#Business Loan Calculator Loan Repayment Calculator Commercial Loan Terms Small Business Financing Business Loan Interest

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Business Loan Calculator helps you estimate monthly payments, interest costs, total repayment amounts, and amortization schedules for various loan scenarios and could secure the best terms for your business loan.

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10  Common Interview Questions and Answers for the Banking Industry

For both newcomers and seasoned professionals, banking offers a wide range of job choices. The interview process, which includes a variety of interview questions, must be passed in addition to the academic credentials and aptitude tests.

A banking position could or might not require experience, but it does require a strong interview performance.

The banking and finance sectors offer a variety of entry points for graduates from different academic disciplines, including corporate banking, customer relationship management, researchers, tax analysts, analysts, etc.

Let’s examine the top 10 banking interview questions and responses in the article that follows so that you can ace the interview.

Top 10 Banking Interview Questions and Answers are:

Question 1: Brief me about yourself?

Every interviewer starts the conversation and gets to know the candidate with this key question. Therefore, always be upbeat and start your introduction by listing your name, education, and any other pertinent details that the interviewer should be aware of. Just finish it in under two minutes to avoid having a long, dull talk.

Question 2: Why do you want to join the banking sector?

Be reasonable in your response to this question and explain how the banking industry has affected individuals by providing all the data you have available to support your claim that it is the industry with the quickest rate of expansion. Don’t begin by saying that you want a secure career or some other aspect of your life. Simply ensure that it is knowledgeable enough to form an accurate evaluation of your response.

Question 3: What are the types of accounts in a bank?

Be direct and begin your response by providing details that can address the interviewer’s query. Bank accounts come in the following varieties:

Checking Account: This account functions similarly to a savings account, however unlike a savings account, it does not accrue interest. There is no withdrawal cap when you create a checking account with a bank, which is a plus.

Money Market Account: This account offers the advantages of both checking and savings accounts. The cash can be withdrawn while still earning higher interest. There is no minimum balance required to open this kind of account.

Account with a certificate of deposit (CD): By establishing such an account, you must make a fixed deposit of funds.

Question 4: What are the necessary documents a person requires to open an account in a bank?

The Know Your Customer (KYC) regulations, which require banks to gather some personal information about account holders, are in accordance with the RBI’s advice to banks. The main documents required to open an account are identification evidence (such as an Aadhar card or Pan card) and address verification.

Question 5: What are the types of Commercial Banks?

Retail or Consuming Bank: A small to medium branch that focuses on serving individual customers rather than corporations or other banks.

Corporate banking, often known as business banking, deals with cash management, stock and bond issuance, financing, and underwriting.

Non-traditional Options: – There are numerous non-banking organisations that provide financial services comparable to those provided by banks. The organisations in question are credit card issuers, credit card businesses, and credit card reporting agencies.

Securities and Investment Banking: Investment banking oversees the management of financial asset portfolios, including those for commodities, currencies, corporate finance, fixed income, debt and equity writing, etc.

Question 6: What is the annual percentage rate (APR)?

The term “APR” stands for annual percentage rate. For using their services, such as loans, credit cards, etc., customers of the bank are subject to a fee or interest. Every year, the interest is calculated.

Question 7: What is Amortization and negative amortization?

Amortization refers to the repayment of the loan by instalment to cover principal amount with interest whereas, negative amortization is when the repayment of the loan is less than the loans accumulated interest, then negative amortization takes places.

Question 8: What is the debt to income ratio?

A loan applicant’s total monthly debt payments are divided by his gross income to get his debt to income ratio.

Question 9: What is loan grading?

Loan grading is the classification of a loan based on numerous risks and criteria, such as the likelihood of payback, the credit history of the borrower, etc. Depending on the loan’s stability and risk, the system assigns it to one to six categories.

Question 10: What do you mean by Co-Maker?

A person who signs a note to guarantee the payment of the loan on behalf of the main loan applicant’s is known as Co-maker or signer.

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What are the advantages of choosing Small Commercial Real Estate Loans?

Commercial real estate loans form the backbone of a business that wants to scale through property investment. Expanding operations, opening new branches, or securing your dream project space is all accessible through these loans. What do commercial real estate loans and small commercial real estate loansoffer? Let's find out how they can open doors for success.

What Are Commercial Real Estate Loans?

Commercial real estate loans are developed primarily to finance purchasing, development, or construction of renovations to commercial properties. Loans range between different types of properties, for instance: offices, retail centers, industrial spaces, and mixed-use buildings. Common people include business owners, investors, and other developers.

These loans offer great and competitive interest rates together with flexible repayment terms along with giving loan amounts substantial for use towards long-term growth-oriented business ventures.

Advantages of Commercial Real Estate Loans

Appreciation of Asset: Long-term property value appreciation often results from investment in commercial real estate.

Customizable Spaces: Renovate or customize spaces to suit your business needs.

Tax Benefits: Such loan-related expenses and properties can depreciate to increase tax benefits.

Diversified Income: Commercial real estate ownership allows investors to generate steady rental income.

Small Commercial Real Estate Loans

Small Commercial Real Estate Loans

For small businesses and startups, it might seem even difficult to access funding. Enter small commercial real estate loans. These loans are designed for businesses with small or low budgets projects.

 Features of small commercial real estate loans:

Amounts in lower terms compared to major investments

Application process simpler and shortens the time

Allowing people to become their first investor or even build a few small structures only

Tips to Avail Commercial Real Estate Loans

Review Your Needs: Calculate how much you will need and what kind of loan is required.

Seek Lenders: Identify those lenders that have a lot of experience in providing commercial real estate financing.

Preparation: Good credit score, business plan, and financial statements.

Comparison of Terms: Interest rates, repayment terms, and other conditions of the loan.

Ready to move forward? Discover your options now and secure funding to unleash your potential!

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ANZ Car and Equipment Finance For Small Businesses

From dental equipment for a private practice to dump trucks and earthmoving machinery for construction, having the right assets is vital for business success. However, specialised equipment is expensive and can put a dent in cash reserves.

ANZ’s flexible finance solutions can help with this. They provide a full funding solution to acquire asset purchases, with repayments structured around periods of higher cash flow to help manage cyclical cashflow.

ANZ’s Rapid Replacement process

ANZ’s Rapid Replacement process lets clients borrow to purchase equipment and vehicles for their business. This is a great option for businesses that need to upgrade or replace their equipment but don’t have the cash on hand. This product offers a competitive interest rate and allows businesses to pay off their loan with a flexible payment schedule.

