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Development Finance – Detailed explanation

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A Development Finance company or a developmental bank is a non-commercial financial institution that provides credit capital to non commercial projects on non-commercial basis. This finance is provided for commercial projects and/or industrial projects such as retail, restaurants, warehouses, manufacturing units, and agricultural land. They provide the loan at very favorable interest rates and at times, provide no documentation for this loan. The main goal of a development or a non-commercial bank is to provide funds to new and emerging businesses. The concept of Development Finance is to help them through a long term business relationship.

These companies are generally established by finance companies or banks to help small business owners establish themselves in their target market and to help them start their own ventures. There are many types of financing provided by these companies. A common form of financing provided by these companies are the lines of credit or line of credit facility. The amount that can be approved by the credit holders depends upon their needs and financial situation. For instance a lender may approve a line of credit facility for a new business if the business owner has the required money in place to start the business. Another form of development finance available by a bank is the secured loans, unsecured loans etc.

Development finance is not only limited to the developing world. The concept of this finance is also widely used in developed countries like United States and United Kingdom. These finance institutions are willing to provide their financial support to a business only if the business owner will help them in their future projects. These companies provide all the necessary documents and details to help the borrower in getting the loan.

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