Debt Syndication in India

Businesses require funding for several reasons. Be it for business expansion, starting a plant, buying machinery, or anything else. Sometimes the requirement might be so large that a single lender or bank will not be able to provide for themselves. What do you do in such a situation? Well, this is where debt syndication loans come into the picture. Thus, by allowing multiple lenders to provide sections of the entire loan amount, it allows you to obtain large amounts of funds. Avail debt syndication in India

What is Debt Syndication?

Debt syndication simply helps businesses to acquire a large amount of loans. Generally by accumulating different amounts from multiple lenders instead of one lender. A leading syndicate firm manages this structured product. Large businesses used debt syndication services earlier. But today even SMEs require large funding. With an increasing number of enterprises in India, the need for large amounts of the fund is only likely to grow.

The need for Debt Syndication

India is a booming economy. With several businesses coming up and the youth focusing on starting enterprises, the requirement for funding is inevitable. The growth is so fast that the funds may be needed in large amounts. The first solution that comes to mind in such a solution is equity funding. However, there is a problem with equity. The ownership of the company diluted the investors, leading to the decreasing claim of the founders of the company. This is where the need for debt syndication is essential.

Debt syndication allows businesses to acquire funding without having to give up on their claim to their own company.

Another reason to get a debt syndication loan is that in normal loans a lender can only provide a certain amount to a borrower depending on their capabilities and other factors. In cases where the funding required is beyond this limit, the syndicate firm arranges multiple lenders. Each of the lenders provides portions of the loan amount.

Eg:- Your company requires 50 crores. And none of the lenders can lend that amount alone. Then a debt syndicate company can acquire you 10 crores from lender A, 20 crores from lender B, 10 crores from lender C, and so on.

Myths about debt funding.

Features and Benefits of Debt Syndication in India:

Debt syndication comes with numerous benefits which are why several companies are preferring this category to finance their business. Here are some of the features and benefits of the debt syndication facility.

It is used for large amounts that cannot be lent by a single lender.
Though there are multiple lenders involved in the loan, there is no need to have an agreement with each individual lender.
The terms are usually between 3 to 15 years.
Each bank or financial institution does not necessarily contribute an equal amount.
Debt syndication is a fast process and effortless process for the borrower.
There is high flexibility for structures and rates for the loan.
The borrower simply has to contact the main syndicating firm rather than apply individually to each lender.

The Process

If you’re confused about how to get a loan through debt syndication, here’s how the process of debt syndication works:

Understand your company’s financial requirements carefully. This includes creating a project report on how you plan on using the funds as well.
Contact and reach out to a top debt syndication firm that will act as your lead lender. Provide them with the documents as well
The lead lender will assess your case, design a loan structure for you as well develop a credit proposal.
The lead lender will place the loan on the marketplace and contact other banks or financial institutions who are ready to participate in the loan.
The loan amount is disbursed once all the lenders finalise the loan contract.

Understand the process of Debt Syndication from case study.

Eligibility for Debt Syndication in India

The following are the common eligibility criteria required to get a debt syndication loan. However, based on the lending financial institutions or banks, there may be additional eligibility requirements.

The sum amount required must be large. In the case of smaller funds, there are other loan options available.
Your company must have a good credit score and hold a good reputation in the market.
Your business must have a strong financial and operational background.
Businesses must meet the minimum operation period required by the financial institution.
Your business will need to meet the minimum turnover amount required by the syndicate agent.

Document Requirements

Although the exact documentation will depend on the requirements of the syndicate agent, the following are the general documents you will require:

KYC documents – PAN card, Adhar card, etc of the business owner.
PAN Card of the company
Project report
Company bank statements for the past 12 months.
Proof of business registration.
Proof of company turnover.
Documents detailing any existing loans.
Partnership deed, if any.

FAQs on Loan Syndication.

Debt Syndication at Terkar Capital

If you’re looking for effortless and trustworthy debt syndication in India, Terkar Capital is the best place for you. As one of the top debt syndication companies in India, we provide expert analysis of the product and we choose the right lenders for the syndication. We also boast of quick turnaround time and provide timely and optimum availability of funds. Our expert team will provide you with the complete and perfect end-to-end execution of the syndicate process.

Debt Syndication