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Business Loan

Business Loan FAQs: Get Answers To Your Business Loan Queries

Financial institutions like banks, non-bank financial companies, and other types of financial institutions can give loans to different kinds of businesses. There are many ways that business loans can be changed to meet the needs of growing businesses of different sizes. If you use these loans, your business will have the competitive edge it needs to do well in the world of competition we live in today. Giving loans to businesses helps them create new jobs, which has a direct effect on the economy of the area. Getting a business loan is the easiest and most obvious way to get a lot of cash flow. Business loans are a good choice if your business is ready to start, grow, or expand. In this context, you should know how various business loans can help. [B-01] How do Business Loans help? The loan industry helps a lot of businesses get the money they need in different ways. Business owners can get loans from non-banking financial corporations, traditional banks, government agencies, and even the crowd. Here are some ways in which business loans can help you and how business financing can help you: More funding and advertising Every business wants its brand name to spread on social media like wildfire. If you have enough money, you’ll have more chances to market yourself, use good methods, and make good commercials. Flexibility There are many kinds of loans that can help people run their businesses well. A long-term loan is for a long period, while a short-term loan is only for a certain amount of time. The owner of a business can use a loan for their business, for their own needs, or a mix of both. Free of liability Most of the time, a business borrower doesn’t need to have collateral or make a certain amount of money before applying for a loan. Too will be very helpful for a small business that is just getting started because it will meet the business’s needs and help it grow sustainably. Some places that lend money to businesses don’t ask for collateral. Small business owners will find it easier for the money to stay in business. Easy & flexible payment choices For business financing, there are several flexible ways to pay back the loan. This means businesses will be able to make the repayment in a short time. This is because they will know how to pay back the loan. What are the different types of Business Loans? There are two main types of business loans, which are explained below: Secured Business Loans Secured business loans are a common way for small businesses to get money. This kind of loan is safe if the borrower promises to pay it back or puts up assets or property as security. Collateral is a good way to show the lender that you will pay back the loan within the agreed-upon time frame. It also makes it clear that the lender has every right to take the security if you can’t repay the loan on time. Unsecured Business Loans Without having to put up any collateral, unsecured business loans can help both new and old businesses get the money they need to succeed. Collateral is something valuable that the lender can take back if the borrower doesn’t pay back the loan. Most of the time, lenders require borrowers to sign a guarantee. This is a legal contract that says the borrower must pay back the debt with their own money if the business can’t. When the loan is paid back completely, the personal guarantee is taken off the account. The best-unsecured business loans let businesses get money quickly, cheaply, and with the fewest requirements. What makes you eligible for Business Financing? People who meet the following eligibility criteria can apply for business financing: The minimum age is 18 years old, and the maximum age is 65 years old. Individuals, sole proprietorships, partnerships, public & private companies, limited liability partnerships, retailers, traders, manufacturers, and other businesses that only work in the service, trading, and manufacturing sectors. At least one year’s worth of business experience. Existing businesses must make at least Rs. 12 lakh in sales each year. This amount can change depending on the lender. The person applying must own a home, office, shop, or godown. A credit score of at least 750. Documents required for Business Financing Completed application form with two passport-sized photos. KYC documents of applicants, partners, and co-applicants: Passport, Aadhar Card, Voter ID, PAN Card, driving license, and utility bills. Proof of income with the last six months’ bank statements. Business registration certificate, business PAN card and address proof. Any other document required by the bank/NBFC. What are the various Interest Rates on Business Loans? Interest rates are classified into two types for business loans: those that go down over time and those that stay the same. These are fully explained here: Reduced Balance Interest Rate The “reducing balance rate” is the interest rate that is calculated each month based on how much of the loan is still owed. Here, the EMI includes both the amount of the loan and the interest that is due each month. The amount still owed on the loan goes down after each EMI payment. So, the interest rate for the next month depends only on how much is still owed on the loan. This interest is found by multiplying the interest rate by how much is still owed on the loan. Flat Interest Rate Over the length of the loan, the flat interest rate is applied to the whole loan amount. It doesn’t take into account that the monthly payments will lower the principal amount and, in turn, the interest rate. So, the nominal flat interest rate is much lower than the effective interest rate. Interest Payable per Payment = (Original Loan Amount x Number of Years x Interest Rate p.a.) / Number of Payments This is how you find the fixed rate of interest. Most business loans have interest rates between 15% and 24% p.a. The final interest rate depends on the borrower’s profile, credit score, finances, existing debt, business stability, the outlook for the industry, and several other risk assessment factors. [B-02] Conclusion Business loans give firms the ability to expand their operations without any interruptions. During financial distress, the benefits of business loans are multifarious. Such loans provide a boost to your financial repository. These loans ensure that your business meets the desired expectations. They also ensure that your personal wealth remains unaltered. To learn more about business loans and their vast benefits, check out relevant blogs on Piramal Finance. You can also go through the different services and products offered by them for better insight.
08-11-2023
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Other

Guide to Best Investment Options in India. Where and How to invest?

