Banks of­fer both, term loans and over­draft fa­cil­i­ties which businesses can use to in­crease their work­ing cap­i­tal. Here are cer­tain best prac­tices which part­ners can em­ploy to get the best re­sults through reg­u­lar bank­ing chan­nels.

Many small businesses do not show prof­its or show less profit to pay lower in­come tax. If you need to im­press bankers as well as po­ten­tial in­vestors, ac­cu­rate bal­ance sheets and proper in­com tax re­turns help.

A healthy aver­age quar­terly bal­ance helps businesses with proven track records to ob­tain un­se­cured loans or over­draft fa­cil­i­ties with­out col­lat­eral. Typ­i­cally, banks are will­ing to take a risk of up to three times the aver­age quar­terly bal­ance for un­se­cured loans or over­draft sanc­tions. There are part­ners who have man­aged to get 5-6 times their quar­terly bal­ance as over­draft fa­cil­i­ties.

Sim­i­larly, fixed as­sets such as real es­tate can be ju­di­ciously used to get an over­draft fa­cil­ity which is 1.5-3 times the mar­ket value of the col­lat­eral. Real es­tate rates are al­ways go­ing up, so re­mem­ber to ne­go­ti­ate on the credit ap­provals and quan­tum of sanc­tions ev­ery year.

Bankers and NBFCs are im­pressed with pur­chase or­ders, con­tracts, au­tho­rized part­ner­ship agree­ments and other documents which help prove your cred­i­bil­ity. While these documents alone can’t fetch you a loan, they will boost your chances of get­ting a loan at per­haps a lower than mar­ket in­ter­est rate.

Take ex­tra care to main­tain a healthy bank state­ment for at least six months prior to a loan re­quest. Avoid check dis­hon­ors at any cost.

Get the com­pany ap­proved by dif­fer­ent credit rat­ing agencies. Con­sumer rat­ings by CIBIL of di­rec­tors and pro­mot­ers also help in im­press­ing bankers.

Fi­nally, re­mem­ber that bank­ing is a re­la­tion­ship busi­ness that works both ways, so form a strong re­la­tion­ship with the se­nior staff of the bank.

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