Business Loan
Business loans are offered to small and medium enterprises towards working capital,
expansion, or modernization of existing business. It could be either secured or
unsecured. The idea is that if there is opportunity for growth at acceptable risk
levels the banks will finance. Loan amounts offered could vary between Rs.5 lakh
to Rs.500 lakh.
Secured loans could be against Property (movable / unmovable), Stocks or co-laterals
like fixed deposits etc. Since the loans are secured the rate of interest likely
would be lower than unsecured loans. Unsecured loans could be in the form of short,
medium or long term loans for temporary / bridge loans, Working capital or for purchase
of machineries or other fixed assets.
The interest factor depends on the perceived risk factor by the banks, past track,
growth and profitability trends and the industry profile.
Business loan can be availed by self-employed individuals, Partnership firms, Private
limited and Limited companies. The funds can be used for business expansion, working
capital, renovating your office, buying new property or equipment or personal requirements
like child's education, marriage or home renovation, etc
Process...
• On complete set of documents being provided as per check list forwarded documents
are sent to the respective bank/institution for processing.
• On acceptance of the documents by the bank/institution a physical verification
of residence & office and documents is initiated along with current credit history
report as maintained by Cibil.
• Post positive verification of residence and office and acceptable credit history
as captured by Cibil a personal interview /discussion is arranged at the customer's
office by the bank/institution.
• In case of fresh projects the process is stretched as the bank has to analyses
the back ground of the applicant/firm/company and the Technical feasibility/financial
viability of the project based on various parameters and existing market conditions.
• Based on and subject to credit comfort and mitigation of any further queries the
file is forwarded for sanction to the appropriate authority.
• On sanction loan agreement is executed and all additional documents as required
post personal discussion including original title deeds etc. has to be submitted
along with either post- dated cheques or security cheques in case of repayment through
electronic clearance (ecs).
• The loan is disbursed subsequently.
Documents Required.
• Photograph (Applicant and Co-applicants).
• Pan card (Applicant and Co-applicants).
• Pan card of firm/company if applicable.
• Residence & Office address Proof :
Latest Electricity bill or Receipt of Maintenance Charges or valid Passport or Purchase/Lease
Deed/Leave & License Agreement of Residence or Office Premises. (Either residence
or office has to be self or family owned as per current policy)
Business Existence Proof:
VAT/CST/Service tax Registration certificate or SSI Permanent Registration Certificate
or Warehouse Receipts or Shop & Establishment Certificate.
• Business Profile on Company's Letterhead.
• Partnership deed / Memorandum and Articles of Association with certificate of
incorporation as the case may be. (Amended / Reconstituted partnership deed or Form
32 where ever required)
• Last three years complete set of IT papers including Computation of income, Profit
& Loss A/c. and Balance Sheets with all schedules, annexures, Auditor's / Director's
report, Form 3CA/3CB, & 3CD as the case may be (duly certified by a Chartered Accountant
wherever applicable).
• Latest 12 months Bank statement of the Firm of all accounts.
• Sanction/Closure letter of all existing loans including CC/OD etc.
• Individual Income Tax Returns of the Individual/Partners/Directors for last three
years.
• List of the Existing Directors & Share Holding pattern of the company on letter
head duly certified by Chartered accountant or latest copy of ROC to substantiate
the same.
• Property papers- Complete set -chain of agreements where applicable, Share certificate
copy (Front & Back), Approved plans, CC & OC.
Eligibility...
Some Basic Requirements:
• Should have vintage of at least 3 years.
• Should be profit making for the past 2 years.
• Co-applicant required as a Guarantor.
• Age Limit 25 yrs. Minimum to 65 yrs. maximum.
FAQ...
Q. What are the prepayment Charges?
Pre payment charge of 4% to 6% is levied on balance principle outstanding. For what
Purposes are Business loans given? Business loans are given towards Working Capital,
Short Term Cash Need, Business Expansion, New inventory, Buying Machinery/equipment
etc.
Q. What are the Eligibility Criteria's?
Should have vintage of at least 3 years. Entity should be Self Employed with Min
Age 25 yrs.& Max Age 65 yrs. Should be profit making for the past 2 years Co-applicant
required as a Guarantor:
Q. Who can aval a Business loan?
Business installment loan can be availed by : Self employed individuals / professionals
Sole proprietorship firms Partnership firms Private limited companies and closely
held limited companies.
Q. What are the benefits of Business loans?
Speedy loan processing - 4 to 7 business days Fast and easy documentation . Hassle-free
loans Loansfrom 5 lakh to Rs.3 crRepay with easy equated monthly installments.
Q. What is the minimum annual turnover eligibility?
Minimum turnover required is Rs.1 crore.
Q. What is the interest rate charged on BIL?
Rate of interest varies from 16 % to 22% depending on loan amount, credit assessment
and other parameters.
Q. What are the basic documents required for applying?
Photographs Identity, Age& Signature verification proof Business Bank statements
for last 6 months 2 year audited financials including Profit &Loss, Balance sheet
and IT returns 3 years Business existence Proof Address proof - Residence and Office.
Q. What is the turnaround time for the disbursal of the loan?
Disbursal of the loan may take a minimum of 7 working days from the time of submission
of loan related documents as requested by the Bank.
Q. What parameters are looked into before sanctioning a BIL?
• Liquidity
• Solvency
• Profitability
• Asset Owned
• Track record
• Management
• Business model
• Track record
• Industry and product/service