prasant (self) (56 Points)
20 December 2011Hi,
My self and one of my friend is in process of opening Private limited company for Construction equipment rental.
We are thinking of opening a Pvt Ltd company with 1 lac capital. The down payment required to purchase machine is 8 lac. can we put additional 7 lac in the company as loan from directors. the rest of money will be coming from bank as equipment finance. Is there any debt equity rationwe need to maintain for such business.
Thanks,
Prasant
praveen
(Chartered Accountant)
(6971 Points)
Replied 20 December 2011
See some banks consider loan from directors / shareholders also as capital. But it some banks they dont accept.
Your credit ratings will be based on the equity of the company.
If you have more equity then better the chances of getting finance.
VIDHYA RAMPURIA
(LEGAL)
(72 Points)
Replied 20 December 2011
As per Companies Act, 1956 there is no problem in doing the same. No debt equity ratio is prescribed to be maintained. The only concern is the finance from bank. They hesitate to give loan if there is a low capital base.
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