How to Get Loan for School?
Opening your own school anywhere in India may seem to be a tedious task. This is largely because you need to secure at least Rs 5 lakhs to start a pre-school, Kindergarten or Montessori school and minimum Rs 2 Crores to start a formal 10+2 school in India. To generate the money, you may want the backing of a loan from a bank or financial institution. If you do not know how to approach banks to get loan for school, go through the lines given below.
Here are the Requirements to Get Loan for School:
- First, you need to present a working model of your school in the form of a business plan. Your working model should be a comprehensive business plan that mentions the budget required for starting your school. You also need to clearly mention why you want such a huge amount. In other words, you should mention the nature of your venture and how you wish to allocate the money for various purposes such as construction of the building, cost of the required equipment for physical infrastructure, expenditure involved in interior decoration, painting and wood work and other finishing works. In the plan, you may also specify the number of teachers, their proposed salaries and number of children you wish to enroll into your school.
- In India, schools are generally run by registered Charitable Trusts or registered Societies. So, when you are approaching a bank or institution to get loan for school, you need to produce document stating the ownership of the land for your school. The document should clearly specify the name of the Trustees or members of the Society which would administer your school.
- Another important document is the Change of Land Use. The land you choose for the school should not be agricultural in nature. However, in case of agricultural land, you need to first convert it into land fit for institutional/commercial use. For the purpose, you need to convert the land into commercial or institutional land, in accordance with the norms laid down by the government.
- In order to get loan for school, you also need to submit a Trust Deed, which is an important document specifying the policies of the Trust that would run your school. The Trust should consist of minimum three individuals as its Trustees. At the time of applying for loan to start school, you need to submit the Income Tax Return (ITR) of all the Trustees. You need to submit the ITR for minimum 3 years. You may also include credentials of the Trustees, including their respective profiles. The profiles should consist of the basic documents of identity, including their address proof, ID proof, PAN no. etc.
- If you are taking 10+2 franchise opportunity, you will be required to submit a copy of the Franchise Agreement Document at the time of applying for the loan.
Given Below is Procedure to Get Loan for Opening a School
- First, search for a bank or financial institution that provides loans for similar ventures. If you are new to the market, approach only those banks/financial institutions that indulge in small business financing.
- Before going to the banker, do your preparation. You need to prove the banker that providing you loan will be beneficial for both the parties. You need to assure that the loan amount will be paid back on time, without delay. You also need to highlight the advantages of the venture and convince that providing loan for opening your school will be a low-risk venture.
- The next step is to start the formalities. First, procure the loan application form from the bank. Fill the form as per directions. Attach the copies of the aforesaid required documents.
- Now, get ready to face the questions likely to be asked by the banker. You may have to answer questions such as the loan amount required, duration of the loan period of the loan, why you need the loan (purpose) and mode of repayment. While answering the questions, you should project your image in such a way that the banker is assured that you will repay the loan on time. To provide a clear image of your business venture, you may produce leaflets, brochures and other promotional material.
- All the documents should be printed and not handwritten. This is because handwritten documents send signals of an unprofessional approach.
Apart from the aforesaid points, you should also keep in mind that it may not be easy to get loan for school unless you convince your banker about why it is important to receive funds from the bank for the venture. Moreover, you need to project both your image and your business venture’s image positively, so that the banker readily completes the formalities on paper and provides you the loan.