Contrary to the general perception SMEDA is not a financing organisation but we can help you in getting finances from banks and other financing sources by

• Providing free business pre feasibilities.
• Making personalised business plans on highly economical costs. 
• Handholding and guiding you through the regulatory procedures of banks.

SMEDA does not provide financing directly, it can and does act as a facilitator between the SME and the financial institution(s) to arrange the required funds. Amongst the numerous services that SMEDA can provide to SMEs, financial consulting/advising is one of the strongest facility available.

Assistance in securing financing is subject to the SMEs conforming to SMEDA’s selection criteria. The selection criteria is:

1. Your project/business qualifies to the Definition of SMEs set by SMEDA,
2. Your request (filled as per Project Brief Form) is in conformity to SMEDA’s objectives,
3. You have consent to endorse & abide by the "SMEDA’s mandate letter",
4. Your project appears to be viable,
5. You have demonstrated your commitment to the project.

The financial services that SMEDA can provide are:

The basic rationale behind the services provided by SMEDA is to facilitate those SMEs who are facing problems in exploring financing options due to lack of:

• Expertise needed in identifying the exact financing required,
• Information and capability for preparing a business plan,
• Knowledge of procedures recommended by the financial institutions to launch a financing request.

Those entrepreneurs who intend to approach the financial institutions at their own are more than welcome to do so.

Generally, banks are comfortable to extend their financial support for the projects with 50-50 debt to equity ratio. In addition, they also look for adequate collateral equal to 130% of the total financing required.

Beside these two basic requirements, banks are more prone to projects having exceptional turnovers and sound cash flows. The history of the projects undertaken by the SME and trustworthiness of the entrepreneur are important criteria in the evaluation of the credit risk by banks.

Other issues related to financing like; interest rate, debt tenure and provision of necessary documents depends upon the terms & conditions of the financial institution selected.

In order to make optimal utilization of the time dedicated for SME services and to restrict the services only to genuine entrepreneurs, SMEDA charges a nominal fee for its services. The fee is equivalent to 1% of the financing amount to be arranged from the financial institution(s) with a minimum of Rs. 10,000. which is charged at the time of signing the contract between SMEDA and the client.

SMEDA does not guarantee success of the financing request. The proposal presented by SMEDA to the financial institution is subject to the consent and willingness of the respective financial institution. However, SMEDA assures its endeavor to prepare or present a business plan, which is marketable and acceptable to financial institutions.

A business plan precisely defines the product/services to be sold, its market, competition, operations and its viability. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis.

Business plan helps allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about the project and how it will repay borrowed money, a good business plan is a crucial part of any financing request. Additionally, it can inform sales personnel, suppliers and others about business operations and goals. SMEDA has developed a template to help prepare a business plan.

Committing your own funds is often the first financing step. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider a partner for additional financing. Commercial banks are an obvious source of financing. Other sources include business finance corporations, industrial development corporations and investment banks.

Trade credit and equipment leasing offer alternatives to borrowing. Leasing, for example, can be advantageous because the total lease repayment is tax deductible. Careful weighing of alternatives and a cost analysis will help you make the best decision.

Initially, the financier will ask three questions:

When applying for the loan, one must provide projected financial statements and a solid, clear business plan which gives the name of enterprise, location, production facilities, legal structure and business goals. A clear description of experience and management capabilities, as well as the expertise of other key personnel, will also be needed. "Business Plan Template" prepared by SMEDA is a good source for such an exercise.

There is no specific answer. However, the returns of proposed project must show a smooth & positive cash flows and reasonable profits to offset the loan installments as well as other liabilities.

The importance of keeping adequate records cannot be ignored. Without records, it would be difficult to see how well the business is doing. At a minimum, records are needed to justify:

• Request for financing from a financial institution;
• Claims for the worth of your business, in case you intend to sell it.
• Tax liabilities;

But most important, you need them to run your business successfully and make sound managerial decision in order to increase your profits.