Tiding over rough times with a business loan
I have been in the manufacturing space for almost 5 years with some very good growth year on year. We basically do job work for some of the larger organisations which in turn work with some of the brands like Tommy Hilfiger, Gap and so on. We have a team strength of approximately 300 people with about 180 sewing machines, 40 ironing tables and multiple other job workers. However, back in 2013, I had a small challenge in managing the finance. While the turnover was approximately 3.5 Cr, our profits were diminishing as the clients were squeezing us on margins. Also, there was a challenge in the payments as the cycle had changed from 60 days to 90 days and at times even worse. At this instance, I was in a dilemma on how to manage the finances as we did not have sufficient money to scale and also make payouts for the following month. I had a word with my CA and that’s when he suggested I look for a business loan in Bangalore. While, I had never wanted to take a business loan because of the interest rates, I guess this was the best way forward.
I applied to multiple banks and to my surprise I got some very good offer for the loan. The loan was disbursed based on my eligibility which was in turn calculated basis of my Annual Turnover, profit after tax, the number of years that I have been in business, my personal CIBIL score, the team strength, the kid of company registration, my IT returns for the previous years and many more parameters. Based on the inputs I choose HDFC bank and got a business loan for approximately 15 lakhs disbursed to my company account. The interesting part was the bank with which I had an account could not match the rate of interest offered by HDFC. I guess each bank has its own set of rules basis which we would be eligible for loans.
I submitted all my documents and there were multiple verifications and finally got the loan that I so desperately needed. I used this money to quickly get some more machinery and pay off salaries for the following month. As the saying goes fortune favours the brave, the following month I also got the outstanding payments from my clients. Suddenly there was an excess balance in my account which I used smartly to get some more equipment and people. Having seen this work very well, I went ahead and applied for one more loan in 2014 and this sure has helped us scale at a quicker pace. While I see the valuation game being played, I am very happy raising debt to cater to my needs and run a business efficiently. So remember if you meet the banks eligibility criteria for a business loan, then leverage on that before diluting.

















