financing your venture

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Financing Your Venture : 

Financing Your Venture Presented By: Aditi Dwivedi Asstt. Prof. Department of Management Studies Government Engineering College,Jhalawar

Presentation Plan : 

Presentation Plan A. Definition of MSME. B. Indian MSME sector- A Profile. C. Why Financing is so important? D. Arranging Finance Long term capital Short term capital Risk capital Seed Capital Bridge Loan Documentation for Loan E. Institutional Support structure F. Small Business Financial Management

A. Definition of MSME? : 

A. Definition of MSME? In India, the enterprises have been classified broadly into two categories Manufacturing ; and Those engaged in providing/rendering of services. Both categories have been further classified into micro, small and medium enterprises based on their investment in plant and machinery or on equipment. The present ceiling of investment to be classified as micro, small or medium enterprises is as under :

B. Indian MSME sector- A Profile : 

B. Indian MSME sector- A Profile MSME’s contributes 8 per cent of the country’s GDP, 45 per cent of the manufactured output and 40 per cent of its exports. The MSMEs provide employment to about 60 million persons through 26 million enterprises. The labour to capital ratio in MSMEs and the overall growth in the MSME sector is much higher than in the large industries. The geographic distribution of the MSMEs is also more even. Thus, MSMEs are important for the national objectives of growth with equity and inclusion.

C. Why is financing MSMEs so important? : 

C. Why is financing MSMEs so important? Financing is necessary to help them set up and expand their operations, develop new products, and invest in new staff or production facilities.

D. Arranging Finance : 

D. Arranging Finance No MSME unit can take off without monetary support. The need for finance can be classified into following types: Long and medium term loans Short term loans Risk Capital Seed Capital Bridge loans

1. Long and Medium Term Loans : 

1. Long and Medium Term Loans Long and medium term loans are provided by SFCs, SIDBI and SIDCs. Banks also finance term loans. This type of financing is needed to fund purchase of land, construction of factory building/shed and for purchase of machinery and equipment

2. Short Term Loans : 

2. Short Term Loans The short-term loans are required for working capital requirements, which fund the purchase of raw materials and consumables, payment of wages and other immediate manufacturing and administrative expenses. Such loans are generally available from commercial banks. The commercial banks also sanction composite loan comprising of working capital and term loan up to a loan limit of Rs.1 crore.

3. Risk Capital : 

3. Risk Capital Funds made available for Startup firms and small businesses with exceptional growth potential. Managerial and technical expertise are often also provided. That is called Risk Capital also called Venture Capital.

4. Seed Capital : 

4. Seed Capital Seed capital is money used as the initial investment for a new product or service launch. Seed capital enables businesses to launch a new product or service without depending fully on a business loan.

4. Bridge Loan : 

4. Bridge Loan A bridge loan is interim financing for an individual or business until permanent or the next stage of financing can be obtained.

Documentation for Loan Application : 

Documentation for Loan Application Balance Sheet and Profit Loss Statement for last three consecutive years of firms owned by promoters Income Tax Assessment Certificates of partners/Directors Proof of Possession of Land/Building Architect’s estimate for construction cost Partnership deed/Memorandum and Articles of Associations of Company Project Report Budgetary Quotations of Plant and Machinery

E. Institutional Support Structure : 

E. Institutional Support Structure NATIONAL SMALL INDUSTRIES CORPORATION (NSIC) SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (SIDO) SMALL INDUSTRIES SERVICE INSTITUTES (SISI) SMALL SCALE INDUSTRIES BOARD (SSIB) STATE SMALL INDUSTRIES DEVELOPMENT CORPORATIONS(SSIDC) DISTRICT INDUSTRIES CENTERS (DIC) TECHNICAL CONSULTANCY SERVICES ORGANIZATION OF KARNATAKA (TECSOK). SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD (KIADB) KARNATAKA STATE FINANCIAL CORPORATION (KSFC)

F. Business Financial Planning : 

F. Business Financial Planning One area of particular concern for the smaller business owner lies in the effective management of working capital. Lack of control in this crucial area is a primary cause of business failure in both small and large firms. Business financial planning affects how and on what terms you will be able to attract the funding required to establish, maintain, and expand the business.

Slide 16: 

Financial planning determines the raw materials you can afford to buy, the products you will be able to produce, and whether or not you will be able to market them efficiently. It affects the human and physical resources you will be able to acquire to operate your business. It will be a major determinant of whether or not you will be able to make your hard work profitable.

Slide 17: 

THANK YOU For your active listening Plant a seed of technology, fertilize with management talent, water with abundant amounts of venture money, grow companies, and hope for a bountiful harvest three to seven years later.

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