Everyone who is a beginner struggles to find an investment option suitable for them. They want minimal risk with maximum profit, which is extremely difficult to find because the risk is directly proportional to the probability of profit/ loss when investing. For example, Fixed deposits are safer than buying stocks, but offer lower returns. [B-01] What Makes an Investment Option Good For You? Before deciding where to invest your money, you must clear your goals and needs. This helps you to decide what factors you should consider while choosing the best investment options. There are several factors to consider while choosing an investment option, out of which the most important are: The ability to invest and withdraw funds at any time Flexibility to invest any amount of money Risk-to-profit ratio The time of the investment Why do you need to make Investment plans? Investment plans help you lay out a proper path and strategy to fulfil your future goals, needs, and emergency funds. You should invest your money in different investment options depending on your risk appetite. For example, if you’re young and can take big risks you should invest in stocks, mutual funds, or maybe crypto currency along with some portion in safe investments like bank Fixed Deposits. Following are some of the best investment options you can choose from:- ELSS ELSS funds or Equity Linked Saving Scheme are equity funds. ELSS funds invest majorly in equity or equity-related instruments. The best part of this investment option is you can get tax exemption of up to a limit of Rs. 1,50,000 on the invested amount. It has a lock-in period of 3 years, so the tax levied would be LTCG which will be around 10% depending on your income slab. To invest in ELSS you can directly ask your bank if they offer such services. Or you can apply through various online investment service providers. Bank Fixed Deposit Fixed deposits or FDs are offered by various Banks and NBFCs to their customers. You can ask your bank for an FD, and they’ll tell you the procedure. FD has a lock-in which is pre-decided as well as a fixed rate of return. The lock-in period can be as long as ten years or as short as a month. You can choose whether the interest is paid periodically or at maturity. You have to pay a penalty if you want to withdraw money before maturity. Public Provident Fund PPF or Public provident fund is a long-term investment option. It pays you high interest but stable returns. In PPF, the money is invested every month and interest is compounded. Many big banks offer PPF accounts. You can check with your bank as well. There’s even an option to open a PPF account online these days. National Pension Scheme The National Pension System (NPS) is a retirement savings plan in which employees and employers can make regular contributions. Your savings are pooled into a pension fund and the money collected is then invested by professional fund managers in a diversified portfolio of government bonds, bills, corporate debt, and shares per PFRDA guidelines. Subscribers have the option of purchasing life insurance from a PFRDA-approved life insurance company at the time of their normal exit from the scheme, as well as withdrawing a portion of their accumulated pension wealth as a lump sum if they so desire. Senior Citizen Savings Scheme Senior Citizens’ Saving Scheme (SCSS) is made to cater to senior citizens who are residents of India. It is a government-backed retirement benefits programme, in which lump-sum investment can be done either individually or jointly. Senior citizens get regular income and tax benefits. SCSS is a good investment option for senior citizens above 60 years. You can get this scheme through post offices or certified banks across India. Sovereign Gold Bonds If you’re interested in investing in gold, you should check out SGBs. They are government securities denominated in grams of gold. You have to pay the issue price to buy the SGBs. The bonds will be redeemed in cash on maturity. The bond is issued by the Reserve Bank on behalf of the Government of India. You are sure of the periodical interest and the market value of gold at the time of maturity. There is no hassle of storing gold, paying the making charges, or having purity issues like in the case of gold jewellery. You can invest in SGBs through your bank, online services, or brokers. Direct Equity In direct equity investment, you pick stocks, make your strategies and invest directly into the companies. You receive shares of a company you’ve bought from the stock market in your Demat account. There can be both profit and loss in the stock market. But in the longer horizon on average, the return beats the inflation. Mutual Fund A mutual fund can consist of a portfolio of stocks, bonds, or other securities, depending on the type of mutual fund. The fund is managed by a fund manager, and the mutual fund houses charges for the services offered. The fund can be actively managed or passively managed which tracks some index. Some different mutual fund types are Equity Funds, Money Market Funds, Debt Funds, etc. Tax Implications on Investment Plans in India Great, now that you’ve found a suitable investment plan, you should also consider the tax implications associated with investment options as they can affect the overall return. For example, if the interest income in a financial year on your Fixed Deposit exceeds Rs. 40,000, deposits are applicable for TDS. The Mutual Fund, Debt fund, and stock profits are governed by different tax regulations. The taxation is based on the period of investment. It can be short-term capital gains tax or long-term capital gains tax. The time frame is different for different investment options. Some tax-free investment options are NPS, PPF, pension, Life Insurance, SCSS, etc. [B-02] Conclusion You should invest in securities/ bonds/ schemes after going through all the details. You should set your future goals, and based on your age you can decide the amount of risk you’re willing to take in your investment options. You can consult with professionals like Piramal Finance to avail of their financial services.
08-11-2023
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Home Loan

