Why Start-ups Should take Business Loans

India ranks third globally in the number of start-ups, which crossed 4,200, according to a NASSCOM report in October 2015. Start-ups are thriving in the country, owing to the competitive environment, better opportunities, better infrastructure modules and ease of finance. Finance is one of the most essential aspects for any corporate entity: whether it is a start-up or an established firm. The smooth flow of money is required to setup a business, for its day-day functioning and growth and expansion.

Advantages of Debt Financing

Start-ups may have a tough time funding their enterprise, especially in their nascent stage. Business loans are one of the most suitable options at this time, as well as in the company’s later stages. Here are few points that prove why start-ups should opt for corporate loans.

Business loans

1.     Reduces Personal Liability – Funding your business through your personal savings might have crossed your mind. Although it frees you of the burden of repayment, it comes with its own set of risks. Being a start-up, you can’t expect returns on investment during the initial years and there is a risk of loss as well. Moreover, it is wise to store your savings as an emergency fund. Also, you might be able to raise a much larger amount of money by seeking financing.

2.      Ownership Remains Intact – Unlike angel investors and venture capitalists who own equity against their investment in the company, ownership rights remain intact when you take a business loan.

3.      Tax Benefits – The interest payments are tax deductible. It is perhaps one of the biggest advantages that such form of financing offers.

4.      Profits Remain Intact– Much like banks have no say in operational decisions, they also do not have a share in your profits. You can use the profits to repay the credit amount or you can reinvest it.

5.      Long Repayment Tenure – Flexible repayment options makes it one of the most lucrative financing options. Such loans may have a tenure of as long as 10 years. The tenure differs according to the bank’s policy.

6.      Builds a Strong Credit History – SMEs can have large sums of money to fund various business activities. Timely and early repayments help to build a strong credit reputation, which can help you to secure future loans.

Banks and other financial institutions are less than willing to offer unsecured loans to start-ups, owing to the lack of experience and short timeline of business activity. Firms can take loans against securities in such cases. Securities may include inventory accounts, receivables, equipments, insurance policies or property. Banks in India also offer property loans to fund business activities, both against residential and commercial properties.

Does It Make Sense for Me to Invest in Real Estate?

According to the Ministry of Commerce, the Indian Real Estate market size is expected to reach $180 billion by 2020 from $93.8 billion in 2014. The government approved 100 smart city projects in August this year. Demand continues to be high in the face of supply for real estate across the country. In fact, along with equities, investments in the real estate sector have provided the highest returns reaching 20% over the last two decades.

Real estate will continue to appreciate as long as India’s human capital continues to expand and the GDP growth rate stays positive.

real estate investment

Is the Real Estate Market a Cause for Concern?

If you think that you should not now invest in residential property because markets have yet to correct themselves or that builders have been sitting on a large pile of unsold inventory and that the weak global economy restricts FDI flows into employment generating sectors then you could be in for an indefinitely long wait.

The soon to be implemented Real Estate Regulation and Development Bill 2015 is further expected to lift consumer and market sentiment.

It is true that the real estate sector has been hampered by fraud and red tape but proper care and precaution while making the purchase can ensure that you do not miss out on the opportunity to partake of the unparalleled returns.

real estate fund in India

Real Estate Investment Tips

·         The past record of a developer and the number of completed projects on time is a good indicator of whether a developer can be trusted or not.

·         That the location of the property in question drives prices is one of the most sound real estate investment tips you’re likely to hear.

·         As land acquisition continues to be controversial, real estate funds in India are a great alternative to owning a property. A Private Equity Fund works just like a Mutual Fund by letting experts handle the veracity and credentials of an under construction project. You also get the benefit of certain returns without taking the risk involved in a single project.

·         The capital involved in a real estate fund in India is also less than that in buying a property.

·         Investing in real estate should be looked at from a long term perspective. Hold on to your property for say 10 years and you will notice the power of compounding growth rates that give spectacular returns.

Property rates in favored locations in New Delhi and Mumbai are one of the highest in the world. Remember that real estate funds in India provide returns higher than gold or silver and are less volatile than equity. Economic growth in India is expected to continue and consumerism set to rise. It is best to buy before the market reaches its peak as by then you cannot hope to earn any higher returns on your investment.

Understanding 'Family Health Plans'

In today’s times, with uncertainty and illness dogging our every step, it is important to provide the best we can for our families. This entails securing our loved ones’ future in the only way we can – with the purchase of health insurance.

family health plan

But it is equally important to include the entire family – parents, spouse, children, and dependent siblings – in the ambit of health insurance. There is no way to predict what kind of health disaster will befall you or a member of the family. It is always prudent to be prepared to face the worst than to be stuck in a tragedy without financial help.

Many people take individual health plans; while this is a good practice, it is cheaper to include the family in one comprehensive family health plan than separate policies for all. The following questions will answer your doubts about the wisdom of taking family health insurance policies:

1. What does a family floater health insurance plan do?

It is designed to protect each member of the family from the costs of hospitalisation and treatment. It provides coverage against expensive treatment before and after surgery, hospitalisation charges and even accords daily cash allowance for those making hospital rounds every day. In short, it is a way of providing access to quality healthcare to yourself and your loved ones.

2. What kind of benefits does family health plan offer?

Most family health insurance policies cover hospitalisation, treatment costs, medical bills, doctor’s visit costs, post-surgery care, temporary or permanent loss of income due to illness/death, children’s education in case the earning member of the family passes away and some amount of money for the family’s upkeep after loss of income. Some plans also include cashless hospitalisation, which helps the policy holder get admitted to hospital and avail of treatment without paying a single rupee. Family health insurance policies are designed to take care of the family’s expenses both during the treatment period and post the death of the loved one.

3. Why can’t I simply save money for future health eventualities, instead of taking health insurance?

Because years of savings can be wiped out in just one hospital visit. After that point, there is no way to recoup your finances in a hurry. Instead of this, spending a few thousand rupees every year towards family health plan premiums can secure your loved ones in the most dependable way. You only need to pay the premiums every year or upgrade the sum assured whenever needed – at the time of a crisis, the insurer will take care of all the expenses. Thus, your savings are left untouched and can be used to create wealth for the family.