For starting any form of business, you need capital and if you do not have capital at home or in hand, it means that you need to borrow. Now the question is from whom to borrow money. There are large numbers of financial institutions who are ready to give loans to budding entrepreneurs but each of them have some or the other condition and to meet those conditions is the toughest part. Some may not have conditions prior of taking a loan but once you have taken it, you find yourself in a muddle. Therefore before you approach a bank, you should do a proper study of all their conditions and then talk to them. If you have doubts, you can clear it out while you meet them but do not keep your doubts for the next moment as that can be dangerous.
When it comes to procuring heavy equipment, you are dealing with a lot of money and if you think that buying second hand heavy equipment will cost you less than a brand new one, you are right in a way but that does not mean that it will be so inexpensive that you may not need a loan to go ahead with the deal. As long as you have allocated enough resources to procure a machine you may skip the idea of going for a loan or else many big construction companies take loan to buy heavy equipment. They feel that it is worth to go for loan because by doing that they will not exhaust all their resources and can use it well when it is most required. They need money to take care of operating as well as non-operating expenses and they never want to go short of money when it comes to meeting those expenses.
Conditions of banks prior to loan approval:-
The first thing that you need to check before you approach a bank is their terms and conditions prior to the approval of the loan. They may have certain conditions like they can approve the loan only if your credit rating is above certain ranking or points or if your annual turnover is above a certain amount. These conditions are in place so that they are assured that you will be able to pay your debts in a timely manner. Some financial institutions may even ask for your business plans and how many construction projects you have in hand. They try to seek this info to know you have work in hand and can be trusted as far as repayment of debts is concerned.
Conditions of bank post loan approval:-
Some banks have conditions post loan approval and you need to be cautious about such banks. They may not mention everything crystal clear verbally and therefore you got to read the disclosure carefully. You may find few things that you are not comfortable with. You can raise those things with the bank and seek clarification. If you find them to be satisfactory, you may proceed or else you can always pick the next option.
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