Home Loan Application Rejected? Know the Reasons

Buying a house, whether for investment purposes or as a residence is one of the most crucial financial decisions in everyone’s life. However, managing the finance to buy a house could be difficult at times. In such cases, people prefer applying for a home loan. A home loan is a type of loan that helps borrowers to purchase a house with the promise to return the amount with an added interest rate. As these loans are sanctioned for tenure as long as 30 years, lenders go through the profile of the borrower thoroughly. And since the policies, eligibility, and verification process are too strict, some borrowers face the problem of getting their home loan application rejected. There are plenty of reasons why a home loan application form is rejected. However, there is not any reason for you to panic regarding this. There are some measures that you can take to avoid such a nuisance in the first place. Read on to learn about the reasons for which your home loan application is rejected and some steps on how to prevent it. [B-01] Why is a home loan application rejected? When talking of the reasons for which it is rejected, you must learn the simple notion that lenders need to trust your repaying capacity. If anything in your profile makes the lender suspicious, there are chances that your home loan application will be rejected. Here are some reasons why a loan application form for a home loan is rejected. Poor credit score: Be it any type of loan, a credit score plays a huge role in deciding your creditworthiness to the lender. Poor credit score often is a turn-off for lenders and could be a big reason why your home loan application is rejected in the first place. This possesses a lot of questions regarding your credibility and decreases the lender’s confidence. Inconsistent employment: You might consider changing jobs for better prospects, financial security, or some personal reasons. However, changing jobs very frequently creates a sense of uncertainty about your loan repaying ability to the lenders. This is a big reason why many borrowers could not get their loans processed. Issues in your credit report: Even if your credit score is super to the mark and you might have the desired creditworthiness, if there are errors in your credit report, then your home loan application is going to change. If your credit report is not rectified, then your loan application form will be rejected and you will be debarred from getting the home loan amount. Incomplete Document: As mentioned earlier, most home loans have strict policies and verification. As a home loan is granted based on documentation, you need to submit all the legal documents. If the documentation is incomplete, then there is no doubt that your home loan application is going to be rejected. Indebtedness: If you have a high level of debt pending, then it again questions your repaying capacity. So, as a result, lenders might not be willing to burden your financial situation more by attaching another loan. So, this is also a reason why your home loan application form got rejected in the first place. Issues with the chosen property: Sometimes, the reason for your home loan application to get rejected is because of the issues with the property you have chosen. There could be some legal issues or sometimes the property could be too old as well. If the property you are looking for is too old and shabby, lenders might not allow you to get a home loan. Besides this, there are some other associated reasons for your home loan application to get rejected like not having a ‘No Dues Certificate “from your previous lender, old age, poor employer profile, etc. How to prevent your home loan application from getting rejected? There are many ways through which you can prevent your home loan application form from getting rejected. They are: Improving your credit score: As credit score plays a huge role in deciding your creditworthiness, you should make sure that you have a decent level to apply for a home loan. Most lending institutions look for a credit score that is 750 or more. Maintaining job consistency: To prevent your home loan application from getting rejected, you should make sure that you maintain job consistency. Even if you change a job, make sure that you don’t do it frequently, so that your loan credentials are not affected. Rectify your credit report: Having errors in your credit report affects your loan sanctioning process. So, you should consider this and rectify the errors that are present in your credit report. Proper documentation: Since documents predominantly decide whether or not the loan is to be sanctioned, you must keep all your legal papers in order with you. Doing this properly, helps you avoid the chances of getting your home loan application rejected. Ensuring no issues with the property: Before applying for a home loan, make sure that you have no issues with the property for which you are about to take the loan. Know the eligibility criteria properly: Before you stumble upon applying for a home loan, make sure that you know about the eligibility properly. You can do that through self-research or contacting a bank professional or both. [B-02] Summing it up While applying for a home loan is a big financial decision, knowing about certain points before going for it is important. As a home loan application might get rejected because of the strict policies and processes, you should focus on the above-mentioned points to prevent that from happening. Out of all the points, if you meet the eligibility and have a decent credit score, a lot of problem gets sorted out then and there. In case you want to know more about the home loan application process, you must visit Piramal Finance.
08-11-2023
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Personal Loan

Can I Use Personal Loan to Purchase a Bike?

