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Banks and SME's

The title would definitely raise a question in anybody's mind.. and I am sure with the SME owners would have sleepless nights in thinking and relating these two. All that banks advertise on the media reverses when and SME owner approaches the Bank for support.

If we look at who starts the SME :

- A professional with a great exposure and wanting to do something different in life
- An individual who may be most of the times Middle Class/Business Family(small) with great idea
- An Individual who would have takenover from their parents/family.

An SME owner would think of a bank and the usefulness when they are on the path for growth and needs that helping hand. What one faces is the requisites to support financially. There are good intentions of the Government to set some money for the development of SME's but with the stringent pre-requisites make one feel frustrated. The usual issues faced by SME owners is:

- Project presentation that way its required by the bank
- The Mortgage of equivalent (this is one of the biggest thing would have killed excellent potential business in India atleast)
- Business standing and returns for last three years(Ofcourse, a good idea won't wait that long)
- Guarantees and so on...

If you are SME business owner and starting the company or running it successfully. The following are the investments to be done when you approach any bank...

- Invest some of the money you would have got in business during initial stages into property
- Invest improving your productivity to ensure your profitability is reflected well in the balance sheet (even if you are doing a little business turnover)
- Ensure a good CA who understands the implications of every number you mention in your Balance Sheet.
- Set the expectations and the facts with the bank accurately in the beginning and record.
- Ofcourse any other locational issues you may want to be aware of....

The above are based on my experiences, I am sure there would be many... please do write if you think some more are important while reading this note....

Warm Regards,
Reddy GR
HR Function Management Company

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