Unsecured Loan

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survesh (Querist)
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14 December 2010 Hi,

Please say I much loan can a Individual Borrow in cash and kind from his Relative,Friend and others for His Business under Unsecured loan. The Business has crossed turnover 40 Lakh in FY 2009-10 & 10-11

Thanks & regards

Survesh

Jayashree S Iyer

Jayashree S Iyer (Expert)
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14 December 2010 Your question is vague. If the individual is carrying sole proprietorship the provisions of companies act will not apply and he can borrow in his individual capacity depending on the business requirements and projected cash generation from the business operations.

However if it's a company registered under companies act, the company can avail unsecured loans only from members, directors or their relatives. There is no limit fixed under the companies act. However it's advisable to maintain a balanced debt equity ratio.