To divide or not to divide savings? When getting a bike, this is always the first question. But spending all your hard-earned cash at once is never a good idea. You must have sufficient money to cover unexpected costs and needs quickly. Instead, get a personal loan to buy the bike of your dreams. Now, you might wonder why you shouldn’t just get a loan for a two-wheeler. Let’s say you have to choose between a personal loan and a personal loan for the bike. In such cases, a personal loan is the better choice. [B-01] Why Use a Personal Loan to Buy a New Bike? Two-wheelers are one of the most popular ways to get around the country. They are light and fast and can help riders quickly get from one place to another. Suppose you don’t have sufficient cash to buy a new bike or don’t want to use your earnings for the purchase. In such a situation, you can request a loan to start making the purchase easier. You can get a two-wheeler or personal loan to pay for a brand-new scooter or motorcycle. In India, these two types of loans are given by both banks and NBFCs. Advantages of Getting a Personal Loan to Buy a New Bike Whenever you go for a personal loan, you can benefit from the fact that the loan isn’t tied down to anything. This means you don’t have to purchase collateral or provide security when you ask for a loan. Also, the interest rates on personal loans aren’t too bad. So, borrowing money to buy a bike won’t cost much in the long run. If you make a proper strategy to spend your money well, you can be confident that you’ll be able to pay all your other monthly bills. The best part of a personal loan is that you are not required to tell the lender that you want to buy a bike with the money. You can get a personal loan to buy a top-quality bike, an everyday scooter, a sports bike, or an adventure bike. You can also get a personal loan if you want to buy a brand-new or used two-wheeler. Top Reasons to Take Out a Personal Loan to Buy a Bike Price for 100% on-road. The on-road price can be paid in full when you get a personal loan to purchase a new bike. This is a big help because most lenders only finance up to 90%. So you will not need to worry about putting money down on your loan. You will have to pay a certain amount upfront if you want to use a two-wheeler loan to buy a car. There is no need to put money down. When you rent a bike, you will have to put down a deposit. After talking with your lender, you will have to decide how much you will put down. Most of the time, they only finance 80 to 90% of the vehicle’s “on-road” price. When you get a personal loan to buy a bike, you won’t have to make a down payment. You can get a loan for the full price of your bike. There is no requirement for a credit history. Most people buy their first bike when they finish college or obtain their first job. During these times, a person may not have a credit history because they haven’t applied for credit yet. When you apply for a loan for a two-wheeler, your lender will ask for information about your credit history, or CIBIL score. You need good credit to be able to get a loan for a bike. You could wait a few years, get a good credit score, and then try to get a loan for a two-wheeler. You could just get a loan for yourself. Even for personal loans, lenders want to see CIBIL scores. Low rates of interest Generally, the interest rates on a personal loan are lower than those on a loan for a two-wheeler. The interest rate on your bike loan will depend on how much money you make, how long you need the loan, what kind of bike you have, how old it is, etc. If any of these things don’t meet the lender’s requirements, you may have to pay a very high rate of interest. Easy-to-understand loan requirements Loans for a two-wheeler are harder to get than loans for a car. For a loan for a two-wheeler, the minimum income requirement is a bit higher. If you get a personal loan and have a good monthly income, it won’t be hard to pay the monthly payments. So, if you can get a personal loan that doesn’t cost too much, you can buy that cool bike you’ve been looking at every day at your local bike shop or online. Personal Loans with Shorter Terms When you get a personal loan, individuals can pay it off faster. Most personal loans have terms between six months and five years. When the loan term is shorter, you won’t have to pay interest for many months. You can pay off your loan quickly if you are good with your money. You save a lot of money when you select a shorter loan term with less interest. [B-02] Conclusion You can now choose whether you want a personal loan for a bike or a personal loan. You can get a personal loan either online or in person. To apply online, you must go to the lender’s official website or a third-party financial website. You can compare personal loan interest rates, penalties, processing fees, and other features on the internet. Once you decide, you go for a loan and then purchase your bike. To apply offline, you can go to a branch of your creditor. Then talk to an employee, who will give you the details and help you fill out the application. Piramal Finance is a great financing option for everyone. Visit their website to learn more about the products and services they offer.
08-11-2023
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Business Loan

Get online business loan in 7 Easy Steps

India is a country of start-ups. As per the government of India’s data, the country has over 77000 start-ups distributed across 656 districts. Most of these start-ups are Small and Medium Enterprises (SMEs). Running these businesses requires money, and your business may suffer if you don’t have much money. So, if you plan to start a business or expand your existing one, you may apply for an online business loan. These business loans are slightly different from personal loans. So, let’s see a business loan and how to get one online. [B-01] What is a Business Loan? A business loan is a type of loan that can be only used for business purposes. You can use this loan to cover your direct business requirements, including operational costs, purchase supplies, and other business expenses. One of the benefits of a business loan is its repayment period is longer than a personal loan. Moreover, with a business loan, you get more capital at a lower interest rate compared to a personal loan. How to get a Business Loan online? Like any other loan, you can get an online business loan from any bank or NBFC. However, depending on your eligibility, the terms and conditions of the loan vary from lender to lender. Based on the lender you choose, the online business loan could be secured or unsecured. You must fulfil some eligibility criteria to get the loan for your business. These are the general criteria checked by all lenders. You should be either self-employed, working professionally, or an entity. The entity means partnerships, LLPs, private limited companies, closely held companies, and so on. A minimum required turnover. A minimum business experience in the market. You must be between 22 to 60 years of age (at the time of maturity of the loan). You must have an excellent CIBIL score. Documents required for a business loan Before applying for an online business loan, make sure you have these documents. The PAN card of the individual or company, or firm An identity proof, preferably an Aadhaar card Address proof Bank statement for the last 6 months Recent IT returns with proof of income. For example, in the case of a company or firm, you would require the balance sheet and profit and loss account for the last 2 years A certificate of business continuation for 2 years Documents related to ownership of the company or partnership deed Memorandum of Association and Articles of Association So, once you have collected all these documents, it’s time to apply for an online business loan. If your business comes under the Micro, Small, and Medium Enterprise sectors, you can get a loan under start-up business loan schemes for MSMEs and start-ups. The Government of India (GoI) has started distributing loans directly to start-ups and MSMEs through the Small Industries Development Bank of India (SIDBI). The interest rate on these loans is lower by 300 basis points than the loans offered by other banks. All these loans are sanctioned online, and you need to visit the website of SIDBI to apply. Or you can also get an n by visiting the respective bank’s website or NBFC. Here are the steps to apply for an online business loan. Step 1: Go to the respective website of the bank or NBFC. Step 2: Locate the loan section and business loan under it. Step 3: Open the application form and complete all the required details. Step 4: Apply to attach all documents. Step 5: A representative from the bank will reach out to you if you miss any details or required information. Step 6: The application will go for a loan verification procedure. If everything goes well, your loan application will be approved. Step 7: The money will be credited to your account after the successful approval. Types of Online Business Loans There is no one-size-fits-all for loans. So, depending on your capital requirement and business type, you may go for any of these online business loans. Term loan: This is the most common type of business loan. The term for this loan ranges from one to five years. This type of loan is specially sanctioned for covering business expenses. Moreover, you will need to specify the purpose of use. Start-up loan: As the name suggests, it is sanctioned for start-ups to cover their operational expenses. However, this loan requires a minimum establishment period. It means this loan is only for start-ups already in the market for a particular time. The terms and conditions of this loan depend upon the expected turnover of the company. Invoice Financing: This loan is mainly for small businesses. The purpose of this loan is to fill the gap between putting up invoices and receiving payments. Banks provide this loan against the raised invoice. Working Capital Loan: This loan is sanctioned to manage the temporary financial crunch. This type of loan also covers the operational cost during the seasonal increase in demand. Equipment Financing: You can also get a loan for purchasing equipment and machinery. This type of loan is suitable for manufacturers of various kinds of goods. Under this loan, the machinery brought from the loan amount is treated as collateral. Loan against property: As the name suggests, this loan is sanctioned against your property. The property is kept as collateral, and the tenure for this loan ranges from 10 to 20 years. [B-02] Conclusion In 2022, getting an online business loan will be more accessible than ever. However, each lender has different criteria and interest rates. As a result, some NBFCs take undue advantage of small businesses and provide them with loans at very high-interest rates. You can get a business loan from Piramal Finance at a reasonable interest rate. Besides, you can get more financial education from our blog so that no one can take undue advantage of you.
08-11-2023
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General Insurance

