“Securing a Bank Loan for Your Startup: A Comprehensive Guide

The Indian government offers numerous loan schemes for startups. This article will guide you through the process of securing a bank loan for your business under these schemes.

The key to securing a bank loan lies in convincing the Loan Authorization Manager or Chief Manager of your eligibility and potential. Here are the essential factors they consider:

1. A clear business plan
2. Business track record
3. Credit score
4. Revenue potential
5. Quality of cash cycle

As an entrepreneur, you need to demonstrate certain qualities to convince the manager of your potential. These include:

1. Leadership
2. Creativity
3. Risk-taking
4. Determination
5. Adaptability
6. Vision
7. Strong work ethic
8. Effective communication
9. Resilience
10. Time management

These ten qualities should be evident in your presentation. Before your presentation, prepare your financial plan document with your auditor. The auditor’s document will be accepted as legal, while your presentation aims to build trust with the Manager.

Let’s consider an example of how you can convince the Manager to start a tissue paper making business.

The Manager might have several questions in mind. Here’s how you can address them:

1. How will you market the product?

Before starting the business, accurate data might not be available, but you can present your plan and progress. For instance, if you’re starting a tissue paper making business in Mumbai, divide Mumbai into zones and target the big cities in each zone. Tissue papers are primarily used in restaurants, bakeries, cafes, catering services, etc. Based on your business analytical data, you can target a certain percentage of these businesses in each city.

This approach demonstrates your vision, determination, and resilience.

2. How will you face the competition?

After presenting your market analysis and penetration plan, show how you plan to face the competition. You could target businesses served by traders, focusing on areas outside the big city where the competition might be less.

This shows your adaptability.

3. How will you differ from existing manufacturers?

You could differentiate yourself by purchasing a tissue paper making machine with a unique 1/8 fold feature, which is new to the market. This not only sets you apart from existing manufacturers but also helps in your marketing campaign.

This demonstrates your risk-taking ability and creativity.

4. How will you repay the loan? What will your profit be?

Present your financial plan here. If you’re targeting a profit of 20%, you need to generate a revenue of INR 5 lakhs per month. If your tissue paper product unit price is INR 25.00, then you need to sell only 20000 Units per month, which is only 50% of your production. However, mention that all these will happen after six months of starting the business.

This shows your strong work ethic.

Finally, conclude the presentation with Financial ratios:

1. Liquidity ratio
2. Leverage ratio
3. Efficiency ratio
4. Profitability ratio
5. Market value ratio

If you’re planning to start a business under a business loan and require a business presentation, feel free to contact us.

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