Corporate Loan
About Corporate Loan
Corporate loans are sanctioned for an existing business and industrial house which has been in action for at least 5 years and has made profits for at least the last 2 years. In addition to that, the organization will also be required to have a good credit rating and should have a good track record in terms of being a successful business. In case the organization had loans in the past, the records regarding the repayment of the credit are also taken into consideration.
Types of Corporate Loans in India They are as follows: You can use the available funding from the corporate term loan for anything you want. Either for infusing working capital, purchasing-renovating machinery or property, buying equipment, or upgrading technology. Interest rates can either be fixed or floating. However, it is a fixed loan repayment term. It is three years for a secured corporate loan and up to 15 years for its unsecured variant. This loan is for those investing in financial securities like mutual funds, insurance, bonds, and exchange-traded funds or fixed maturity plans. All you need to do is to pledge your security. The loan repayment term gets renewed every year. These facilities allow business owners to debit their accounts below 0. Every bank will have a pre-determined limit of the available amount. It varies depending on the type of security you have pledged. You pay interest only on the amount used. But the bank holds the right to repay your loan on short notice. It is a type of corporate loan where you receive money for your business assets like inventory or receivables. The amount allowed to withdraw is up to 70% of the value of the asset submitted. And the repayment term gets renew every 12 months. Here, the bank gives a letter of recommendation to the lender in question. It attests to the evaluation that you will pay on time. If you fail, the bank will repay your loan provided you fulfill their conditions. Channel financing is perhaps the latest entry among the types of corporate loans in India. Here, you get a chance to strengthen your network of distributors. The loan ensures that your distributors get the funding required to buy equipment and other items. The design of the repayment schedule is as per the needs of the borrower. This loan gives you instant access to funding when in need of quick cash. The amazing thing about the GST loan is that it eliminates paperwork. The fund available is determined based on your GST return.
There are seven common types of corporate loans in India.
Features and Benefits The features and benefits of Corporate Loan can be summed up as follows: A corporate loan is one of the best ways to get finance for the expansion of your business. You can use the loan for various purposes related to your business and help it reach new heights. There are certain lenders who offer the option of Dropline Overdraft. Through this facility, a current account is opened separately in which the loan amount is deposited. In this way, the borrower will be required to pay interest only on the amount that he or she utilizes. Most lenders offer a flexible tenure for the repayment of the loan which usually ranges between 12 months and 48 months. Some lenders even provide loans for the tenure of 60 months. This allows the borrower to grow his or her business with ease.
SBI Corporate Loan The SBI corporate term loans can support your company in funding ongoing business expansion, repaying high-cost debt, technology up-gradation, R&D expenditure, leveraging specific cash streams that accrue into your company, implementing early retirement schemes, and supplementing working capital. Corporate term loans can be structured under the FCNR (B) scheme as well, with the option of switching the currency denomination at the end of interest periods. This will help you take advantage of global interest rate trends vis-a-vis domestic rates to minimize your debt cost. The bank’s corporate term loans are generally available for tenors from three to five years, synchronized with your specific needs. SBI corporate term loans may carry fixed or floating rates, as befits the exact requirement of the client and the risk context. Again, these rates will be linked to the bank’s prime lending rate.
HDFC Corporate Loan
Bajaj Finserv Corporate loan
ICICI Bank Corporate Loan
DHFL Corporate loan
IIFL corporate loan
Union Bank of India Corporate Loan Corporates trading in international markets requires foreign currency funding for meeting their exports & imports fund obligations. Facilities are available for meeting pre-sales and post-sales requirements both in domestic as well as foreign currency.
Does the rate of interest for corporate loans differ for different applicants ?
Should I always apply for the loan which offers the lowest interest rate ? No, it is recommended to check the terms and conditions of the lender before you apply for a loan. The lowest rate of interest might not always be the most beneficial loan for you. Hidden charges might arise which will make the overall loan amount quite heavy for you. It is a prudent move to check the charges and rates associated with the loan such as the processing fees, late fees, cost of administration, foreclosure charges, and so on, before applying for a loan.