This process is available for secured and unsecured loans. It also includes a streamlined application process that simplifies the approval process. This saves businesses time and effort, while reducing stress. ANZ also offers an online calculator that helps to calculate loan repayments.

ANZ’s simplified application process makes it easier for small business owners to apply for a business loan. It allows businesses to provide a minimum of 12 months of business bank statements and self-declare their financial position. ANZ can then assess the client’s ability to repay the loan and approve it quickly. This is in contrast to other lenders who require detailed personal information and BAS statements.

ANZ’s Business Banking Specialists

ANZ Business Banking Specialists proactively build and grow relationships with small businesses and provide solutions to meet their needs. They offer a range of products and services, including ANZ E*Trade, online banking, international transactions, credit cards, and loans. These specialists also collaborate with colleagues to help clients.

Whether you need a new car or equipment for your company, there are many benefits of investing in asset finance. With low interest rates and a flexible repayment structure, you can afford to pay for your asset over a term that suits your budget. You can also use this form of financing to buy a boat or caravan for your personal use.

ANZ is an award-winning bank in Australia and New Zealand. Its branch network and call centres are extensive. It is a leading provider of financial and banking services for consumers, small businesses, corporates, and governments. It has earned Canstar’s Bank of the Year | Small Business award for five consecutive years.

ANZ’s Online Application

ANZ’s online application is easy to use. It lets you manage your finances at any time, including setting up direct debits, making payments to suppliers and employees, and importing transaction files from most accounting software packages. You can also access detailed domestic, foreign currency and credit card account information. It also features payee templates and bulk payment options, as well as built in audit history.

ANZ has been around for more than half a century, and it is one of Australia’s most established financial services companies. Its core values include showing care for everyone, exploring innovative work styles, using data to improve, and actively welcoming feedback.

ANZ offers personal and business banking solutions, as well as insurance products. The company also provides corporate finance and investment management, and operates a network of over 400 branches across Australia and New Zealand. ANZ also has a presence in Asia through investments in Malaysia’s AMMB Holdings, China’s Shanghai Rural Commercial Bank and Vietnam’s Saigon Securities Incorporation.

ANZ’s Mobile App

ANZ offers a wide range of personal banking and financial services including bank accounts, home loans, credit cards, wealth management services, insurance, and more. In addition to ANZ’s traditional banking products, it also offers mobile applications for its customers.

The ANZ App includes a number of useful features, such as the ability to make payments using PayID and to schedule future or recurring payments. It can also be used to view account statements and personalised insights. Customers can also use the ANZ App to track their spending with ‘Money Tiles’ and to save money with multiple savings goals.

The ANZ App is designed to be accessible for people with disabilities. For example, it can be downloaded to an iPad and customised to include larger text and voice-activated ‘OK to pay’ functionality. The ANZ App is available for download from the Apple App Store and Google Play. It is free to download but terms and conditions apply.

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Loan Against Property for Business Expansion: Is It Worth It?

Expanding a business is an exciting yet challenging venture that often requires substantial capital. One financing option that many business owners consider is a business loan against property. But is this the right move for your business? In this blog, we'll explore the ins and outs of taking a loan against property for business expansion and help you determine if it's worth it.

What is a Loan Against Property?

A loan against property (LAP) is a secured loan where you pledge your residential or commercial property as collateral to the lender. The loan amount sanctioned is usually a percentage of the property's market value. This type of loan is popular among business owners due to its lower interest rates compared to unsecured loans and the ability to access significant funds.

Advantages of a Business Loan Against Property

1. Lower Interest Rates

One of the most significant advantages of a business loan against property is the lower interest rates. Since the loan is secured with your property, lenders perceive it as less risky, allowing them to offer more competitive rates compared to unsecured loans.

2. Higher Loan Amount

A loan against property allows you to borrow a substantial amount, typically up to 60-70% of the property's market value. This can be particularly beneficial for large-scale business expansions, such as opening new locations, purchasing high-value equipment, or funding extensive marketing campaigns.

3. Flexible Repayment Tenure

Lenders usually offer flexible repayment tenures for loans against property, ranging from 5 to 15 years. This extended period allows you to manage your cash flow better and repay the loan comfortably without straining your business finances.

4. Continued Ownership of Property

Unlike selling property to raise funds, a loan against property allows you to retain ownership and continue using it. This is particularly beneficial if the property generates rental income or is essential for your business operations.

Disadvantages of a Business Loan Against Property

1. Risk of Losing Property

The most significant risk associated with a loan against property is the possibility of losing your property if you default on the loan. This could be a severe blow to your business and personal finances, especially if the property holds substantial value.

2. Longer Processing Time

Secured loans, including loans against property, typically involve a more extended approval process compared to unsecured loans. This is due to the need for property valuation and thorough documentation. If you need funds urgently, this might not be the most suitable option.

3. Higher Processing Fees and Charges

While interest rates are lower, the processing fees, legal charges, and valuation fees associated with a loan against property can be higher. These additional costs should be considered when calculating the total expense of the loan.

Is a Business Loan Against Property Worth It?

Deciding whether a business loan against property is worth it depends on various factors, including your business's financial health, the purpose of the expansion, and your risk tolerance.

When It's Worth It:

Stable Revenue: If your business has stable and predictable revenue, the risk of defaulting on the loan is lower, making it a viable option.

Significant Capital Requirement: For large-scale expansions requiring substantial capital, a loan against property can provide the necessary funds at a lower interest rate.

Long-Term Investments: If the expansion is a long-term investment expected to generate significant returns over time, the extended repayment tenure can be advantageous.

When It's Not Worth It:

Uncertain Cash Flow: If your business's cash flow is unpredictable, the risk of default increases, making this a risky option.

Small-Scale Needs: For smaller capital needs, other financing options like business credit lines or unsecured loans might be more appropriate and less risky.

Urgent Funding Needs: If you require immediate funds, the longer processing time for a loan against property might not meet your needs.

Conclusion

A business loan against property can be an excellent financing option for business expansion, offering lower interest rates and higher loan amounts. However, it's crucial to weigh the benefits against the risks and consider your business's unique circumstances. By thoroughly evaluating your needs and financial stability, you can make an informed decision that supports your business growth while safeguarding your assets.

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The Complete Guide to Financing Commercial Trucks for Sale

Financing is a crucial aspect of purchasing commercial trucks that can significantly impact your business's bottom line. 

Whether you're expanding your fleet or starting a new venture, understanding the intricacies of truck financing is essential for making informed decisions and securing the best possible terms. 

