Description
Finance Management - Project on Term Loan...
TERM LOAN
What is Term Loan…?
A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years.
I.
A loan is the purchase of the present use of money with the promise to repay the amount in the future. According to a pre-arranged schedule and at a specified rate of interest.
II.
III. Bank term loan are very common kind of lending
General purpose of Term Loan
•Expansion & Modernization •Up-gradation of technology & energy conservation schemes / machinery.
•Design and introduction of new layouts in the factory to enhance productivity.
•Acquisition of software, hardware, consumable tools, jigs, fixtures etc •Acquisition of ISO and other similar certifications. •Business visits abroad for technology, finalizing business deals, participating in exhibitions / fairs for market promotion etc.,
Term Loan Procedure
Submission of loan application with Project report: I. II. III. IV. V. VI. VII. Particular of the firm Particular of the project Cost of the project Means of financing Marketing and selling arrangement Profitability and cash flow Government consent
Types of Term loan
2 types Loan
Short Term Loan
Long Term Loan
Types of Term loan
Short Term Loan
I.
Use for seasonal build-ups of inventory and receivables, as well as to take advantage of supplier discounts or pay lump-sum expenses, such as taxes or insurance.
Repayment is usually in a lump sum with interest at maturity
II.
III. Short-term loans are generally made on a secured (or collateralized) basis and are for a term of a year or less. IV. Short-term loan typically lines of credit , working capital loans, or accounts receivable loans, usually reach maturity within one year or less V. A short term business loan is an option an established business that has a strong support.
Types of Term loan
Long Term Loan
I.
II.
These are set for three & 10 Years, some run for 20 years.
Long-term loans are collateralized by a business's assets and typically require quarterly or monthly payments derived from profits or cash flow.
III. These loans usually carry wording that limits the amount of additional financial commitments the business may take on (including other debts but also dividends or principals' salaries), and they sometimes require that a certain amount of profit be set-aside to repay the loan. IV. Examples are fund vehicles, computer systems, plant, machinery or other equipment
Banking institution
Web blink :http://vijayabank.com
VIJAYA Bank as a Bank
? Vijaya Bank, was founded on 23rd October 1931 by late Shri A.B.Shetty and other enterprising farmers in Mangalore, Karnataka. The objective of the founders was essentially to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. The bank became a scheduled bank in 1958. ? Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it during the 1963-68. The credit for this merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank. ? The bank was nationalised on 15th April 1980. The bank has built a network of 1190 branches,47 Extention Counters and 516 ATMs as at 28.02.2011, that span all 28 states and 4 union territories in the country. ? Each branch provides effective and efficient services and significantly contributes to the growth of the individual, and the nation 010.
VIJAYA Bank
?Vijaya Bank provides term finance/term loans for business expansion, up gradation of existing facilities etc to ease the pressures on margins of the company. ?The Bank is providing structured term loans to meet the short term as well as long term funding requirements . Bank offer specific solution so as to match repayment with your cash flows to repay the debt thereby enhancing your profitability.
What do banks look for when making decisions about term loans?
?Character- How you managed other Loans? Business Experience?
?Credit Capacity- Bank will Conduct a full credit analysis , including a detailed review of financial statements and personal finances to assess your ability to repay. ?Collateral-Expect the bank to want this source to be larger than the amount you're borrowing
What do banks look for when making decisions about term loans?
Capital what you own outside of the business-bonds, stocks, apartment buildings-that might be an alternate repayment source. Comfort/confidence with the Business Plan How accurate are the revenue and expense projections? Expect the bank to make a detailed judgment. What is the condition of the economy and the industry?
What do banks look for when making decisions about term loans?
Capital what you own outside of the business-bonds, stocks, apartment buildings-that might be an alternate repayment source. Comfort/confidence with the business plan How accurate are the revenue and expense projections? Expect the bank to make a detailed judgment. What is the condition of the economy and the industry?
Appraisal Procedure
•Flash report :
The Bank prepares flash report . The flash report is the guage whether it is feasible to provide the loan to the applicant. It determines the feasibility of the project by looking the financial, economical, technical, marketing, managerial aspects. It determines the amount of money that bank will earn after providing loan. It The financial ratios for appraisal of the project includes: ? Debt equity ratio. ? Interest coverage ratio. ? Debt service coverage ratio. ? Profitability ratio.(such as return on capital employed, Net profit ratio, operating profit ratio) ? Capital structure
Project Appraisal
•Project Appraisal is the process by which the Financial Institutions makes an independent and objective assessment of the various aspects of the investment proposition for arriving at a financing decision Broad aspects of Appraisal ?Financial Appraisal ?Technical Appraisal ?Economic Appraisal ?Management competence ?Market Appraisal
Project Appraisal
•Project Appraisal is the process by which the Financial Institutions makes an independent and objective assessment of the various aspects of the investment proposition for arriving at a financing decision Broad aspects of Appraisal ?Financial Appraisal ?Technical Appraisal ?Economic Appraisal ?Management competence ?Market Appraisal
Financial Appraisal
I. II. III. IV. V. It seeks to assess the following: Cost of Project. Capital structure. Cash flow estimate. Return of investment on the project.
