Q&A library

Our business was started in 2015. But due to a partner causing losses to the company we couldn't declare the profits to the company. In Feb 2020, that partner retired, although business looks strong, since we gave an exit to the partner, we are not getting support from Banks because we gave an exit to the partner. How can I support my business financially now?
Questioned by Sridhar k V, Karnataka
 This cannot be considered as a genuine reason on the part of the lending institution to deny the funding, however it is very important to meet all the eligibility criteria for receiving a loan approval. Prepare an Audited Financial report or document of the past financial transactions since that will help. Also, make a business plan with an impressive write up and projected financial details and then approach a good banker for loan.

I am interested to start-up with gold loan ventures, but I have no knowledge in it. It would be great if you could advice on it. I want to know whether it will be useful if we start up now at this point and how?
Questioned by C I Vincent, Kerala
At the very starting stage of a business, it is advisable to keep loans and other liabilities to a minimum. If you can ‘prove’ your business for the first 3-6 months without a loan (or by availing small loans from family members), is ideal. In short: avail a loan to expand your business; not to experiment your idea. To apply for a business-loan anywhere, you need to have your business idea drafted on paper. Such a document is called a ‘Business Plan’. In this plan, you need to clearly mention what business you intend to do (what product or service you intend to sell), who your customers are, how you intend to make money out of your business, and by when. This Business Plan will not only help visualize and explain your idea to others better; it will also help the Bank or Micro-finance company or Investor make a sound assessment of your idea and offer you the loan with confidence.

Is the "Credit Linked Subsidy Scheme" still applicable ? If so, where can I get more information ?
Questioned by Chandan Kumar Bose, West Bengal
The Credit Linked Subsidy Scheme was till 31st March 2020.pmay-urban.gov.in/clss

I have a Udyog Adhaar registration and want to avail loan for my business using the same ? What is the process for the same and wherefrom can I get more information?
Questioned by Baljinder Kaur, Punjab
Udyog Adhaar registration helps bring small and medium scale industries as a part of the organised sector of MSME in our country. This in turn allows the business which has an Udyog Adhaar registration to be able to gain knowledge about the various schemes being offered by the Government and other NBFCs and apply for those schemes and avail the services.For registering for the scheme, go to - https://udyamregistration.gov.in/.

Is there any specific scheme for upgrading Technology and Machinery for the Textile Industry ? If so what is the size of the loan available for the same ?
Questioned by Sharan Jagadish Gull, Karnataka
In line with the "Make In India" initiative, the government provides - credit linked capital investment subsidy to help the Textile industries and the sector upgrade - machinery and technology. This scheme is referred to as - "Amended Technology Upgradation Fund Scheme" (ATUFS).This scheme will help in investment, productivity, quality, employment, exports and import substitution in textile industry. It will also indirectly promote investment in textile machinery manufacturing.Every eligible individual entity (not the unit) will be entitled for reimbursement of Capital Investment Subsidy (CIS) under this scheme• Garmenting, Technical Textiles- 15% subject to an upper limit of Rs. 30 crores• Weaving for brand new Shuttle less Looms (including weaving and knitting), processing jute, silk and Handloom - 10% subject to upper limit of Rs 20 crore• Composite units/Multiple segments - If the eligible capital investment in respect of Garmenting and Technical Textiles category is more than 50% of the eligible project cost.- 15% subject to an upper limit of Rs 30• Composite Unit/ Multiple segments - IF the eligible capital investment in respect of Garmenting and technical textiles category is less than 50% of the project cost. - 10% subject to an upper limit of 20 crores.To get more details of this scheme, you may visit - https://www.startupindia.gov.in/content/sih/en/government-schemes/amended_technology_upgradation_fund_scheme.html

I would like to know the funding opportunities for my start-up. We are developing a financial platform for women called HerMoneyTalks. Please provide information on any seed, angel, impact investment/ funding opportunities suitable for my start-up.
Questioned by Nisary M, Kerala
Seed funding is used during the formation of start-up i.e during the infancy stage of the startup. It is provided by investors in exchange for an equity stake in the company. It can be obtained from family, friends, relatives etc. This is only for the initial stage processing and after securing it one can approach investors for additional funding. This is done usually for the initial operations of the company and to get additional investments from venture capitalists. Angel investing is done by high net worth individuals. This is also a sort of seed funding but the difference is in the amount invested by the investors. In seed funding the amount is only to support the initial stages which is smaller usually but in angel investing the amount starts from lacs up to crores. Impact investment is a form of investment which apart from financial returns focuses on constructive outcomes. They focus on making a positive impact by investing. For E.g. investment made for a business along with financial return creates a positive impact on the social and natural environment such as CSR activities, tree plantation, clean technologies etc. Based on whatever plans you have for your start-up, funding can be chosen accordingly.

