Types of Debt Financing for Startups – Shashank Agrawal, Worth Corporate Solutions

Shashank Agrawal, Director, Worth highlights the essentials one needs to know while applying for a debt and the consequences it has on the business. This video will give young and budding entrepreneurs insight into the various dynamic facets of financing one’s startup.

Hi i’m shashank agronomy chartered accountant and i also have my starter worth corporate solutions private limited in fact we are into debt financing that the core area and what is debt financing for startups is really you know look at and identify the best options for starters that is also cheaper than equity even was to understand and it’s very difficult to

Accept at first point in that that is cheaper here equity is extensive you pay text and then you get your fresh aquilini so let’s say four meter with hundred the earning the 30 rupees goes intakes and 70 rupees comes into the capital but when you go for your debt raising your money through any form of debt that will discuss now you always get a direct you know

Cheaper and easier cuz costs money so you pay a simple interest on that compound or simple interest whatever money you use and most artists have to ensure that they have the best adoption and what are the benefit of rare you know raising it is you get to pay low interest one you can pay off in installments as per your comfort three you pay interest only on the

Amount of loan is utilized amount of debt utilized and whenever you compare with the equity financing options it is rare that you find that that is expensive and but yeah one thing you should know is whenever you go for that raising you should be prepared for lenders questions when why why you want money what will we do for the money when you exactly need money

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When shall you return my money what is the interest cause that you can afford to dr. business gives that cash flow to pay my money back the amount of loan that has raised these are basic kind of questions that any any kind of linda would come to make your bank maybe be a start-up fun by government of india that gives you 10 200 lakh rupees on a twelve to thirteen

Percent rate of interest it could be anyone but the question remains quite common when you apply for raising a date through a bank or a non-banking finance company you should have a basic documents ready your bank accounts your permanent account number your license is the gamma so that you create know your customer norms have to be complied with maybe aadhaar card

Or something then then comes to you and ask similar very basic question do you have a property to offer so there is a cgt sme loans it’s a collateral guarantee by government of india in which you can raise up to two curves of debt without giving any collateral but if you start up utilize the facility it’s a bit expensive because you have to pay for the guarantee

Cost two to three percent more expensive than the normal cost alone but yes you need not have a collateral you need not go to your parents and asked that i want to your property i want your house property to give you know you give that property for some risky business that i think which is more risky that you had been doing earlier types of debt financing can be

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Various like you know you can have unsecured loan from the bank which can be paid in 36 months maybe nbsp would come and offer you make a little expenses see generally nbfc a non-banking finance company offers view was structured loan they can go beyond what a nationalized bank could ever do for it or private man would do for it but they would charge a premium

On it we have to be sure about it do we really need that much of money so here the cash flows you’re planning you understanding about your debt comes into play if you need money then only borrow money if you need money surely borrow money but never never underestimate the cost of interest in sure that you’ve planned for it your cash flows work on it you

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Types of Debt Financing for Startups" – Shashank Agrawal, Worth Corporate Solutions By Wadhwani Foundation