Hi, I am having an export business. I need advice on the legality side if there is any issue. I like to have a website , where individuals can come to my site and give me a loan for running my business and i will sign e-contract with everyone ready to loan me, stating i will return back how much ever possible after i invest in my business and get returns. Its a sole proprietor firm , and also stating in the contract that the decision of the sole proprietor is final in terms of settlement. Is there any legal issues , and if yes please mention the law stating that there is a issue. government has passed an ordinance ie. Banning of Unregulated Deposit Schemes Ordinance, 2019, I need to know if there is an issue with my business in that. also i came across an article where it says Small businesses, proprietorship, partnerships, LLPs and SMEs that take unsecured loans from unrelated parties and enterprises are also exempt under Section 2(4)(I) of the law. link to article: https://taxguru.in/finance/ban-funds-received-business-personal-purposes-govt.html
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Small businesses, proprietorship, partnerships, LLPs and SMEs that take unsecured loans from unrelated parties and enterprises are also exempt under Section 2(4)(I) of the law.
This exemption covers “advance payment for hire or supply of goods and covers genuine business needs and trade advances among others so that those who depend on small short-term credit or deposits for various needs do not face any problems”.
You cna take loans for business purposes
You need to have permission of the rbi to collect such finds from large no of people.
You are going to avail loans from public who may advance the same looking at your credentials in the website.
In my opinion there should be no legal hassle or infirmity in this.
you can proceed with your proposal to mobilize funds your way.
Thank you for your opinions. I have one more idea , which is a little modification of this , is it legal to collect money from my personal website as a personal loan from unrelated parties by signing an E-Contract with them individually and saying I might invest that money in my own business and repay them. Is this idea better than my previous one ? and what all legal complications are there in this?
You are at liberty to take loan for business purposes
The lender would ask you to guarantee the loan repayment, if you are above to meet the requirements of the lender for granting this loan you may proceed in nay manner whichever is feasible at your end.
Until and unless there is no illegal transaction, you are always safe legally.
If you collect it from many people you will need money lending licence in future