Along with food and shelter, clothes are one of our most basic necessities. As long as human civilisation exists, the need for clothing will remain and the textile industry will remain significant.
Still, expanding a small-scale textile business requires you to be prepared with a well-thought-out textile business plan. You may be looking to manufacture, distribute, or sell new textile products to your retail customers, or scale up production and reach out to new customers. You may even have the target market and raw material sources figured out. But that’s only half the story.
What else to consider
There are other aspects to consider while expanding a small-scale textile business – such as increased transportation costs, the presence of competition in the new market/product, market demand and size etc. You must make sure that your business fulfils the necessary compliances, and that you have put upgraded marketing plans in place.
However, the most important factor of any business is the availability of capital. As an established entrepreneur looking to expand within the textile sector, you will need to ensure that you have sufficient financial backing to fuel your venture. The capital could come from your own earnings or an investor, or it can be arranged through a Business Loan.
A case study
Take the example of ABC Garments. Its founder-director Mr A wanted to expand his garment manufacturing company in Andhra Pradesh, located strategically close to some fertile cotton fields. He was running it on a small scale for casual wear and now wanted to expand to children’s garments. The fabric was readily available and so were accessories such as buttons, zippers etc.
Mr A was well aware that such an expansion plan called for some amount of working capital on an ongoing basis, including the regular expenses for skilled workers. However, the main financial burden was the capital expenditure on the new machines required for the various phases of children’s garment production – cutting, sewing, and assembling the clothes.
Mr A decided to apply for a loan to meet the initial expenses and the first few production cycles. He found out that a Business Loan from HDFC Bank offers up to Rs 50 lakhs that is speedily disbursed with minimal documentation and without any need for collateral, security, or guarantor. So that’s what Mr A decided on.
Some key takeaways
Let us consider the key takeaways we can derive from ABC Garment’s loan application with HDFC Bank:
- Mr A was able to easily check the loan eligibility of his business by logging into the official website of HDFC Bank and visiting their Business Loan section. He got a basic understanding of its features and facilities, the documentation, fees and charges, etc. He was also able to apply for the loan online.
- HDFC Bank insists that the business must be a legal entity. It could be a proprietorship, a partnership, or a company like ABC Garments.
- Having been in the garments business for nearly six years, Mr A’s company met the turnover and income requirements of HDFC Bank. A young and energetic entrepreneur in his mid-thirties, Mr A also met the age criteria for their business loan.
- ABC Garments already had a PAN, factory address, and identity proofs in place. Mr A had also furnished documents such as bank statements, IT returns, balance sheets, and the trade licence of his business enterprise. He had to provide a Memorandum and Articles of Association, certified by himself, along with a copy of the board resolution.
- Mr A appreciated the transparent loan processing by HDFC Bank, which included full disclosure of important terms and conditions like prepayment charges and rules, loan processing charges and its upper and lower limits, interest range, and late payment charges – along with information on the minimum and maximum interest rate and annual percentage rate offered to customers during the previous quarter.
- Mr A was assured that in the future he could transfer loan balances to HDFC Bank for a very low processing fee and also avail of its overdraft facilities, for which no security was required.
Thus, as an up-and-coming textile entrepreneur, Mr A was able to benefit from associating with HDFC Bank and enjoying the various benefits of a Business Loan If you need a loan to expand your business, you could do the same!
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* Terms & conditions apply. Business Loan disbursal at sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