How to Apply for a Corporate Loan ? You can apply for a corporate loan by choosing one of the following methods:
Comparison of Best Corporate Loan Offers from Top Banks / NBFCs
| BANK/NBFC | INSTITUTION TYPE | MINIMUM LOAN AMOUNT | MAXIMUM LOAN AMOUNT | MINIMUM TENURE | MAXIMUM TENURE | INTEREST RATES | FEES & CHARGES |
|---|---|---|---|---|---|---|---|
| Axis Bank | Bank | ₹50000 | ₹50,00,000 | 1 Year | 15 Years | Custom | Up to 2% + GST as applicable |
| Aditya Birla Finance Ltd. | NBFC | ₹50000 | ₹15,00,000 | 1 Year | 3 Years | 16.85% – 17.85% | Up to 2% + GST as applicable |
| Arohan Financial Services Ltd. | NBFC | ₹500000 | ₹75,00,000 | 9 Months | 2 Years | 20.70% – 26.99% | 1% + GST as applicable |
| Bajaj Finsery | NBFC | ₹100000 | ₹30,00,000 | 1 Month | 8 Years | 18% – 40% | Up to 3% + GST as applicable |
| Capital First | NBFC | ₹1000000 | ₹75,00,000 | 1 Year | 5 Years | 16.00% – 24.00% | Up to 2% + GST as applicable |
| Capital First | NBFC | ₹1000000 | ₹50,00,000 | 1 Year | 3 Years | 12% – 15% | Up to 2% + GST as applicable |
| Deutsche Bank | Bank | ₹1000000 | ₹50,00,000 | 2 Years | 4 Years | 24% | Up to 3% + GST as applicable |
| Edelweiss Financial Services Ltd. | NBFC | ₹350000 | ₹25,00,00,000 | 4 Year | 10 Years | 20.50% | 2% – 3.5% + GST as applicable |
| Equitas Small Finance Bank | Bank | ₹500000 | ₹75,00,000 | 1 Year | 5 Years | 18% | 2% + GST as applicable |
| Fortune Financial Services – Kapital Tech | NBFC | ₹200000 | ₹150,00,000 | 3 Months | 2 Years | 15% – 24% | 1.5% – 2% + GST as applicable |
| Fullerton | NBFC | ₹1000000 | ₹50,00,000 | 1 Year | 4 Years | 13% – 16% | Up to 6.5% + GST as applicable |
| HDB Financial Services Ltd. | Bank | ₹100000 | ₹30,00,000 | 1 Year | 5 Years | 12% – 36% | 2% + GST as applicable |
| HDFC Bank | Bank | ₹50000 | ₹50,00,000 | 1 Year | 4 Years | 15.65% to 21.20% | 2% + GST as applicable |
| ICICI Bank | Bank | ₹100000 | ₹10,00,00,000 | 1 Year | 5 Years | 12.9% – 16.65% | Up to 2% + GST as applicable |
| IDFC Bank | Bank | ₹100000 | ₹40,00,000 | 1 Year | 5 Years | 11.69% – 15% | 1.5% + GST as applicable |
| India Infoline | NBFC | ₹100000 | ₹50,00,000 | 1 Year | 5 Years | 18% – 25% | Upto 3% + GST as applicable |
| IndusInd Bank | Bank | ₹100000 | ₹15,00,000 | 1 Year | 5 Years | 10.6% -18% | 0.5% + GST as applicable |
| Kotak Mahindra Bank | Bank | ₹300000 | ₹2,00,00,000 | 1 Year | 3 Years | 16.00 % to 19.99% | Up to 3% + GST as applicable |
| Lendingkart Finance Ltd. | NBFC | ₹50000 | ₹100,00,000 | 1 Month | 1 Year | 18% – 27%* | 2% + GST as applicable |
| Magma FinCorp Ltd. | NBFC | ₹300000 | ₹2,00,00,000 | 1 Year | 4 Years | 17% – 21% | 2% + GST as applicable |
| Neo Growth | NBFC | ₹200000 | ₹75,00,000 | 6 Months | 2 Years | 12% – 36% | 2% + GST as applicable |
| RBL Bank Ltd. | Bank | ₹1000000 | ₹35,00,000 | 1 Year | 3 Years | 16.00% – 27.00% | 2% + GST as applicable |
| Standard Chartered Bank | Bank | ₹1000000 | ₹75,00,000 | 1 Year | 5 Years | 13.5% – 20% | Up to 2% + GST as applicable |
| Tribe Tech Private Limited | NBFC | ₹100000 | ₹20,00,000 | 1 Year | 3 Years | 12% – 36% | 2% + GST as applicable |
| Yes Bank | Bank | ₹1000000 | ₹400,00,000 | 1 Year | 5 Years | 13.25% – 19.99% | Up to 2.5% + GST as applicable |
Common Eligibility Criteria for Corporate Loan Factors Affecting Eligibility of Corporate Loan There are various factors which affect the eligibility of an applicant for a corporate loan.These factors can be summed up as: 1. Age of the applicant: For most lenders, the eligible age range for applying for a corporate loan is 21 years to 65 years. 2. Filing of ITR: The applicant should have filed his or her ITR for the previous years.Banks usually require at least 2 years’ ITR files to consider the eligibility of an applicant for a corporate loan. The credit repayment capability and the monthly income of an applicant are evaluated based on of the submitted ITR. 3. Annual income: The eligibility for a loan based on the annual income of an applicant varies from lender to lender. In general, if an applicant has an annual income of at least Rs.1 crore, he or she is considered to be eligible for an unsecured business loan (or corporate loan). However,certain lenders who offer credit to applicants with an annual income of less than Rs.10 lakh as well. 4. Stability in banking: Generally, lenders check the bank statements of at least 6 months before they approve a loan. Through this exercise, the lender checks the track record of the applicant’s stability in terms of banking, as well as the repayment history of previous loans. 