Even though promoters funding loan is provision from the bank, you can use it smartly to increase your shareholding in a company.
The function of promoters is not just limited to getting investors for the company, they also play an important role in making sure that the company is well funded and incorporated. Among numerous problems that an organization faces in its run, the most fatal and feared one is – financial crisis. For an organization, getting funding from the market during such times can be an arduous task. The reason is quite simple; investors don’t invest their money in underperforming companies. This can be the opportune moment for occasional promoters to increase their holdings in that company.
Now, before you invest your money in an underperforming company, there are some things that you need to consider. Since the company is already in loss, it can be hard to predict whether the company will still be operational in future. In this case, investing your hard earned money in such a company might also cause you a substantial loss personally. You need to try something different to save yourself from incurring losses in the worst scenario while increasing your shareholding simultaneously. This is where you can opt for promoters funding.
What is promoters funding?
Promoters funding is a financial provision offered by banks and NBFCs to promoters of a company. The provision is a secured loan and hence needs collateral. The collateral can be from the existing company or any other company’s shares you own.
Why should you opt for this loan?
A promoters funding loan can be beneficial for you in many ways. Firstly, you can use the loan to increase your stock holding in the existing company. Secondly, here are some of the major benefits that come with the loan.
- Low interest rate: This is among the important benefits of a promoters funding As mentioned earlier, promoters funding is classified under secured loans. The collateral that you pledge for the loan works like security for the lender, who in return, offers you a loan at lower interest rate.
- Easy application: The application process to apply for a promoters funding loan is very easy. To begin with, you have to submit an application form with necessary documents at the lender’s office. Once the lender reviews the application and finds it credible, the loan will be sanctioned in your account soon. You can also apply for a promoter funding online, through the lender’s website.
- Documents: You have to fill a loan application form and submit it along with other required documents like KYC, banking statements, address proof and a proof of share ownership. You can also apply for a promoters funding loan online by visiting the lender’s website.
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