Business Loans India : SME Loan from Bank of Baroda
Reasons are many for loan securing. No matter that you are after starting or expanding your business, purchasing or refinancing equipment or restructuring your balance sheet is always an important part of a venture. Business Loans probably provide you the most flexible solution to meet your financial needs. These loans are financial agreements in which a lender or a commercial institution gives money to you. And with, you agree to repay the money with interest, in an agreed point of time.
Loans are very flexible and can be structured to meet your varied business needs. When arranging business loans, lenders keep borrower’s feasibility into consideration. This section will give you a general overview. These loans come in secured and unsecured forms. Secured loans are collateral-backed money provisions. Collateral is something worth asset that guarantees the loan. Based on the evaluated amount of the loan, fund is granted to you. On the other hand, unsecured loans are non-collateral based money provisions. Entrepreneurs find it hard at obtaining. And lenders on the other hand, offer the fund to the individuals they deem unlikely to default.
Rate of interest charged upon the business loans varies from persona to person and lender to lender. However, you find two set of rate options i.e., fixed and variable rates. With a fixed rate the interest rate applied to the outstanding principal remains constant throughout the predetermined period. The rate of interest is set at the beginning of your loan by examining the risk involved and the current market rates. While, a variable interest rate is applied on the outstanding principal amount fluctuates in line with changes to the base rate of a bank. The rate of interest for each period will be based on the current market rate plus a predetermined premium that remains constant throughout the life of your loan.
Information about SME Medium Term Loan from Bank of Baroda
PURPOSE:
* To augment enterprise’s working capital gap and to help in improvement of current ratio and also for meeting genuine business requirements. The facility will also be available for repayment of secured and unsecured Loans of other banks or institutions, but not for any purpose, which is not related to the enterprises activity.
ENTERPRISES GROUP:
* Small and Medium-sized corporates, business and trading houses (including partnership firms).
ELIGIBILITY CRITERIA
* Satisfactory credit rating for the last three years
* Latest Balance Sheet etc. should be available.
* Satisfactory financial performance in terms of Sales/turnover and profits. Negative variance, if any, should not be more than 10%.
* Debt-equity ratio should not be higher than 2.5:1 and average DSCR should be not less than 1.5:1.
* Satisfactory dealings with the Bank for at least Three years.
LOAN AMOUNT:
* Upto 25% of the existing fund based Working capital limits (depending on the Credit Rating), subject to a minimum of Rs. 25 Lakhs and maximum of Rs. 500 Lakhs.
PERIOD:
* Not exceeding –36- months, to be repaid in equal quarterly or half-yearly installments.
SECURITY
* First charge / Equitable mortgage of fixed assets of the Company / firm or extension of existing first charge/ equitable mortgage of fixed assets, ensuring that there is a minimum asset cover of 1.50
RATE OF INTEREST:
* 0.5% – 1.0% over the Bank’s BPLR, only for the additional Loan to be granted under the Scheme.
* Prepayment penalty of 1%, if loan is prepaid within -24- months of drawdown.
PROCESSING CHARGES:
* 0.1% of the amount of loan, with a minimum of Rs. 25,000/- and maximum of Rs. 50,000/-.
Sources : http://www.bankofbaroda.com