5. Stability of the business: The lenders also check the history of the business (in case of existing businesses) to find out the growth and stability of the business. This helps the lender decide whether the loan should be approved or not. What is Letter of Credit Facility ? It is a type of credit facility, wherein the bank will provide a letter to the seller guaranteeing that you will be making the payment on time for the expected amount. However, if you are unable to pay for the purchase made, the bank will cover the outstanding payment on certain conditions. How does a line of credit work? Line of Credit is a unique credit facility given to our loan applicants, wherein you are approved for a certain limit of credit/ loan, for a said duration. The monthly installment for Line of Credit will consist only of the interest amount and will not have a principal component monthly. The principal amount of the loan is to be repaid at the end of the tenure of the facility. You can deposit funds when in access and withdraw fund when required in business, and you will be charged interest only on the amount utilized by you. The limit may drop with along the tenor (drop line) or remain constant throughout the tenor, giving you maximum availability of funds throughout the tenor. How do I calculate the interest on the line of credit? It’s pretty simple, Here is a formula you can use: Interest=
(Amount Used * Rate of Interest)/360* Number of days’ funds used
Common Documents Required for Corporate Loan Bajaj Finserv Corporate Loan Documents Required i.For self-employed professionals – Registration document in case of sole proprietors. Other proofs of business identity for self-employed professionals include documents issued in the concern’s name like PAN card, payment receipt for municipal tax, electricity bill, IT returns, etc. ii.For self-employed non-professional – Sole proprietor’s registration document, individual identity proof of the owner, IT Returns, at least 6 months of bank statements of the owner, statement of creditor/book debt/periodic stock, GST return, etc. iii.For other entities (partnerships and Private Limited companies) – Partnership agreement in case of partnership firms and Certificate of Commencement/Article and Memorandum of Association for Private Limited companies. Other supporting documents for these concerns including returns of Income Tax, Goods and Services Tax, registration certificate under the Shops and Establishment Act, etc. Besides, partners and directors also need to submit individual proofs of identity. ICICI Bank Corporate Loan Documents Required IIFL Corporate Loan Documents Required HDFC Bank Corporate Loan Documents Required
The documentation process for corporate loans is quite simple and quick.
The documentation process may vary from bank to bank. However, the documents that are usually required are listed below:
Sr. No. Document Name Details
1. Application Form All fields should be duly filled in and acknowledgment given to the customer 2. Self-attested copy of KYC Documents Entity proof – Partnership deed/Certificate of Incorporation/Shops and Establishment certificate
Copy of PAN Card of Entity, Proprietors/Partners/Directors, Security providers and guarantors
Address Proof of Entity, Proprietors/Partners/Directors, Security providers and guarantors 3. Financials Last 3 years Audited/Provisional Financials (Audited financials to include Balance Sheet, Profit and Loss Account along with schedules and Notes to Accounts, Tax audit reports, Statutory Audit report). In case of Provisional financials, VAT returns are also required.
Current year performance and projected turnover on letterhead of the entity
Last 1 year Income Tax returns of the borrowing entity (along with Computation of Income and copy of acknowledgement), if filed online, acknowledgement number is required 4. Bank Statements (not more than 45 days old) Latest Bank Statements for last 6 months (in case of First Time Borrower) and 12 months (in case of Takeover proposals). In case of multiple banking, statements covering minimum 75% of banking turnover is to be provided.
Balance Sheet and Profit & Loss account for the previous 2 years, after being CA Certified/Audited
Does the rate of interest for corporate loans differ for different applicants? Ans:
Should I always apply for the loan which offers the lowest interest rate? Ans:
Why does the bank need the financial statements of the business? Ans:
Other than the interest rates, what are the other factors that are required to be checked at the time of making a loan application? Ans:
Why choose Indian Loan Bazaar to get a corporate loan in India? Ans:
What do pre-closure payment and part-prepayment mean? Ans:
Will lenders allow pre-closure payment? Ans:
How long will it take to get a corporate loan? Ans:
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