VI. Tax benefit.
Technical Appraisal
?Focuses mainly on the following aspects I. II. III. IV. product mix capacity process of manufacture engineering know-how and technical collaboration V. raw materials and consumables VI. site and location VII. building VIII.plant and equipments IX. manpower requirements
Terms & Conditions
I. II. III. IV. Arrangements of the Loan Insurance State indemnity The loan period and possession of the loaned objects V. Financial conditions VI. Governing law and jurisdiction
Term loan Document
I. Security Documents:II. Demand promissory notes. III. Letter of continuing Security. IV. Letter of lien & set off V. Letter of Guarantee VI. Agreement of Hypothecation of movable property. VII. Post Document:VIII.Insurance Policies IX. Endorsement of registration Certificate
Disbursement Of Loan
?Disbursement of loans-
?Based on the information provided by the borrower, the Financial Institution will determine the amount of term loan to be disbursed from time to time. Before the entire term loan is disbursed, the borrower must fully comply with all terms and conditions of the loan agreement. Disbursement of loan is of three method. ? Full ? Partial ? Step by Step
Borrowers is required to submit Document to bank
I. II. III. IV. V.
Physical progress of project Financial status of project Contribution made by promoters Projected fund flow statement Compliance and statutory requirements
Financial Review for Last four Years
[ in Cr. ]
Financial Review for Last four Years [ Rs. in Cr. ] Mar'07 Paid up Share Capital Mar'08 Mar'09 Mar'10
433.52
Reserves Loans & Advances Gross Profits 1056.96 Net Profits 507.29 Investments 21107.45 1417.81 859.23
433.52
1672.89 1272.59 898.91 262.48 17387.7 4335.18
433.52
1884.55 1473.42 660.88 361.28 16617.32 4335.18
433.52
2229.96 1635.03 696.02 331.34 12018.41 4335.18
Number of equity shares (Lacs)
4335.18
doc_906550676.ppt
Finance Management - Project on Term Loan...
TERM LOAN
What is Term Loan…?
A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years.
I.
A loan is the purchase of the present use of money with the promise to repay the amount in the future. According to a pre-arranged schedule and at a specified rate of interest.
II.
III. Bank term loan are very common kind of lending
General purpose of Term Loan
•Expansion & Modernization •Up-gradation of technology & energy conservation schemes / machinery.
•Design and introduction of new layouts in the factory to enhance productivity.
•Acquisition of software, hardware, consumable tools, jigs, fixtures etc •Acquisition of ISO and other similar certifications. •Business visits abroad for technology, finalizing business deals, participating in exhibitions / fairs for market promotion etc.,
Term Loan Procedure
Submission of loan application with Project report: I. II. III. IV. V. VI. VII. Particular of the firm Particular of the project Cost of the project Means of financing Marketing and selling arrangement Profitability and cash flow Government consent
Types of Term loan
2 types Loan
Short Term Loan
Long Term Loan
Types of Term loan
Short Term Loan
I.
Use for seasonal build-ups of inventory and receivables, as well as to take advantage of supplier discounts or pay lump-sum expenses, such as taxes or insurance.
Repayment is usually in a lump sum with interest at maturity
II.
III. Short-term loans are generally made on a secured (or collateralized) basis and are for a term of a year or less. IV. Short-term loan typically lines of credit , working capital loans, or accounts receivable loans, usually reach maturity within one year or less V. A short term business loan is an option an established business that has a strong support.
Types of Term loan
Long Term Loan
I.
II.
These are set for three & 10 Years, some run for 20 years.
Long-term loans are collateralized by a business's assets and typically require quarterly or monthly payments derived from profits or cash flow.
III. These loans usually carry wording that limits the amount of additional financial commitments the business may take on (including other debts but also dividends or principals' salaries), and they sometimes require that a certain amount of profit be set-aside to repay the loan. IV. Examples are fund vehicles, computer systems, plant, machinery or other equipment
Banking institution
Web blink :http://vijayabank.com
VIJAYA Bank as a Bank
? Vijaya Bank, was founded on 23rd October 1931 by late Shri A.B.Shetty and other enterprising farmers in Mangalore, Karnataka. The objective of the founders was essentially to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. The bank became a scheduled bank in 1958. ? Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it during the 1963-68. The credit for this merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank. ? The bank was nationalised on 15th April 1980. The bank has built a network of 1190 branches,47 Extention Counters and 516 ATMs as at 28.02.2011, that span all 28 states and 4 union territories in the country. ? Each branch provides effective and efficient services and significantly contributes to the growth of the individual, and the nation 010.
