CMA Data means Credit Monitoring Arrangement data. As per RBI guidelines, CMA data is required for Project Loans, Term Loans and Working Capital Limits. This data is to be provided by a company to bank for getting the loan from bank and annually, for renewing or enhancing their existing Bank loan. It is a systematic analysis of working capital management of the borrower and the purpose of this statement is to ensure the use of funds effectively. A professionally prepared CMA report can improve the chances of obtaining bank loan.

Documents required:-

• Past 2 years Audited Financials
• Provisional Financial for the current year; in the absence of provisional financials, details of the top line shall be essential
• Term Loan Repayment Schedule, if any

A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. It is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.

Some of the famous credit rating agencies are CARE, CRISIL, ICRA. These rating agencies regularly collect information from creditors, lenders, utilities and other debt collectors to process the data into a readable and usable form and provide credit information reports on individual consumers for lenders.

Credit reports contain information like name, age, address, list of credit facilities, repayment track record and a credit score. This information helps lenders assess credit worthiness of their borrowers and their ability to pay back a loan if granted.

A debenture is a type of debt instrument that is not secured physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond to secure capital. Debentures are generally freely transferable by the debenture holder. Debenture holders have no rights to vote in the company's general meetings of shareholders, but they may have separate meetings or votes.

Convertible and non convertible debentures

Convertible debentures are bonds that can convert into Equity shares of the issuing corporation after a specific period of time. These types of bonds are the most attractive to investors because of the ability to convert, and they are most attractive to companies because of the low interest rate.

Non-convertible debentures are debentures that cannot be converted into equity of the issuing corporation. To compensate, investors are rewarded with a higher interest rate when compared to convertible debentures.

Equity

Equity is a source of funding in which the company offers to the general public to invest in the company in return of the ownership in the form of shareholding in the company. Generally, Equity is cheaper than debt, it is the owners fund and we don’t need to pay heavy interest on a monthly basis, irrelevant to the profits and loses of the organisation. But on the other hand, the lender does not have a claim to equity in the business, debt does not dilute the owner's ownership interest in the company.

So its all depends upon the structure and preferences of the organisation whether to choose the equity or debt. It is preferable that this decision will be taken in the guidance of an expert Who can conclude the pros cons of the both as per the preferences and nature of the organisation .

Term loans are the standard commercial loan, often used to pay for a major investment in the business or an acquisition. The loans often have fixed interest rates, with monthly or quarterly repayment schedules and a set maturity date. These are provided for acquiring or constructing or installing or establishing capital assets, which will provide returns over a period of time. Term loans usually last between one and ten years, but may last as long as 30 years in some cases. Term loan usually involves an unfixed interest rate that will add additional balance to be repaid.

Bankers tend to classify term loans into two categories:

• Intermediate- Intermediate-term loans usually run less than three years, and are generally repaid in monthly installments from a business's cash flow.
• long-term loans- Long-term loans can run for as long as 10 or 20 years and include additional requirements such as collateral and limits on the amount of additional financial commitments the business may take on.

It is the best preferable option for small enterprises. As if the financial statement of the company are sound and willing to make a substantial down payment, you can receive financing with minimal monthly payments and total loan costs. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme provides a way for Entrepreneurs to obtain a bank loan of upto Rs.1 Crore without any collateral security.

A working capital loan is a loan that has the purpose of financing the everyday operations of a company. Working capital is a financial parameter which represents operational liquidity available to a business, organisation or other entity. Conversion of cash through various stages viz., raw material, semi-processed goods, finished goods, sales, debtors and bills receivables into cash takes a certain period of time that is known as ‘length of operating cycle’. Longer the operating cycle time, the more is the working capital required and one other important factor for the need of working capital is credit allowance to the customers. Every organisation needs the working capital loans to meet short term fund requirements.

Some of short term loan are as follows:-

• LETTER OF CREDIT

  A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

• BANK GUARANTEE

  A bank guarantee is a guarantee from a lending institution ensuring the liabilities of a debtor will be met. If the debtor fails to settle a debt, the bank covers it.

• MORTGAGE LOAN

  A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.

• WORKING CAPITAL LOAN

  Working capital loan is sanctioned by Banks for working capital purposes like holding of inventory, receivables and build-up of other current assets in a business. Working capital facilities are renewable every year.