Published on February 22, 2014
WELL! SECURING CREDIT FOR YOUR VENTURE COULD ALSO BE. intro ATLEAST IN INDIA!
Current Scenario Sources of Startup phase funding 9, 9% 3, 3% 3, 3% 22, 22% 63, 63% State Finance Corporation Angel Investor Venture Capitalist Banks Self Financed Source: National Knowledge Commission No. of proposals approved – Decreasing Amount of funds dispersed – Increasing Implications • Stringent process • Govt. schemes not getting utilised • Rise of private equity – VCs
Difficulty levels faced by types of entrepreneurs in securing bank credit Source: National Knowledge Commission
Challenges faced by New Entrepreneurs • Proper Preliminary docs • Much emphasis on individuals/ team profile • Time duration of credit acquisition • Under financing – demand supply gap • Collateral undervaluation • Skillset, resources and infrastructure overvalued • Improper communication from the banks • Unavailability of seed capital • Gender bias-ness
Challenges faced by Existing Entrepreneurs • Re-work on the papers prepared prior to loan application • Previous financial records • Past repayment schedule • Debt restructuring • Under-finance
Solutions for New Entrepreneurs • Bankers require return on time invested – proper compliance regarding docs before approaching a bank. • Availing of micro finance, micro equity. Schemes like Mutual Credit Guarantee & Network Enterprises Fund • Approaching Angel Investors, VCs, PE Funds. • Set up a public fund using innovative PPP mechanisms • Make incubators responsive to market needs • Encourage enabling business environment
Solutions for Existing Entrepreneurs • Selection of bank according to the nature of business • Create a secondary market for smaller companies • Inclusion of more private sector banks in case of debt restructuring • Providing credit in clusters should become more mainstream • Bankruptcy laws • PPP establishments for existing firms
Wishing you all the best in Securing a Hassle-free Loan! Thank You!
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