General Purpose Term Loans From State Bank of India
Starting a small business can be an exciting – but sometimes terrifying – journey. For those who have dreamt of entrepreneurship, small business ownership can be the realization of a lifetime aspiration. There are many things to consider when starting a small business, not the least of which is financing. Determining the best method to acquiring a small business loan can be as complex as starting the business itself.
When beginning the search for a small business loan, it will do you well to be organized and diligent in your efforts. There are many avenues to explore when it comes to securing the most appropriate small business loan for your specific situation. It’s important that you are comfortable with your choice and that the particular small business loan you choose fits your unique circumstances. Remember, this is your small business. And your small business loan should reflect the principles that matter to you.
To begin your efforts to find a small business loan, look first to your current financial institution. In many cases, an already established relationship will mean great savings and an easier transition for you. See what allowances they can offer you because of your past relationship with their organization.
General Purpose Term Loans From State Bank of India
State Bank of India grants term loans to small scale industries for meeting general commercial purposes like substitution of high cost debt,research and development, shoring up net worth and funding business expansion.
The tenor of the loan is normally is 3 years, and the pricing is fine-tuned to suit the risk profile of the borrower. The repayment is structured in monthly or quarterly installments, according to the cash generation cycle.
Eligibility criteria
The SSI unit that takes the loan should not have any history of defaults in payment of interest or installments of the principal. The unit should have a strong performance record and a respectable credit rating as per the bank’s own credit assessment scales ( In case of loan above Rs. 25 lakhs ) .
Type of security/guarantee
Extension of hypothecation charge over the current assets and fixed assets is required as primary security. Further, the borrower whose aggregate loans with the Bank exceed Rs 5 lakh may explore the possibility of collateralizing tangible security such as immovable property and third party guarantee. In all cases, personal guarantees of proprietors/partners/promoters have to be furnished.
Margins
A minimum margin of 25 per cent is applicable for acquisition of land and building, building construction, renovation of offices, showrooms, godowns, purchase of equipment, vehicles etc. In other words, the quantum of the loan will be restricted to 75 per cent of the total expenditure.
Sources : http://www.statebankofindia.com/