What is the Maximum Subsidy offered by the government to warehouse/logistics business? What is the new guidelines for this business? And what is the future of the business in India?
Questioned by Mahendra Jain, Chhattisgarh
The subsidy which is applicable for warehouses and logistics park for Chhattisgarh can be found in the following site - https://industries.cg.gov.in/pdf/LogisticsParkPolicy2018_12042018.pdfThe new guidelines for warehouses are:• Personal hygiene requirements for employees, including hand washing and proper use of personal protective equipment (PPE).• Social distancing rules for the workplace and permitting employees to work from home where appropriate.• Increased attention to disinfecting work areas, break room and restroom facilities. Instruct employees to conduct a complete between-shift wipe-down of handrails, desks, lifts and other equipment workers typically come in contact with.• Ensuring adequate quantities and use of hand sanitizers and antiseptic wipes.• Limiting access to the facility, Meet drivers and other non-essential visitors in the yard vs. having them come into the facility, and if required to enter take their temperatures first.• Limit daily breaks and lunch to on-site locations so workers are not exposed to infections outside of the workplace. Limit interaction among employees during shift changes. Conduct regular team stand-up meetings in smaller groups of 10 or less.• For new hires, include temperature checks and bar anyone who appears to have a fever or respiratory illness. Also conduct temperature checks of employees arriving and departing the facility.(Source: Material Handling & Logistics Write up)The first and most important change will be the rise of domestic sourcing to make supply chains more local. This will also push establishment of global value chains in India to not only serve domestic but also export markets.As cargo moves nationally, crisscrossing multiple states, multimodal transport using a combination of rail, sea and road will gain dominance. Typically, multi modal transport’s first and last mile is mostly local with a shorter lead thereby reducing inter-state movements and the number of touch points for cargo.One observation during this crisis was that many companies are operating supply chains mostly just in time with limited pipeline stock and were unable to provide products when needed.There is no doubt with the massive changes in supply chains, digital transformation of the industry will be hastened. From planning to execution, every element of the logistics process would be reconsidered, repurposed and digitized.(Author of the article is MD - Transport Corporation of India, senior VP- ASSOCHAM, Economic Times)

What is TReDS discounting rate ? Where can I get more information?
Questioned by Shivam Mehta, MAHARASHTRA
TReDS is an online platform to meet the immediate cash requirements of small and medium businesses. One can register on this platform and sell the "Accounts Receivables" of their business to get immediate cash. These bills will be sold at a "discounted rate" to the buyer; for example if the the Accounts Receivable is Rs. 100. discount rate is 10%, then the seller will receive Rs. 90 (against Rs 100) from the buyer. For more details refer to - https://m.rbi.org.in/Scripts/FAQView.aspx?Id=132.

We have availed a business loan from an NBFC, for which moratorium was announced from April to June 2020. This was further extended for another 3 months. But now we are told that moratorium is over and EMI for June 2020 has to be paid. Kindly advise correct position
Questioned by Asit Sinha, Maharashtra
If you wish to avail moratorium from June to August 2020, you will have to place moratorium request once again for the next 3 month. Based on the policy adopted by the lending institution, the moratorium may be extended to all borrowers or only those who approach the lender in this regard. In any case, the overhauled terms must be conveyed to the borrower and the acknowledgment must be recorded.A choice might be given to the borrower opting the moratorium. In the event that the borrower neglects to react or stays quiet, it might be considered as including esteemed acknowledgment, the re-examined terms will be shared which ought to be acknowledged by the borrower-either electronically or such different methods according to the particular loaning practice. Further, the PDC or NACH ought not to be introduced for encashment according to the current terms.However, in case the borrower has not opted for the moratorium by his action or otherwise has expressly denied the option, the PDC and NACH shall be encashed as per the existing terms and necessary action can be initiated by the lender in case of dishonour.

Which all institutions provide loans up to 10 lakhs for small scale businesses?
Questioned by Vijay Ramkrishna Patil, Maharashtra
The finance sector in India is transforming. Banks and Non-Banking Financial Companies (NBFCs) are among the financial institutions that are licensed to provide loan products NBFCs have known as an important financial intermediary predominantly for the small-scale and retail sectors with the growing importance assigned to financial inclusion. They offer facilities like working capital loans, housing loans, equipment lease finance, hire purchase finance, personal loans, vehicle financing, etc. Banks provide assistance in time of need to businesses by providing funds. Mudra loan is business loan given by government of India to Small and Medium enterprise. You can avail business loan with longer duration without collateral if your business is doing well. Central government has come up with the ‘Atmanirbhar Bharat’ - special economic and comprehensive packages for various sections including the MSMEs. Banks and NBFCs provides similar products that suits for small business. They offer a wide range of products and services for individuals. The specific services offered vary widely between different types of financial institutions. Muthoot Fincorp Ltd. has launched a special Gold Loan Scheme for businesses called "Ashwas Dinam Gold Loan", where maximum loan value against gold along with steady interest rate for 180 days is offered; along with 24x7 online repayment options and reducing interest on daily payments.

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