Buying Term Insurance? Avoid these mistakes

You should ease most of your fears now that you’ve opted for term insurance. After all, a term insurance policy offers life insurance. It assures that the lifestyle quality of your family is not affected in the case of the breadwinner’s death. Also, life aims such as child education and property ownership are not affected after getting a term insurance policy. The benefit of term insurance is that it is the simplest coverage. In other terms, the premium you pay is devoted to giving your life insurance. [B-01] What Exactly Is Term Insurance? Term insurance is a kind of life insurance that protects against the danger of early demise. When you get this insurance, you pick the sum insured and the term of the policy. After that, in the event of death within the policy’s term, the sum insured is paid to the candidate. Term insurance policies often do not offer a maturity benefit. That is, if the insured lives until the conclusion of the policy period, there is no payout. For example, suppose you purchase a 25-year term plan with an amount insured of Rs. 50 lakhs. Hence, a term insurance plan protects the risk on the insured’s life for as long as the plan is in place and all payments are made on time. Term Insurance Plan Features Here are some distinct features of term insurance plans that set them apart from other types of life insurance: As a pure safety plan, term plans provide the highest sum covered at the lowest cost. These plans are available for the long run. Some term insurance provides coverage for up to 85 years. If the insured dies during the period of the policy, the whole sum promised is given to the designee as a death benefit, as well as the policy is cancelled. Term plans have extra riders that you may add to your policy. Many plans also include riders that provide a broader range of coverage. Mistakes to Avoid When Getting Term Insurance Not Comparing Premiums The cover sum to premium rate in a term insurance plan is quite high. This is due to the fact that by paying a modest premium, you might have a large sum insured. The rates charged by various insurance providers will be likely to range greatly. As a result, before concluding the plan, it is vital to check term insurance prices from many insurers. Seeking a Low Life Insurance Amount Many of you purchase term insurance policies without assessing the true needs of life insurance. Getting a term insurance policy with limited coverage may not fulfil the goal for which it was bought. It is best to keep your insurance between 15 and 20 times your yearly income. Based on your age, fiscal demands, and family cases, you may need a greater level of coverage. Buying for a Lower Tenure Insurance coverage aims to protect your life goals. Despite your present age, get a term insurance policy that will cover you until the age of 60. Life aims such as kids’ education, home buying, and so on are often met around then. Yet, for late starts or you who may still have fiscal pledges beyond the age of 60, getting a term insurance plan may be vital, even for a longer term. You may quit paying the premium once the debts are fulfilled since they have no maturity worth. Buying Late Buying term insurance might not be on your to-do list if you’re young and single. Your parents may rely on you monetarily, or you may be tying the knot in a few months. The premium you would pay at an early age will be far lower than the cost you will pay later in life. When bought at an early age, you will pay the same price every year for the next 25 to 30 years. Not Adding Riders Aside from the danger of dying early from natural factors, there are hazards in other aspects as well. A handicap reduces one’s earning capability, while a medical problem may also have an impact on your finances. A term insurance policy allows you to add extra benefits known as riders, like an accidental rider, sickness rider, severe illness rider, and so on. Adding these extras to your term insurance plan expands the benefits and offers full coverage. Not Trying Different Things A basic term insurance plan’s death benefit stays constant all across the policy duration. Yet, a few more plans provide rising or reducing coverage. Some policies allow the family to get a part of the cash insured as a lump payment and the remainder in regular instalments. You may even pay till the age of 60 while keeping the coverage for a longer time. Filling Out Forms on Your Own In most cases, you leave the request form to be completed by the insurance company. Going over the request form reveals the facts that the insurers are looking for. It also allows you complete control over the disclosures made in the application. As your life is being covered, you will feel a feeling of ownership after you fill out the form on your own. Refusing to Disclose Crucial Data The insurance company will need you to provide certain details on the request form. Such disclosure will concern your wages and health state, as well as the medical status of your family. It is vital that you fully disclose them when applying. Any non-disclosure might lead to the nominees rejecting the claim, which would defeat the objective of why you obtained the term insurance policy. Excluding E-Insurance Options Buying a term insurance policy online has various advantages, such as buying offers, a rapid procedure, and so on. The absence of e-insurance may lead to more paperwork as well as a delay in the procedure. [B-02] Conclusion When buying term insurance, it is of grave importance not to make any mistakes. This will help you get the best deal possible. You should make an informed decision when it comes to purchasing the greatest term insurance plan. It can be a valuable asset for you and your family. If you want to learn more about buying term insurance, visit Piramal Finance for related blogs and explore their products and services.
08-11-2023
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FD

