Business Loans: Six Steps

Six Steps to Successfully Getting Business Loans

1. Decide how much money you need and for what purpose. Coming to a clear understanding of the purpose of your loan is key in selecting the kinds of business lenders you will need to approach since many commercial lenders specialize in certain areas. Some of your options would be working capital, inventory, equipment, expansion and new facilities financing.

2. Determine what collateral you will use for the loan you are seeking some of you options are your cash flow, inventory, equipment, receivables, commercial property, a new contract and personal guarantees. While you may not have to come up with 100 percent collateral coverage all lenders will want some kind of guarantee so start lining up your collateral.

3. Pull your company’s business credit report and examine it very closely for accuracy and any errors, the last thing you want is for something unexpected to prevent you from obtaining your loan. Also pull your own personal credit report and those you of your top management team or key officers and partners and do the same kind of through review as you did with your business credit report.

4. Prepare a good business plans detailing your business operations, how you will use the funds you receive, and what kind of profits your use of these funds will create. The profits your use of the business loan will create is key to any business plan or funding request, because it is from those profits that the loan will be repaid.

5. Develop a list of lenders specific to your loan needs your list could include commercial banks, commercial finance firms, specialty lenders, private lenders, and government loan programs. In selecting lenders keep in mind that while commercial banks have very strict lending guidelines there are many different kinds of commercial lenders who will lend to companies that banks will not.

6. Select those lenders you want to work with and prepare and submit your loan requests to them then give them plenty of time to make a decision on your loan request. The last thing you ever want to do is to try and rush a lender into making a fast loan decision on a loan request, or you won’t like the fast decision you get I promise.

In your search for a business loan there are many factors that are beyond your control, but these steps are six factors that you can control as you look for business financing. In troubled economic times like those we are experiencing now you may have to look a little longer for the business loan your company needs, but it will be worth the effort when you get the money you need to operate and grow your business.

TELECOM

Idea Cellular's key metrics

Beginning of operations in Mumbai, Kolkata will expand margins

Idea Cellular seems to be well on the road to recovery, with its fairly sound performance in the December quarter reinforcing its strengthening footprint as a pan-India player.

A marginal increase in ARPU (average revenue per user) too should be heartening, indicative of the peaking out of competitive intensity that ate into the margins of players across the industry over the past 18 months.

Revenues for the quarter increased by 25.6 per cent over the same period last fiscal to Rs 3,956 crore, while net profits expanded by 42.8 per cent to Rs 243 crore.

Sequentially too, revenues and profits have grown at a healthy pace.

Key metrics improve

Over the past year, the company has steadily moved into newer circles and now has country-wide operations. Despite expanding operations, Idea has managed to keep its operating margins steady at 24 per cent levels. While it is expanding margins in its 13 established service areas of operation, it has managed to continuously reduce losses in nine new circles. With lucrative areas such as Mumbai, Tamil Nadu and Kolkata being among the newer geographies, there is sufficient scope for Idea to cut losses in these areas and expand margins further.

After many quarters of falling ARPUs, Idea has witnessed a marginal increase on this front, accompanied by a slight increase in minutes of usage. Realisations per minute have remained steady at around 42 paisa levels, which compares favourably with many top peers. The expansion to newer service areas has also allowed the company to continuously reduce its cost per minute.

The ushering in of mobile number portability would pose a challenge to the company in retaining subscribers. Recent data from Haryana, where it was first introduced suggests a net outflow of subscribers. It remains to be seen if there would be a proportionate loss of revenues subsequently as over the past few years, subscriber growth has outstripped revenue growth for players across the industry.

Idea has a revenue market share of 12.8 per cent and would hope for minimum erosion on this front.

Over the next few months the company is set to launch 3G services. This may offer sufficient scope to increase realisations as the 11 service areas where it has won spectrum account for 80 per cent of its existing revenues and would allow for a focussed customer mining.

Philips buys Preethi

Philips buys Preethi to grow in South India:

                

Philips has agreed to buy South Indian home appliances brand Preethi for over Rs 350 crore in one of the largest M&A transactions in the intensely-competitive home appliances market in the country. The deal involves the purchase of the Preethi brand along with manufacturing facilities and after-sales divisions. Maya Appliances, which makes and owns the Preethi brand name, will continue to function as a separate company.

Preethi mixers are a popular brand in the South and Philips will get access to a large market with dedicated plants and after-sales service. The Indian mixer market is estimated to be around Rs 1,400 crore and around 4.8 million units are sold every year. Preethi alone sells around 1.6 million units. Preethi, which has been trying to expand in the north and west, will be able to do so, riding on Philips’ dealer network.

The deal is expected to close by the first quarter of next fiscal. Maya Appliances reported sales of Rs 300 crore for the year ended March, 2010 and plans to touch Rs 400 crore this fiscal. Preethi was established in 1978 and 850 employees work on the brand. The brand has seen double-digit revenue growth for several years.

Since launching Their first products over 30 years ago, Preethi has grown into one of the most successful and trusted kitchen appliance brands in India. 

Now Maya Appliances have an even brighter future with Philips. The combined strength two organisations will benefit both their customers and employees.

To capture growth in kitchen appliances, Philips need to intimately understand local consumer needs and deliver the right solutions. By building on Preethi’s unique local knowledge, heritage of quality and substantial distributor and dealer network, They are well positioned to drive growth in one of the world’s most dynamic kitchen appliance markets.

Philips will also use Preethi’s manufacturing facility to make some other products. The brand was manufactured from seven locations - four in Himachal Pradesh and three in Tamil Nadu - and is now planning to set up one more near Chennai with an investment of Rs 30 crore.