This comprehensive guide will walk you through everything you need to know about financing commercial trucks for sale NZ, from types of financing options to tips for getting approved and managing your financial obligations.

Types of Financing Options for Commercial Trucks

Commercial truck financing offers several options tailored to the needs of businesses. Here are the primary types:

Traditional Bank Loans: Banks offer loans specifically designed for purchasing commercial trucks. These loans typically have fixed or variable interest rates and require a down payment. They are suitable for businesses with solid credit histories and stable financials.

Dealership Financing: Many truck dealerships provide financing options directly to buyers. These may include leasing arrangements, instalment loans, or balloon payment plans. Dealership financing can be convenient, especially for businesses purchasing trucks for sale NZ from the same dealer.

Equipment Financing: This option involves using the truck as collateral for the loan. Equipment financing is accessible to businesses with varying credit profiles and may offer flexible terms and repayment schedules.

SBA Loans: Small Business Administration (SBA) loans provide government-backed financing options for small businesses, including those looking to purchase commercial trucks. SBA loans often have competitive interest rates and longer repayment terms.

Steps to Secure Financing for Commercial Trucks

Step 1: Assess Your Financial Position

Before applying for financing, evaluate your business's financial health. Review your credit score, cash flow projections, and existing debt obligations. Lenders will assess your financial stability to determine your creditworthiness.

Step 2: Determine Your Budget and Financing Needs

Calculate how much you can afford to spend on a commercial truck. Consider factors such as monthly payments, operating costs, and potential revenue generation from the truck. Determine whether you need financing to cover the entire cost or if you can make a down payment.

Step 3: Gather Necessary Documentation

Prepare documentation lenders require, such as financial statements, tax returns, business plans, and proof of identity. Having these documents ready can streamline the application process and increase your chances of approval.

Step 4: Shop Around for Financing Options

Research and compare financing options from multiple lenders, including banks, credit unions, and dealership financing. Evaluate interest rates, repayment terms, fees, and eligibility criteria to find the best fit for your business's needs.

Step 5: Apply for Financing

Submit your application for commercial truck financing with your chosen lender. The lender will conduct a thorough review of your application, including credit checks and assessments of your business's financial viability.

Step 6: Negotiate Terms and Conditions

Once you receive financing offers, carefully review and compare the terms and conditions. Negotiate with lenders to secure favourable interest rates, repayment schedules, and additional benefits or incentives.

Tips for Getting Approved for Commercial Truck Financing

Improve Your Credit Score: Maintain a good credit score by paying bills on time and reducing outstanding debts.

Increase Down Payment: Offering a larger down payment can lower your loan-to-value ratio and improve your chances of approval.

Provide Collateral: If possible, offer additional collateral to secure the loan and demonstrate commitment to repayment.

Prepare a Solid Business Plan: Outline your business's goals, market analysis, and financial projections to reassure lenders of your business's viability.

Conclusion

Financing commercial trucks for sale NZ requires careful planning and understanding of your business's financial needs and capabilities. 

By exploring different financing options, preparing necessary documentation, and negotiating favourable terms, you can secure financing that supports your business's growth and success. 

Remember to assess your financial position, seek competitive offers, and manage your financial obligations responsibly to maximise the benefits of owning commercial trucks for your business operations.

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8 Pitfalls of Ignoring Property Loan Interest Rates in Singapore

Ignoring property loan interest rates in Singapore can have significant financial consequences, particularly for those taking out a commercial property loan. Understanding and monitoring these interest rates is crucial for making informed decisions. 

Highlighted here are the key pitfalls of neglecting property loan interest rates so you can avoid these common mistakes.

Increased Financial Burden

The most immediate and obvious pitfall of ignoring property loan interest rates is the potential for a substantial increase in the financial burden. When interest rates rise, the cost of borrowing increases, leading to higher monthly payments. For commercial property loans, this can significantly affect cash flow and profitability. Businesses may find themselves struggling to meet higher repayment amounts, which could strain their financial resources and hinder growth.

Misjudging Affordability

Ignoring current interest rates can lead to misjudging the affordability of a property loan. Borrowers who do not factor in potential rate hikes may overestimate their ability to afford a loan. This can result in financial over-commitment and the risk of default. It is essential to calculate the total cost of the loan, considering various interest rate scenarios, to ensure that the property remains affordable under different market conditions.

Impact on Investment Returns

Property loan interest rates directly impact the returns on property investments. Higher interest rates increase the cost of financing, which can reduce the overall return on investment (ROI). For commercial property loans, this is particularly significant as higher financing costs can diminish the profitability of rental income or resale value. Investors must stay informed about interest rate trends to make strategic decisions that maximise their returns.

Limited Refinancing Options

Failing to keep an eye on property loan interest rates can also limit refinancing options. Refinancing a loan at a lower interest rate can provide significant savings over the loan term. However, if a borrower is unaware of market rate changes, they may miss the opportunity to refinance at more favourable terms. Regularly monitoring interest rates allows borrowers to act swiftly when beneficial refinancing opportunities arise.

Underestimating Long-Term Costs

Property loan interest rates affect the long-term cost of borrowing. Ignoring these rates can lead to underestimating the total amount paid over the life of the loan. Even a small difference in interest rates can translate into thousands of dollars in additional costs. For commercial property loans, this can impact long-term financial planning and the overall viability of the investment. Careful consideration of interest rates helps borrowers plan for the true cost of their loans.

Stress on Business Operations

Commercial property loans typically involve larger sums of money and longer repayment terms than residential loans. Ignoring property loan interest rates in Singapore can place undue stress on business operations. Higher interest rates can divert funds from other essential business activities, such as expansion, marketing, or research and development. This diversion can stifle business growth and reduce competitive advantage. Maintaining awareness of interest rate trends helps businesses manage their finances more effectively and ensures operational stability.

Increased Risk of Default

One of the most severe consequences of ignoring property loan interest rates is the increased risk of default. Higher interest rates can lead to unaffordable monthly payments, pushing borrowers into financial distress. This is particularly critical for commercial property loans, where default can have far-reaching implications, including legal actions and loss of the property. Staying informed about interest rate changes allows borrowers to proactively manage their loans and avoid default situations.

Missed Opportunities for Rate Locks

Lenders often offer rate lock options, allowing borrowers to secure a fixed interest rate for a specified period. Ignoring property loan interest rates can result in missed opportunities to lock in favourable rates. This is especially important in a rising interest rate environment. By monitoring rate trends, borrowers can take advantage of rate lock offers to secure lower rates, providing financial predictability and potentially saving significant amounts over the loan term.

