Business Loans India : CENT Trade Loan from Central Bank of India
Your trade needs funds for variety of purposes. Since, generating lots of funds from own sources is often not possible, taking out Business Loans becomes inevitable. As per your requirements and circumstances, you can use the borrowed amount for buying raw material, office furniture, machinery or equipment or you can buy a new property for commercial use.
Before you make the application, make a plan of investing the loan. The loan provider will like to know as to where and how you are going to use the borrowed funds. Keep all your documents ready.
Depending on your needs, business loans come in secured or unsecured option. You shall have to pledge any of your valued asset like home or any property as collateral to borrow greater funds against it. The secured loans carries lower rate of interest, which reduces the monthly outgoings substantially. You can choose to repay the loan in 5 to 25 years. The unsecured loans provide smaller finance without collateral. But interest rate will be little higher. The loan repayment duration is kept shorter in the range of 5 to 15 years.
It is advisable to first apply for rate quotes of business loans. You can then compare as many lenders as you can for finding out a suitable deal. Usually, as compared to banks and financial institutions, you will get the loans at competitive rates from online lenders and at less additional charges. Ensure that you repay the loan installments in timely manner to keep your trade from debts in future and to make rapid improvements in your credit rating as well.
Quantum of finance
Maximum Rs.50.00 lakhs per borrower
Mode of assessment
Limit to be assessed as per Turnover Method, i.e. 20% of projected annual sales. The limit shall be for a period of 12 months and renewed / reviewed annually.
Nature of finance
Overdraft
Rate of interest
BPLR – 1.00%
Security
Equitable Mortgage of non-encumbered residential house / flat, commercial or industrial property in the name and possession of the borrower (including joint owners) i.e. self-occupied or vacant. The property should be of value not less than 200% of the limit. The property in the name of spouse / relative may also be accepted as security making them either co-borrower or guarantor; and / or Liquid security in the form of –
1. NSC / Govt. Bonds (excluding shares) – to the extent of 133% of loan amount
2. Time Deposit of Bank / Surrender Value of LIP – to the extent of 112% of loan amount.
Where the limit is availed by one of the joint owners, in addition to equitable mortgage of property, guarantee of other joint owner should be obtained.
Where the property is in the name of third party (relatives) branches should take following additional precautions while accepting the property as security:
1. Clear and marketable title
2. Valuation
3. Subsequent to availing of limit, if the property is proposed to be let out, Bank’s permission will be required.
Insurance
The property should be insured for fire, riot and wherever required against other appropriate hazards, such as, earthquake, flood, lightening etc. by the borrower with usual bank clause for full value of the property.
Stock in trade to be comprehensively insured for full value.
Sanctioning authority
Branch Manager Scale – I = Rs.5.00 lakhs
Branch Manager Scale – II = Rs.10.00 lakhs
Branch Manager Scale – III = Rs.20.00 lakhs
CM / RM in Scale – IV = Rs.30.00 lakhs
AGM / RM in Scale – V = Rs.40.00 lakhs
DGM and above = Rs.50.00 lakhs
Processing charge
1.00% of the limit – Maximum Rs.10,000/-
Details required
1. Application form
2. Financial Statements in case of limit of Rs.10.00 lakhs and above should be obtained.
3. Copy of Sales tax / VAT Registration
4. Copies of Sales tax / VAT Returns (Assessment Orders for last four quarters)
5. Details of property offered as security with its present valuation;
6. Income tax Returns for the last 3 years.
Documentation
1. Demand Promissory Note
2. Letter of Continuity
3. Interest variation letter
4. E.M. of property
5. Letter of Guarantee of joint owner.
Miscellaneous
1. The limit should be reviewed / renewed annually.
2. Borrower should exclusively deal with our bank and route all turnover through the account
3. Operations in the account should be monitored on regular basis. Monthly projected turnover should reflect in the operations of the account.
Sources : http://www.centralbankofindia.co.in/
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