Small business loans for women involve a number of procedures. Firstly, they have to submit the loan application that seeks comprehensive information about the project. Specifically, the application form covers aspects like promoter’s background, particulars of the industrial concern, and particulars of the project (capacity, process, technical arrangements, management location, land and buildings, plant and machinery, raw materials, labor and schedule of implementation).
In addition, the loan application form seeks the cost of the project, means of financing, marketing and selling arrangements, profitability and cash flow and economic considerations. When the application is received, an officer of the recipient institution reviews it to ascertain whether it is complete for processing.
If it is incomplete the borrower is asked to provide the required additional information. When the application is considered complete, the recipient institution prepares a ‘flash report’ which is essentially a summarization of the loan application, to be evaluated at the Senior Executive Meeting (SEM).
Once the SEM, on the basis of its evaluation of the flash report, decides that the project justifies a detailed appraisal, it nominates the lead financial institution. The factors taken into account for designating the lead institution are location of the project, prior experience of institutions in handling similar projects, and existing workload of the institutions.
The detailed appraisal of the project is done by the lead institution. The appraisal covers the marketing, technical, financial, managerial and economic aspects. The appraisal memorandum is normally prepared within two months after site inspection and placed before the SEM for a decision about approval of the project and determining the sharing arrangement among the institutions. Once a favorable decision is taken at the SEM forum and the sharing arrangement worked out, the case is referred to the Board of Directors of the lead financial institution. After the Board of Directors of the lead financial institution approves the proposal, a financial letter of sanction is issued to the borrower.