Common Mistakes to Avoid While Investing in FDs

Investing in FD is an excellent choice for investors seeking guaranteed earnings while maintaining the highest level of security. You just deposit a bulk amount of money and then see it grow over the specified period and at the specified interest rate. Because of the high-interest rates and stability, your money grows at minimal risk. However, certain quick judgments may jeopardise your ability to make the most money. You can end up making mistakes that cost you the chance to maximise your FD interest revenue. [B-01] What Do You Mean by Fixed Deposit? Investing in FD is one of the safest types of investments since they generate constant returns. Because of the low risk of the investment, a large number of people in the country choose to invest in fixed deposits rather than shares. Furthermore, some fixed deposits may assist you in reducing your tax liability under Section 80C of the Income Tax Act of 1961. Fixed deposits give you control over your money and enable you to see it increase over time. Investing in FD is a popular investment option, but there are a few common traps to avoid when investing in them. Here are six typical errors to avoid to earn more and earn more securely from your fixed deposit. How Does Fixed Deposit Work? We’ve simplified it for you to help you understand what a fixed deposit is: A fixed deposit is a financial product provided by banks and NBFCs that allows you to deposit a large amount of money and earn a greater rate of interest than a savings account. An FD may be issued for a period of 7 days to 10 years. When you deposit with your bank, it begins generating interest based on the length of the deposit. The basic rule of a fixed deposit is that funds shouldn’t be withdrawn before maturity. If you withdraw before the maturity date, you must pay the penalty. You may choose the time duration for your investing in FD. In other words, you may keep it open for as long as you have available cash. Some banks provide a premature withdrawal option, although this results in a reduced interest rate. The bank credits the main amount and interest to the account holder’s bank account on the maturity date. Fixed Deposit Types Before you put aside money for investing in FD, you should be aware of the various kinds of fixed deposits available on the market. Read on to learn more: Typical Fixed Deposit A simple fixed deposit involves depositing money over a specific period at a fixed interest rate. The periods of a typical fixed deposit range from one week to ten years. It is the most popular FD choice among investors. Fixed Deposit Special Special fixed deposits are called so since they are only available for a limited time. A particular period might range from 290 to 390 days. Special FDs have a higher interest rate and are popular with a variety of stakeholders. Fixed Deposit with Tax Savings Tax-saving fixed deposits, unlike standard fixed deposits, cannot be booked for less than 5 years. The cash invested is tax-free under section 80C of the Income Tax Act of 1961, but the interest earned on the FD is taxable. Variable Fixed Deposit A floating fixed deposit’s interest rate fluctuates quarterly or annually, allowing consumers to profit from fluctuating interest rates. The Reserve Bank of India’s rules govern changes in interest rates. Most Common Mistakes to Avoid While Investing in FDs Here is a list of common mutual fund mistakes that new investors make. A lack of financial goals Financial goals are vital once you start planning your investments. Investing gets easier when you have a clear goal in mind. Because the money will be locked in for a certain period, you should have clear and realistic goals in mind before investing in FD. Not comparing interest rates When you decide to create a fixed deposit, start comparing interest rates from several organisations. Banks are increasingly offering enticing interest rates to entice customers. Interest rates vary per bank, so seek the one that gives the highest interest rate on a fixed deposit. Choosing an inappropriate lock-in period The amount invested in a fixed deposit is set for a certain period. As a consequence, you must proceed with prudence and invest only when you are convinced that you will not need it shortly. The periods of fixed deposits range from 7 days to 10 years. As a consequence, you should only invest in FD after carefully considering your current and future requirements. Examine the tenures as well. Making a hurried exit If you withdraw from the fixed deposit before it matures, you will be assessed a penalty. For partial or early withdrawals, most banks levy a 1% penalty on the applicable rate. Clients may break the fixed deposit without penalty with certain banks; however, they should reinvest the money in a new fixed deposit with the same bank for a longer duration. Failure to meet liquidity requirements It should be noted that investing in FD is a safe way to invest; your money is locked in for a certain amount of time. As a consequence, you should make sure you have enough cash on hand in case of an emergency. [B-02] Conclusion Keep these points in mind to avoid making the same mistakes that others have made. Avoiding these mistakes will allow you to earn greater benefits and earnings from your fixed deposit investments. You may also get in touch with the experts to learn more about your investing options and locate the best-fit term deposit plan for your financial needs. The experts will help you in learning about the different advantages and benefits of your selected fixed deposit plan, which will allow you to make the best financial possible choice. Before investing in FD, keep the previous concepts in mind to get the most out of what they have to offer! To know more about such types of topics, visit Piramal Finance.
08-11-2023
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Schemes