In conclusion, ignoring property loan interest rates in Singapore can lead to numerous financial pitfalls, including increased financial burden, misjudging affordability, reduced investment returns, limited refinancing options, underestimating long-term costs, stress on business operations, increased risk of default, and missed opportunities for rate locks. For those with commercial property loans, staying informed about interest rates is crucial for managing financial health and optimising investment outcomes. Proactive monitoring and strategic decision-making can help mitigate these risks and ensure more favourable loan conditions. Contact RHB Bank for expert advice and tailored solutions to navigate the complexities of property loan interest rates and secure the best possible financing options for your needs.

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Unlocking Financial Success with Small Business Lending Calculators

It’s no secret that the process of acquiring financing for a small business can be overwhelming and intimidating. To make sure you are making the best decisions for your business, it’s important to understand what options are available to you and how much you can borrow. Thankfully, with the help of online lending calculators, small business owners can access the information they need to make informed decisions about their financial future.

Commercial Real Estate Loan Calculator

A commercial loan calculator is an essential tool for any business owner looking to secure a loan. By entering in simple data such as loan amount, interest rate, and repayment terms, businesses can get an estimate of their monthly payments and total cost of the loan, amortization table along with visualizing data. Businesses should also keep in mind that these calculators use estimated interest rates, which may not accurately reflect the actual cost of the loan after fees and other costs are factored in.

Heavy Equipment Financing Calculator

An equipment loan calculator is specifically designed for businesses looking to purchase expensive equipment or industrial machinery. This type of calculator takes into account factors such as depreciation and residual value to determine how much a business should expect to pay each month for the life of the loan along with total cost and depreciation methods. In addition, businesses should keep in mind that some lenders offer discounts on interest rates depending on how long the equipment is expected to last.

SBA 7a Loan Calculator

The Small Business Administration (SBA) offers loans specifically designed for small businesses. The SBA loan calculator helps businesses determine if they qualify for an SBA loan and how much they would be able to borrow based on their credit score, industry experience, and other factors. It’s important to note that while this type of calculator is helpful in understanding potential costs associated with an SBA loan, it does not guarantee approval or provide advice on whether an SBA loan is right for your business.  SBA 7a loan calculator will provide detailed breakdown on the loan financings.

Receivables Factoring Calculator

Factoring is a form of financing offered by third-party companies who purchase unpaid invoices from businesses at a discounted rate. A factoring calculator helps businesses understand how much money they will receive upfront from selling their invoices as well as how much money they will eventually receive once all invoices have been paid off. It’s important to note that factoring rates vary depending on several factors including creditworthiness and invoice size so it’s important to shop around before committing to any particular lender or deal structure. 

Whether you are looking for a commercial loan or a factoring solution, online lending calculators can help small business owners make informed decisions about their finances. By entering simple data into these calculators, small businesses can quickly get an accurate estimate of what they can expect in terms of monthly payments and overall cost when taking out any type of financing solution. With this knowledge in hand, small businesses can feel confident knowing that they are making sound financial decisions when it comes time to finance their next endeavor!

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Loans Guide

Many people are confused by the several types of loans available. Listed here is a helpful loans guide of the most common loans available today.

Bad Credit Personal Loan

A Bad Credit Personal Loan is just a loan created for the many people who have a negative credit rating. However created, your past record of County Court Judgements, mortgage and other loan arrears can go on to deny you usage of finance that other people regard as normal. If you should be a house owner with equity in your property, a Bad Credit Personal Loan would bring that normality back once again to your life. Secured on your property, a Bad Credit Personal Loan can provide you with the freedom, like, to do the house improvements or buy the brand new car you truly wanted. With a Bad Credit Personal Loan you are able to borrow from £5,000 to £75,000 and up to 125% of your property value in a few cases.

Business Loan

A company loan like ok忠訓 is designed for a wide selection of small, medium and startup business needs such as the purchase, refinance, expansion of a company, development loans or any kind of commercial investment. Business loans are often available from £50,000 to £1,000,000 at highly competitive interest rates from leading commercial loan lenders. They could offer up to 79% LTV (Loan to Valuation) with variable rates, according to status and amount of term.

They're normally offered on Freehold and long Leasehold properties with Bricks and Mortar valuations required. Legal and valuation fees are payable by the client. A company loan may be secured by all forms of UK business property, commercial and residential properties.

Cash Loan

Cash Loans also called Payday Loans are arranged for individuals in employment who find themselves in a predicament where they are in short supply of immediate funds.

A Cash Loan can assist you in this case with short term loans of between £80 and £400.

Loans are repayable on your following payday, though it is possible to renew your loan until subsequent paydays. To utilize for a Cash Loan you need to maintain employment and have a bank-account with a cheque book. An undesirable credit rating or debt history is initially not just a problem.

Debt Consolidation Loan

Debt consolidation loans can give you a fresh start, enabling you to consolidate all your loans into one - giving you one easy to handle payment, and in most cases, at a lowered rate of interest.

Secured on your property debt consolidation loans can sweep away the pile of repayments to your credit and store cards, HP, loans and replace them with one, low cost, monthly payment - one calculated to be well within your means. With a Debt Consolidation Loan you are able to borrow from £5,000 to £75,000 and up to 125% of your property value in a few cases. It can reduce BOTH your interest costs AND your monthly repayments, putting you back control of your life.

Home Loan

A Home Loan is just a loan secured in your home. You can unlock the value tangled up in your property with a secured Home loan.

The loan may be used for any purpose, and can be acquired to anybody who owns their home. Home loans may be used for any purpose such as, home improvements, new car, luxury holiday, pay of store card or charge card debt and debt consolidation. With a Home Loan you are able to borrow from £5,000 to £75,000.

Student Loan

A student loan is way of borrowing money to help with the cost of your higher education. Applications are made through your Local Education Authority. A student loan is just a way of receiving money to help together with your living costs when you're in higher education. You begin paying back the loan once you have finished studying, provided your income has reached a specific level.

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How a Small Business Loans in Canada is best option for your business?

When considering a small business loan in Canada, there are several things you should keep in mind. First, you need to decide if the loan is secured or unsecured. The latter is the most common choice. The reason for this is that the SBA guarantees up to 85% of the loan amount. Second, you need to understand how small business loans in Canada work. A small business loan in Canada may be the best option for your business.

