I want to take a bank loan to start a small grocery store. How will the bank decide the maximum amount it can give me? What can I furnish as security? I own a two-bedroom apartment. Can it be considered as security for the loan? Banks are usually comfortable lending to an existing business, rather than funding start-ups. Some of them do have special schemes for small entrepreneurs, and may be willing to fund your venture.
The loan will be sanctioned after you have submitted a project plan, which describes the prospects for your business, and also has the information about your finances and net worth. Some banks are willing to fund up to Rs 15 lakh without collateral, provided you are able to bring in your own capital into the business. Banks usually do not offer mortgage-based loans for businesses, but the value of your home will add to your net worth and can increase your credit-worthiness. There is no standard set of practices when it comes to small business loans. Approach a bank that you are dealing with already since they know you and are familiar with your transactions.
