sure, you could jump right in and start your business without a plan, but it’s much more likely that you’ll waste time, money, and resources—unless you have a plan.

Planning guarantees that you’ll be more successful. Over the years, there have been multiple academic studies of companies that do plan and those that don’t. And, time and time again, the results show that companies that plan are more successful, more likely to get funding, and more likely to achieve their goals.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your report.