Misconceptions about small business loans in Canada

When it comes to obtaining financing for your small business, you may have heard many misconceptions about small business loans in Canada. Traditional banks are notorious for not properly explaining how different types of financing work or how they calculate business credit. The truth is that there are many different types of financing for small businesses, and you should always consult with a lender before applying for a loan. You should also be aware of the different types of terms, conditions, and fees involved with applying for a small business loan.

Ways to get a small business loan in Canada

There are many different ways to get a small business loan in Canada. There are traditional banks, credit unions, and online lenders. Credit unions have a lower interest rate than banks, so they may be able to offer you a better loan than a traditional bank. You will also have more flexibility when it comes to repayment terms and the amount of your loan. If you have a good credit score, you should consider using a credit union for your loan.

SBA guarantees up to 85% of a loan amount

The SBA is the government agency that guarantees up to 85% of a small-business loan. The agency charges lenders guarantee fees based on the amount of the loan. These fees are typically financed into the total loan amount. The SBA also charges various other fees. By understanding these fees, you can anticipate how much you can expect to pay for your loan. To get the most out of your loan, you should review all terms and conditions carefully and contact your bank for more information.

Common lenders for small business loans in Canada

In Canada, most small business owners turn to their local bank for their financing needs. This bank offers a range of business credit products, including term loans and variable-rate commercial mortgages. Small business owners can also apply for a government-guaranteed loan program. The BMO also offers many other lending products and services. While this bank isn't the most innovative lender, it does offer a wide variety of options for small businesses.

Requirements for getting a small business loan in Canada

Getting a small business loan in Canada is an important step in starting a business. While you can apply with any traditional bank, there are some requirements that you must meet to qualify. First, you must have a business plan in place. This plan should outline your business objectives and projected cash flow. You can also apply with an online lender, but they will usually have higher interest rates. Be sure to research your options before you apply.

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In business parlance, assets can be divided into two major classes of tangible and intangible resources. Where tangible resources are constitutive of buildings, machines, and equipment, intangible resources are creations of the mind, which include inventions, literary, artistic, and musical works, labels, designs and symbols, and other goods or services of the like nature. In the present times, businesses significantly derive value from intangible resources since they are easy to transfer and hold substantial worth. Even though the ratio of intangible assets against tangible assets is witnessing a sharp rise, the idea of using Intellectual Property (IP) assets for debt funding is yet to take its best shape.

Understanding IP-Backed Financing

IP- backed financing is a term used in connection to the use of IP assets to enable access to credit. This subject has gained relevance amongst all sectors and all sizes of business operations alike since it allows leveraging the IP assets held by an entity in exchange for financing. Even banking and lending institutions have started to consider IP assets as collateral while extending any financial aid instead of conventional assets like land, jewelry, equipment, and machine.

The benefit of collateralizing IP is that it increases the amount of available credit. Since IP has the capability of multiplying the value held originally, it also raises the potential of a successful loan. Therefore, some banks utilize IP assets as a medium of credit enhancement. One sector where such financing is prudent is biotechnology since it strives on capital and largely depends on valuations. Such financing may come to one’s rescue in instances where a company’s assets are performing well, and such a financing strategy would attract funds easily. It may also be helpful in instances where the asset has failed to perform in its trials. Therefore, it is completely dependent on the strategy and goals of an entity upon which the route of such deployment is chosen.

Modes of Collateralization

There are different ways of pursuing collateralization of IP assets, some of which were highlighted in Enquiries into Intellectual Property’s Economic Impact published by the Organization for Economic Cooperation and Development (OECD) and are mentioned below:

Securitization:  The process of securitization can be followed up where the IP asset has substantial value and is capable of adequate returns. To initiate securitization, the originator (owner of the IP assets) has to place its assets or the rights to its future revenues (royalties) in a special purpose vehicle or a trust, which then issues securities in the capital market. It helps generate more value since there is no actual transfer of the IP. The investors buy these asset-backed securities, and there is a rate of interest that accrues to the investor, which is how it helps to raise funds.

Direct Collateral: This is the easiest way of turning an IP asset into collateral. This mode enables an IP asset to be directly pledged in the form of collateral to secure a loan agreement. Therefore, where the asset holder fails to repay the loan within the stipulated time or turns insolvent, leading to defaults in payment, the lending authority can either seize the goods or utilize them in a manner to make good of such a loss. The IP asset can be licensed or utilized in any manner as may be provided for in the terms and conditions upon which a loan agreement was agreed to originally.

Sale and Leaseback: Such a transaction enables the rights holder to sells its IP asset to a rather specialized investor or any other lender instead of immediate funding on a conditional basis. The condition allows the IP asset’s owner to be licensed, in return for which it pays some specific stipulated amount of royalty to the buyer for a fixed period. Once the stipulated term of royalty payments is completed without any default in payments, the original rights holder of the IP asset has the option to buy the asset back at an already decided price.

Initiatives Taken by Different CountriesCountryPlan/InitiativeSingaporeThe IP Financing Scheme (‘IPFS’) was a scheme launched by the IP Office of Singapore to increase the access to IP-backed financing to nurture IP-rich companies by enabling them to obtain loans from Participating Financing Institutions.ChinaThe China National Intellectual Property Administration is an organization responsible for the management and coordination of IP assets. This authority acts as the central registry of IP-backed financing pledges.KoreaThe Korean government supports many programs for the development of Intellectual Property Rights (IPRs), their protection, and financing. It also runs risk-sharing programs and IP commercial insurance programs.MalaysiaThe government has an IP Financing Scheme, which helps and encourages Small and Medium Enterprises (SMEs) in utilizing the IP assets as collateral.Hurdles in IP-Based Financing

As has been observed, the financing of IP assets is much in vogue in many countries like the United Kingdom and the United States. However, it is still underused in other countries. The barriers to such financing are mentioned below, which can be mitigated through new business practices or policies.

IP Assets may be Difficult to Re-Deploy: Where an entity holds a set of complementary assets to a particular piece of IP, the value of its core IP is contingent on each other. Therefore, it may be financially distressing to dispose-off a single IP in isolation as it may imply the decline of its actual value.

IP Exit Markets are Usually Immature: It has been observed that the secondary market for IP assets is underdeveloped to procure a quick and low-cost resale of such assets for the creditor who needs to realize a value from it. It is majorly due to the unawareness of lending institutions and banks in understanding the risks involved in securing an IP asset or how best its outcomes could be realized.

The Transaction Cost for IP Assets as Collateral is High: Where an institution agrees to lend any credit instead of an IP asset, the transaction cost is high due to difficulty asserting the entity’s creditworthiness based on distinct asymmetric information. There is a cost of conducting a risk assessment as well.