ECLGS - Emergency Credit Line Guarantee Scheme

As small businesses shut down in economically stressful situations, a slowdown of trade and commerce affects the livelihood of people. The government introduced a scheme to reduce stress and help build their trade again. Emergency Credit Line Guarantee Scheme (ECLGS) provides 100 percent coverage to banks and other institutions that lend to these businesses identified by the Kamath Committee. Read on to know more about ECLGS including its features, the purpose of the scheme, and eligibility. [B-01] What is Emergency Credit Line Guarantee Scheme (ECLGS)? The Indian government announced ECLGS in 2020 as a part of the Atma Nirbhar Bharat Package. Their objective is to aid MSMEs (Micro, Small & Medium Enterprises) to resume business and build their business that suffered during the pandemic. As per the scheme, Member Lending Institutions (MLIs) have been assured a 100 percent guarantee in case of non-repayment of the loan. After being introduced in May 2020, ECLGS was extended multiple times to include more sectors and increase the borrowing limit. In February 2022 it was extended till March 2023 to implement the announcement made in the Union Budget 2022-23. Also, the guarantee cover was expanded by Rs 50,000 crores to increase the total limit of the scheme from Rs 4.5 lakh to Rs 5 lakh crore. As of August 5, 2022, loans of about Rs 3.67 lakh crore were disbursed, as per government data. While earlier the scheme aimed at reviving SMEs and MSMEs, the finance ministry recently enhanced the ECLGS loan amount eligibility for domestic airlines, from Rs 400 crore to Rs 1,500 crore. Purpose of the Scheme The scheme aims to help MSME borrowers with the capital required to restart businesses affected by the pandemic. Who are eligible for ECLGS? Below, we have listed the eligibility criteria for ECLGS and it has been divided into points for better understanding. The components in the scheme includes ECLGS 1.0, ECLGS 1.0(Extension), ECLGS 2.0, ECLGS 2.0(Extension), ECLGS 3.0, ECLGS 3.0(Extension), and ECLGS 4.0. 1. ECLGS 1.0 As on February 29, 2022, the scheme provides fully guaranteed credit to business enterprises and individuals for specific business purposes. Their total outstanding credit across lending institutions should be up to Rs. 50 crore. 2. ECLGS 1.0 (Extension) Under this section, businesses that have availed financial aid under ECLGS 1.0 as of March 31, 2021, are eligible for the scheme. 3. ECLGS 2.0 As on February 29, 2022, borrowers belonging to 26 sectors identified by Kamath Committee with loans above Rs.50 crore to Rs.500 crore and due up 60 days are eligible for the scheme. However, it is also mandatory to meet other terms of the guidelines. 4. Under ECLGS 2.0 (Extension) As on March 31, 2021, those who have taken aid under ECLGS 2.0 as per the revised date are eligible for the scheme. It’s also mandatory to meet other terms of the scheme. 5. ECLGS 3.0 As on March 2021, those belonging to travel and tourism, leisure, catering, sporting, civil aviation, hospitality, floricultural products, and handling supply chains with due up to 60 days are eligible for the scheme. 6. Under ECLGS 3.0 (Extension) Businesses that have taken assistance as per ECLGS 3.0 or businesses that qualify under ECLGS 3.0 as on March 31, 2021, or January 31, 2022, are eligible. It is also mandatory to meet other terms of the scheme. 7. ECLGS 4.0 Under this section, hospitals, medical colleges, and units involved in providing liquid oxygen, oxygen cylinders, etc. are eligible. As of March 31, 2021, they should have taken a loan from a lending organization with a due up to 90 days. They are eligible for the aid of up to Rs 2 crore to set up Pressure Swing Adsorption for on-site oxygen-producing plants. An exception has been allowed if their credit card or savings account does not exceed 1 percent of the total loan amount. under ECLGS 1.0, ECLGS 2.0, and ECLGS 3.0, businesses or entities which had NPA or SMA-2 status as of February 29, 2020, are not eligible. Under ECLGS 4.0, accounts that had NPA status as of March 31, 2020, are not eligible. However, there will be an exception if the borrower’s savings account is not more than 1 percent of the loan. Under ECLGS, the overdue must be regularized before assistance is provided. Also, MLIs should ensure the process they follow covers the overdue. Other Eligibility Criteria The business requesting financial aid must have their GST number. However, MSMEs or enterprises that do not need GST registration do not fall under the category. ECLGS 2.0, ECLGS 3.0, and ECLGS 4.0 will be on an ‘Opt-in’ basis. The loans don’t need to be covered under NCGTC or CGTMSE Scheme. There will be no guarantee fee for credit facilities provided under this scheme. Similarly, there will be no processing fee or prepayment charges. The charges for documentation or other charges will be based on the extant guidelines of the bank. [B-02] Conclusion While the above-mentioned are the norms of the current structure of the scheme, the Management Committee for the ECLGS Fund will be the deciding authority about any changes to eligibility, criteria, guarantee fee, rate of interest, and tenor of GECL. There is no guarantee fee for credit facilities provided under this scheme. Similarly, there is no processing fee or prepayment charges. Documentation and other charges will be as per the guidelines of the bank. There will be comprehensive insurance for the securities charged to the bank should be taken depending on the bank clause.
08-11-2023
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Business Loan

