In our last edition, we had discussed about the basics of funding
(http://ca4you.in/blog/2016/04/19/funding-for-start-ups/)
In this article we will discuss about how to have great
background for Debt Funding
1- Get Private Limited
Company Incorporation Done. It is the most basic form of business registration
which is accepted by Financial Institutes and is preferred over LLP
Incorporation, One Person Company Registration and Firm Registration
2- Focus on correct
Accounting and Book-Keeping principles and show the right profits (hiding
profits to save some taxes does not pay in long run)
3- Have a robust Business
Plan in place with focus on Revenue, DSCRA, expenses
4- Mostly for debt funding
it is (almost) mandatory to have some kind of assets on your books. If this is
not the case, the rate of interests may get high. In nutshell you would need
some tangible asset as collateral (either Director’s or Company’s asset)
5- For Private Limited
Company, it is always advisable to have some consultants who could help you to
draft B-Plan, Investment Memorandum etc.
6- The rate of Interest in
India ranges from 12% to 20% and the business plan should be robust enough to
be able to generate serious profits to match these numbers
7- Apart from Banks, there
are various NBFCs as well as Private lender who provides debt funding and
thought they are a bit expensive but has
quicker processing time.
Next article would cover details on
Equity Funding, Hope this article was informative. For more info visit: www.ca4you.in
Also call us at +91 8447265465 or mail us on vivek@rrs-group.in
for any further query
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