Unawareness of Lending Institutions in Contemplating IP Assets: This is especially true for banks as they do not have a well-developed plan or procedure to streamline the assessment of an IP asset. There has to be a proper framework to assess whether a particular asset can qualify as requisite security and whether or not it is capable of raising capital adequately in the event of failure of the lender to perform its part of the obligations.

The Merits and Demerits of IP-Backed FinancingMerits of IP-Backed FinancingDemerits of IP-Backed FinancingIt is an improved form of security if the potential is well realized. Therefore, in the event where a debtor fails to repay the loan, the bank is in a much stronger position to make good of the loss.A major issue lies in the fact that IP generated by the company is very seldom represented on the balance sheet, as a result of which the directors may find it difficult to explain the actual potential of the IP assets.IP assets have good value, and with time, their appreciation usually increases. Sometimes the value may increase more than a tangible asset.Tangible assets have subsequent disposable value. However, the resale market for intangible assets is instead less formalized since they offer less certainty.IP assets once pledged act as a powerful incentive for debtors to honor the repayment of their debts, especially in the case where IP assets are of core value to their business activity.There is always a risk of valuation depending on market needs and the ratio of demand and supply. The same may be affected by the performance of one’s assets or the introduction of a competitor’s asset in the market.Instead of undertaking Personal Guarantees (PGs), IP assets are more useful as they act as an additional source of security other than tangible assets.Since IP assets carry some know-how or trade secret applicable or surrounding an IP asset that is not subject to disclosure, it may result in a substantial loss while calculating the actual value of the intangible asset.Conclusion

IP assets can be considered valuable tools for pursuing financing activities. Such financing is yet to gain full and functional momentum since there is a lack of infrastructure for financing activities and valuation techniques to facilitate such transactions, especially in the realm of IPRs. For proceeding further in such aspect, it is requisite to create transparency in the market to establish strong relationships between corporate entities with well-curated IP portfolios and other lending authorities to further the cause of IP-backed financing and utilize the same to the best possible extent. ✅ For more visit: https://www.kashishipr.com/

[jencrafterblog]

Business Loans: Things you should consider before applying for a business loan

Introduction

A loan is an amount borrowed with the promise to pay off on the monthly basis along with a particular amount of interest. A loan that's specifically applied for business purposes is a business loan. When business owners find themselves unable to pay off expenses using their available resources, they require financial assistance and approach lenders for the same.

A loan creates a debt for the borrower. Any business has a lot of loan options to settle on from. Normally, funds are raised from members of family and shut friends circle by most of the people but many chose to use for bank loans, business cash advances, equipment financing, invoice financing, working capital loan, loan against property, credit cards, etc.

Traditionally, banks are the foremost widely preferred source of business finance. However, securing a loan from a bank requires the execution of the many procedural formalities.

A business loan are often obtained for various sorts of reasons like paying basic operating expenses, purchasing land, paying salaries, updating machinery, meeting working capital requirements, purchasing new machinery, purchasing new assets, etc.

A borrower is obliged to know terms and conditions before applying for business loans, which, among many others, include the tenure of repayment, the interest charged, and therefore the collateral offered by the borrower on the business loan procured. It's expected from a borrower to understand how business loans work. Just in case of any doubt, clear communication between a lender and borrower is important, during this regard to avoid future complications.

A lender always needs collateral just in case a business isn't ready to pay the timely repayment. A lender makes sure that the interest is charged on loans because the price paid for borrowing the money. Interest is either fixed or variable. A fixed interest remains fixed throughout the tenure of repayment. A variable rate of interest fluctuates and depends upon many factors.

There are many types of business loans. Term loan, for instance, may be a quite common kind and may be secured or unsecured. It’s taken for a selected purpose, say, capital expenditure. During this kind, the lender approves the payment amount. The tenure of secured loans is different from unsecured loans.

Whereas, a working capital loan may be a small business loan taken to hide shortages of day-to-day expenses. The shortage of off-season is roofed with the help of a working capital loan. At times, there's an excess demand from customers during peak seasons, which may be met using working capital loans and is usually applied by manufacturers, retailers, wholesalers, import-export businesses, etc.

A business loan are often obtained by mortgaging the litigation-free residential property or commercial property to obtain funds. Lender ensures that such property is free from any encumbrance. This is often the type of loan typically applied for if the loan amount exceeding Rs.50 Lacs. The tenure for such loans is between 15-20 years.

An overdraft facility is sanctioned after taking into consideration the credit history of the borrower, business cash flow, repayment history, and overall relationship history with the financial organization. Here buyer pays interest only on the amount utilized and withdraw the amount only to the extent required. The funds are utilized in this manner as long because the principal amount including an interest is repaid timely.

The government of India has come up with various initiatives to encourage women in starting small to medium-sized businesses. To uplift women, a reduction on the standard interest rates is obtainable on a flexible loan amount. Procuring loans is faster due to the faster loan process.

Business credit cards are very useful for procuring funds on an instant basis. A business owner requires fast cash and needs to earn rewards on the payments done for the debt, then a business credit card is an appropriate choice to use.

Facts a Borrower Must Know before applying for a business loan

1. Know your purpose

Every business is goal-oriented. Goals are often short-term and long-term. They must align with the vision of the corporate. The management can take strategic or tactical decisions based on the situation, which can confirm that the business goes within the right direction.

There are various purposes that a business loan could also be availed which inter alia include, starting a replacement business, expansion of existing one, hiring more staff, buying more inventory and raw materials, incurring the value of advertising, to extend the efficiency through updating, etc.

It’s very crucial to ‘Know your why’. The business loan application must be made as long as it's getting to help the business grow. It's the right of the lender to understand the rationale for the business loan application.

2. Determine the Business Loan help

The second step is to work out the entire amount of business loans required. Knowing what proportion money the business is falling in need of, helps to apply for a business loan accordingly. Borrowing in excess puts a burden on the borrower. Borrowing less than needed will compel the borrower to arrange funds from other sources.

The skill here is to calculate the precise amount of monetary assistance needed. A borrower may overestimate or underestimate. The wise thing to do is to make a business loan application for a bit higher amount than required to satisfy unseen, unpredicted, or contingent expenses which will incur.

It’s prudent to not take an excessive amount of risk. The simplest way to do it is to arrange for less business loan amount, therefore the burden of paying huge interest are often reduced.

3. Shortlist Your Options for Applying for a Loan

Presently, there are numerous options available from where business loans are often availed. While some choose to seek assistance from their family or friends, the most common way is to approach Banks. 