VIJAYA Bank
?Vijaya Bank provides term finance/term loans for business expansion, up gradation of existing facilities etc to ease the pressures on margins of the company. ?The Bank is providing structured term loans to meet the short term as well as long term funding requirements . Bank offer specific solution so as to match repayment with your cash flows to repay the debt thereby enhancing your profitability.
What do banks look for when making decisions about term loans?
?Character- How you managed other Loans? Business Experience?
?Credit Capacity- Bank will Conduct a full credit analysis , including a detailed review of financial statements and personal finances to assess your ability to repay. ?Collateral-Expect the bank to want this source to be larger than the amount you're borrowing
What do banks look for when making decisions about term loans?
Capital what you own outside of the business-bonds, stocks, apartment buildings-that might be an alternate repayment source. Comfort/confidence with the Business Plan How accurate are the revenue and expense projections? Expect the bank to make a detailed judgment. What is the condition of the economy and the industry?
What do banks look for when making decisions about term loans?
Capital what you own outside of the business-bonds, stocks, apartment buildings-that might be an alternate repayment source. Comfort/confidence with the business plan How accurate are the revenue and expense projections? Expect the bank to make a detailed judgment. What is the condition of the economy and the industry?
Appraisal Procedure
•Flash report :
The Bank prepares flash report . The flash report is the guage whether it is feasible to provide the loan to the applicant. It determines the feasibility of the project by looking the financial, economical, technical, marketing, managerial aspects. It determines the amount of money that bank will earn after providing loan. It The financial ratios for appraisal of the project includes: ? Debt equity ratio. ? Interest coverage ratio. ? Debt service coverage ratio. ? Profitability ratio.(such as return on capital employed, Net profit ratio, operating profit ratio) ? Capital structure
Project Appraisal
•Project Appraisal is the process by which the Financial Institutions makes an independent and objective assessment of the various aspects of the investment proposition for arriving at a financing decision Broad aspects of Appraisal ?Financial Appraisal ?Technical Appraisal ?Economic Appraisal ?Management competence ?Market Appraisal
Project Appraisal
•Project Appraisal is the process by which the Financial Institutions makes an independent and objective assessment of the various aspects of the investment proposition for arriving at a financing decision Broad aspects of Appraisal ?Financial Appraisal ?Technical Appraisal ?Economic Appraisal ?Management competence ?Market Appraisal
Financial Appraisal
I. II. III. IV. V. It seeks to assess the following: Cost of Project. Capital structure. Cash flow estimate. Return of investment on the project.
VI. Tax benefit.
Technical Appraisal
?Focuses mainly on the following aspects I. II. III. IV. product mix capacity process of manufacture engineering know-how and technical collaboration V. raw materials and consumables VI. site and location VII. building VIII.plant and equipments IX. manpower requirements
Terms & Conditions
I. II. III. IV. Arrangements of the Loan Insurance State indemnity The loan period and possession of the loaned objects V. Financial conditions VI. Governing law and jurisdiction
Term loan Document
I. Security Documents:II. Demand promissory notes. III. Letter of continuing Security. IV. Letter of lien & set off V. Letter of Guarantee VI. Agreement of Hypothecation of movable property. VII. Post Document:VIII.Insurance Policies IX. Endorsement of registration Certificate
Disbursement Of Loan
?Disbursement of loans-
?Based on the information provided by the borrower, the Financial Institution will determine the amount of term loan to be disbursed from time to time. Before the entire term loan is disbursed, the borrower must fully comply with all terms and conditions of the loan agreement. Disbursement of loan is of three method. ? Full ? Partial ? Step by Step
Borrowers is required to submit Document to bank
I. II. III. IV. V.
Physical progress of project Financial status of project Contribution made by promoters Projected fund flow statement Compliance and statutory requirements
Financial Review for Last four Years
[ in Cr. ]
Financial Review for Last four Years [ Rs. in Cr. ] Mar'07 Paid up Share Capital Mar'08 Mar'09 Mar'10
433.52
Reserves Loans & Advances Gross Profits 1056.96 Net Profits 507.29 Investments 21107.45 1417.81 859.23
433.52
1672.89 1272.59 898.91 262.48 17387.7 4335.18
433.52
1884.55 1473.42 660.88 361.28 16617.32 4335.18
433.52
2229.96 1635.03 696.02 331.34 12018.41 4335.18
Number of equity shares (Lacs)
4335.18
doc_906550676.ppt