We make project reports, and through our associates do bank Syndication to help you secure bank loans. Detail Project Report and feasibility study is required by the bank to process the loan applications. We do not guarantee any loan, but surely can do the proper documentation and presentation to help you secure finances. Hospitals are included in Infrastructure sector and are a priority segment to lend. It is always advisable to secure finances before starting construction. Terms of financing are very important: like
- Tenure: Hospitals takes some time to start generating cash flow and hence the loan tenure should not be for 7 – 10 years tenure. A shorter tenure is not advisable
- Moratorium: It is the time a bank or financial institute give from the day the loan is disbursed to the time first repayment starts. As it take minimum 1 years construct and 1 year to break even, 2-3 years of moratorium should be there. Otherwise there may be issues with cash flow. Interest need to be paid regularly from the first month of disbursement. Moratorium is on Principal not on interest.
- Interest rates: With the falling interest rates, and limited credit offtake, suitable interest rates can be negotiated. Presently (2017) interest rates are in a range of 10 – 14 %. Even 1% difference on interest rates will make a huge difference on complete project life cycle.
- Principal repayment: Many time a equal/flat repayment is offered by Banks, this increased outflow in earlier days as total outflow is principal repayment + interest. In Initial tenure as the principal amount is high (which reduces as we repay) the interest is also high, so with an equal/ flat principal repayment the total outflow is higher in start and reduces. Generally a EMI type of structure to be preferred where the overall out flow is constant during the complete tenure. Actually an increasing monthly outflow is the best, as with time the earnings also increase and hence the repayment capability.
- Debt to Equity: Equity is the money an entrepreneur puts and debt is the loan he takes. On an ideal term 100 % own money is good as you do not have to pay back, but as equity is expensive and most of the entrepreneurs leverage their money with borrowings, it is health to maintain a portion of both means of finance (debt: equity). Healthy mix for hospitals is around 40 % equity and 60 % debt. (1: 1.5).
Our expert team will take case of these important aspect and try to get you the best terms with your lender, and guide in managing finances. Fee of Debt Syndication is 1.5% of the loan amount. This may be higher for a smaller loan size (less than 10 crs) and lesser for 40 cr + loans.