4. Financial track record

Maintaining books of accounts is a necessity. These include Balance sheets, Profits, and Loss Account, Cash flow statements, Audit reports, and any other prescribed. The lender wants to ensure the timely repayment of the loan and may ask for current business performance, in case the collateral is not provided.

Read more…

[wisebuyinvestment]

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Wisebuy Investment Group is a commercial finance Newcastle which always put their clients at priority and helps them based on their terms and conditions. Our Team is highly qualified and expert in guiding you professionally for various types of loans like home loans, Business Loan Calculator, car loans, regular loans, and any more. We will provide you highly professional advice and solutions as per your requirement for your perfect finance investments. 

Everyone deserves to experience their dream life by living in their own dreamed house and riding in a luxurious car. For this you just need to contact us – Our portfolio of loans will help you in buying your dreams, no matter what the situation you are facing. 

You just need to develop interests and dream-rest is our responsibility. We are assuring that you will get unbiased finance options at all times. No head-ache of bulky paper-work, no more filling of forms and documents. Everything is our responsibility. Our service stays continued to make sure the product is meeting your needs properly even when you receive funds or loans for your purchase.

Additionally, for more convenience, we do not charge any extra cost or hidden costs. Personal Loan Broker Newcastle of Wise Buy Investment is one of the cheapest methods for financing loans. 

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Our experienced and licensed brokers at Wise Buy Investment Group in Newcastle can help you to get a loan. 

As the Australian Market is highly competitive and there are several lenders and services are available in the market. You need to research a lot for a better deal after-all Even a small difference in the rates of home loan can make a BIG difference to your repayments and amount of interest you’ll pay over the life of your loan.

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[electronica-finance-ltd]

Why is Working Capital important for Small Businesses?

Working capital is the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Need of Working Capital Management:

Efficient working capital management is an important component of sustainable growth. If a company runs out of money for running its day-to-day expenses, the production of wares and services will eventually stop. In such instance, the business will fail to cater to its existing customers and henceforth fail to acquire new ones as well. To restart production, the company will then tap into the company capital. While this step may offer a temporary respite, it will affect long-term stability by jeopardising asset and equipment acquisition and maintenance. Therefore, it is important to have a working capital management system in place, which can realistically assess the company’s working capital requirements, hence giving the managers and business owners enough time to come up with a solution.

Why is working capital so critical for any business?

The main reasons for working capital being so important are:

Enhances solvency: Working capital helps to meet short-term expenses, including purchasing raw materials, payment of salaries and meeting overhead expenses. Some of these payments cannot be delayed. Having sufficient liquidity helps the uninterrupted flow of production; thus, maintaining the solvency of a business.

Increased goodwill: When a business is able to promptly meet its regular expenses and pay salaries on time, it generates goodwill, not just internally with employees but also with suppliers and distributors.

Uninterrupted supply of raw materials: Quick payments ensure regular supply of raw materials. The inability to pay suppliers can result in production coming to a standstill.

Improved ability to face any crisis: Apart from the smooth functioning of business operations, working capital ensures that any financial emergency can be handled with ease. A business that has sufficient liquidity can cushion itself against unforeseen situations. Thus, the financing of working capital defines the financial health of a business and how smoothly it can operate under different circumstances.

Issues faced by MSMEs regarding working capital:

MSME is a strong contributor to the Indian economy but at the same time these enterprises or small business still faces challenges in accessing working capital.

A recent report by RBI says that the MSME sector has witnessed two major shocks – demonetisation and introduction of goods and services tax (GST). The introduction of GST led to increase in compliance costs and other operating costs for MSMEs as most of them were brought into the tax net. The MSME sector, however faces operational problems due to its size and nature of business, and is, therefore, relatively more susceptible to various shocks to the economy.

It is partly due to weak credit worthiness of micro and small enterprises in the country. Due to their weak economic base, they find it difficult to take financial assistance from the commercial banks and financial institutions. They are generally the last in the value chain to be paid.

MSMEs have no legal fall back for recovering dues as their reserve is completely invested. They depend on the working capital for any other expenses which can also cause balance sheet mismanagement as the statutory dues remain pending. This can affect the company’s CIBIL score.

Why is working capital loan an effective solution?

It is essential to remember that cash is king. It means that money (cash) is more valuable than any other form of investment tool. Assets and liabilities management is one of the most important things for business owners. Small businesses particularly should drive a perfect balance between the assets and liabilities to effectively carry on their daily operations, as they don’t have the capital to take up large losses. Appropriate working capital management is required to avoid any bankruptcy.

To avoid working capital scarcity, it is important to also not divert working capital money for machine or asset purchase, as it gets fixated there.

Insufficient working capital points to red flags in the company’s operations. When you need to find working capital for your business, a good way to give yourself extra support to meet your obligations is a working capital loan. Working capital loans are loans used specifically to finance the everyday operations of a business.

The cash that you don’t have to cover your short-term obligations can be compensated with a working capital loan. These loans are designed to pay for short-term expenses and are generally quickly approved. These loans can be exactly what a business needs to get a handle on covering operational expenses and making smart investments in the business in the near term.

Non-banking financial institutions are leading the race when it comes to working capital loans and financing. There is a simple reason for this, NBFCs have developed products and services which cater exclusively to the needs of small businesses; meaning, it is easier than ever to apply for a business loan, the verification process is quick and hassle-free, and the loans are approved faster.

Electronica Finance Ltd knows how demanding businesses can sometimes be. Therefore, we offer working capital demand loans up to 50 lacs with short term (up to 90 days) repayment. The interest rates are flexible and based on the customer’s profile. Other remarkable features of these loans are that they are revolving in nature, which means that they can be used again after repayment or after expiry of 1 year whichever is earlier. You also save interest cost as you pay interest only on amount used. Being an NBFC, EFL’s verification process is quick and easy, and the loans are approved in a day*.

Boost your confidence with EFL’s working capital loans and take the next step towards growing your business. EFL is By Your Side.

[incorp-india]

Measures by RBI to boost Liquidity and Lending

LIQUIDITY

1. Repo rate reduced by 75 basis points to 4.40%. What does that mean and how does it impact banks/borrowers?

Repo Rate refers to the rate at which commercial banks borrow money by selling their securities to the central bank of our country i.e. Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds or due to some statutory measures. Reduction in Repo Rate is a measure by RBI to boost liquidity and lending that will allow the commercial banks to borrow funds from RBI for meeting its shortage of funds for at a reduced rate. It will lead to a reduction in the benchmark rate of interest of all banks i.e. MCLR.

