Debt Syndication

debt-syndication

 

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 by themselves. What do you do in such a situation? Well, this is where debt syndication loan is the perfect solution. By allowing multiple lenders to provide sections of the entire loan amount, it allows you to obtain large amounts of funds.

What is Debt Syndication?

Debt syndication simply put, helps businesses to acquire a large amount loan by accumulating different amounts from multiple lenders instead of one lender. It is a structured product that is managed by a leading syndicate firm. Though debt syndication services were used by large businesses earlier, 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 of 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 the mind in such a solution is equity funding. However, there is a problem with equity. The ownership of the company gets diluted to 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, multiple lenders are arranged by a syndicate firm and each of the lenders provides portions of the loan amount. 

Eg:- If your company requires 50 crores, and if none of the lenders can lend that amount alone, 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.

Features and Benefits of Debt Syndication

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.
debt-syndication-at-terkar-capital

Process of debt Syndication

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 who 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 finalize the loan contract. 

Eligibility

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.
  • Your business 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.

Why Terkar Capital for Debt Syndication?

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 Pune, 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.

For More Details Please contact our Experts

If you have any questions, please do not hesitate to ask us. Please also call us or email us before visiting to make sure that you will be served with our best services.

  8308629820 / 8262831330
  yes@terkarcapital.com