Business Loan for Traders – Apply now for a Loan for Traders

You may be the most vital part of the supply chain system as a trader. You make certain that the goods produced by a certain producer reach the end user. As a result, your trade business is vital to the Indian economy and any economic system. You, as a trader, may need loans from time to time to keep your activities operating. The great news is that you may now get business loans from a variety of lenders as a trader. [B-01] Benefits and Features of Trader Business Loans The following are some of the qualities and benefits of business loans for traders: Collateral-free Business loans for traders are offered without the need for assets. This means you won’t have to deal with a lot of processes to acquire credit. Yet, since such business loans are unprotected, you will be charged a higher rate of interest. Varying Tenures You may repay your business loans for longer than 36 months as a trader. Some lending firms may even enable you to spread your loan repayment over a period of 60 months. Quick and Easy As a trader, you may apply for a business loan via any lender. This implies you will be able to file for a business loan swiftly since, most of the time, you will need one right away. Little Paperwork As a trader, you may get a business loan with less paperwork. Most of the time, all a user has to submit while applying is their professional and personal data, as well as relevant identity and salary proofs. Since you only need to provide a few papers as a trader, you won’t have to spend much time asking for trader credit. Rapid Approval and Payment Once the bank has checked the papers sent with a trader loan request, the funds will be credited to your account as soon as possible. Trader/business loan funds are often paid within three days after approval. Prepayment Fees Are Close to Zero If you, as a trader, desire to stop your loan account prior to the expiry of the repayment period, you may do so for a very nominal fee. Some banks may enable you to do so for free. Yet, as a trader, you must recall reviewing the lender’s prepayment plan before enrolling to make an informed choice. Interest Rate Factors For a Business Loan For Traders Credit Rating Credit scores vary from 300 – 900. It displays to a lender that you are creditworthy. Your credit score is used by lenders to judge your stability. If you have an excellent credit score, your business loan interest rates would be much lower. Most lenders regard a credit rating of 750 or above to be good. If you have a poor credit score, your lender will deem you as a risky client and will either raise your loan interest rate or deny your loan request. Before asking for a business loan, you should always verify your credit score. History of Credit If you have a solid and lengthy credit history, the interest rates on your business loan would be cheap. This is due to the fact that your lender will examine your past actions with credit to assess your creditworthiness. If you have a poor credit history, your interest rates would be higher since you are seen as a high-risk client. Sum of the Loan The interest rate on a big business loan is lower than on a small company loan. As a result, it is preferable to get a big loan for your company rather than a small loan, as interest rates fluctuate according to the loan size obtained by the client. Ensure that you calculate your firm’s demands and needs, including labour, gear, stock, and other expenses. Relationship With The Lender If you have a solid and healthy connection with the lender from whom you are borrowing and are an existing client, interest rates may be negotiated. A reduced interest rate can be obtained by this. It might help you save money on your company financing. Most lenders like to delight their clients, so they may cut the interest rates if you have a pleasant and long-term connection with them. Conditions for Trader Loan Eligibility To qualify for a business loan for traders, you must satisfy the following criteria: You must be a sole trader. You must have a minimum of 5 years of business experience. It would be best if you were an Indian national above the age of 22. You must have a minimum yearly revenue of Rs. 10 lakhs. It would be best if you had a CIBIL score of 750 or above to be considered. Lenders’ credit score requirements might differ. You must have a minimum yearly income of Rs. 2 lakhs. You must have managed a profitable business for at least two years. How to Ask for a Trading Loan To apply for a business loan for traders, you must follow the following steps: Step 1: Fill in your business and personal details first. Step 2: Pick a business loan deal from your preferred lender. Step 3: Give other vital information such as the loan sum and chosen payback term. Step 4: Submit scanned copies of all relevant papers for review to the lender. Step 5: The lender will review the paperwork, and if accepted, the business loan sum will be sent into your account within three business days. [B-02] Conclusion A trader may need a company loan to pay for items acquired from manufacturers, pay workers’ wages, or cover basic operating expenses. Several traders prefer to provide credit to their customers, and if the money pledged does not arrive on time, the trader may suffer a financial constraint. In such cases, a business loan for traders might come in handy. If you want to learn more about MSME business loans, visit Piramal Finance for related blogs and explore their products and services.
08-11-2023
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