Many home loans by few banks in recent times (w.e.f. October 2019) were benchmarked directly to the Repo rates. Interest on such loans will now be at a reduced rate.

2. Reverse Repo reduced by 90 basis points to 4.00%. What does that mean and how does it impact banks/borrowers?

Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. It is an instrument that can be used to control the money supply in the country.

By reducing this rate, RBI is dis-incentivizing the commercial banks to lend to RBI and rather lend to the general public. In other words, if commercial banks lend to RBI, they will earn 4.00% on it. This leaves no incentive for the banks to lend to RBI.

3. CRR reduced by 100 basis points to 3.00%. What does that mean and how does it impact banks/borrowers?

Cash Reserve Ratio (CRR) is the minimum amount of deposit that the commercial banks must hold as reserves with the central bank. Its purpose is to safeguard the interest of depositors because the banks cannot lend this money to others. Hence, it ensures that banks do not run out of cash to meet the payment demands of their depositors.

By reducing the CRR the liquidity of the commercial banks will increase by 1% of their entire deposits. The impact of this is that the RBI will immediately release funds of Rs. 1.37 lakh crores in the commercial banks. This will enhance the liquidity of the banks.

4. What is the impact on the overall liquidity of all the above measures?

Rs. 3.74 lakh crore of liquidity is injected into the banking system to incentivize lending to the General Public, SMEs and Corporates.

TERM LOANS

1. A three-month moratorium on payment of instalments of Term Loan outstanding. Who can give a moratorium? Is the moratorium in respect of all term loans?

All lending institutions including commercial banks including regional rural banks, small finance banks and local area banks, co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.

Kindly note there is no waiver on the repayments of term loan. In our opinion, the word ‘instalment’ should be interpreted to include interest as well as principal. Therefore, interest will accrue and the payment of the same will be deferred.

2. How does this moratorium take an effect on the tenure of the term loan?

As per RBI guidance to banks, the repayment schedule and all subsequent due dates will get extended by three months. Hence, the tenor for such term loans may be shifted across the board by three months.

It may be noted that the moratorium granted is effectively forward looking for a period of three months starting 1st March 2020 and the account will be continued to be classified as standard.

3. What happens to EMIs debited by banks after 1st March 2020?

Since the measure is retrospective from 1st March 2020, in case of the EMI has already been debited to your account during the intervening period from 1st March 2020 till date, one may approach the lending institution to grant relief under these announcements.

4. What happens to overdue EMIs?

Already overdue EMIs i.e. those EMIs due prior to 1st March 2020 will not be covered in the relief granted by RBI. In other words, the account will be classified as an NPA for the non-payment of EMIs due prior to 1st March 2020 if they become overdue for more than 90 days.

However, on 17th April 2020, the RBI has clarified that the lockdown period would be excluded from calculating the 90-day default period for classification of the loan account as an NPA. Hence for EMIs due, the counter of a number of days of default will stop on 25th March 2020 (first day of lockdown) and restart on the end of lockdown (4th May 2020 or any later date, as decided by the government).

5. How will I know if my EMI has been suspended?

The RBI has not yet issued detailed guidelines on this. Once guidelines are issued, there will be more clarity on this.

6. How will the process work at the bank level?

All banks will have to discuss the moratorium and get a decision approved at their board level. Once approved, they may reach out to customers informing them of the moratorium.

7. Is this a waiver of EMIs or a deferment of EMIs?

This is not a waiver, but a deferment. You will have to pay the EMIs at a later date as decided by the bank. The RBI has informed banks to have board-approved policies in place on moratorium/deferment.

8. Does the moratorium cover both principal and interest?

Yes. It does. If announced by your bank, you can forego payment of your entire EMI, including payment and interest.

9. What kind of loans does the moratorium cover?

The RBI policy statement explicitly mentions term loans, which includes home loans, personal loans, education loans, auto and any other loans which have a fixed tenure. They also include consumer durable loans, such as EMIs on mobiles, fridge, TV, etc.

10. Does the moratorium cover credit card payments?

Yes. Credit card payments will be covered under the moratorium.

WORKING CAPITAL LOANS

1. Interest on working capital facilities to be deferred by 3 months. How will it be paid?

In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.

Practically, March month’s interest on outstanding CC will be debited by the banks, say on 31st March 2020. Under normal circumstances, this interest must be serviced by the first week of April. However, because of the lockdown and social distancing, etc, there may be no inflows into the CC account, the CC account could become illiquid and the interest may not be served. RBI has permitted that the servicing of interest can be deferred for 3 months. The accumulated interest (i.e. for the month of March, April and May 2020) for the three months period will be paid after the expiry of the deferment period.

2. What happens to non-fund-based limits like LCs, etc?

We expect some clarity to come from RBI on this. RBI’s circular is silent on this. The LCs on due dates will hit the CC account and the CC account may be overdrawn. We believe that many banks have/will come up with additional special lines of credit of 10% of their existing working capital limits for their existing clients. Banks will use this as a tool to liquidate the LC liabilities that are due. This will ensure that no accounts are shown overdrawn.

3. What happens to export credit lines/bill discounting?

We expect some clarity to come from RBI on this. We believe this will get covered under the working capital facilities like a CC/Overdraft and a 3-month deferment on the same will be allowed.

4. What happens to forex loans?

We expect some clarity to come from RBI on this. As of now, the RBI release is silent on this matter.

5. Revised DP calculations by reassessing the WC cycle. How does this impact a borrower?

In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions may recalculate drawing power by reducing margins and/or by reassessing the working capital cycle for the borrowers.

GENERAL

1. Will such deferment / re-scheduling / revision not to be considered as default for classification as NPA? Will it affect the credit history of the borrowers?

All the aforementioned measures are being provided specifically to enable the borrowers to tide over the economic fallout from COVID-19. Hence, the same will not be treated as a change in terms and conditions of loan agreements due to the financial difficulty of the borrowers will not result in asset classification downgrade or classification as NPA. The lending institutions may accordingly put in place a Board approved policy in this regard.

All the above including the rescheduling of payments will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) like CIBIL, etc. by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries.

2. What is the impact of the above measures on businesses?

These measures are a much-needed breather to all the business houses given by RBI. This along with the special line of credit granted by several banks will help many businesses and individuals to tide over the current scenario and streamline their finances over the next few months.

In this lockdown period as well, our team at In.Corp will always be available to assist you in any banking or financial guidance you may need for your businesses. For assistance, do get in touch with us at info@incorpadvisory.in.