What is Corporate Loan and How to Get a Corporate Loan in India?
Corporate loans or business loans are endorsed for the company that is active and has been doing business for at least 5 years with financial gains in the past 2 years. In addition, compared to that, the organization may also be required to really have a good credit rating and is needed to have a great background with regards to being a company that is prosperous. The records towards the payment associated with credit are additionally considered in the event the organization availed loans in any of the past fiscal years.
Corporate loans can be availed for the below-mentioned reasons:
- To invest in the administrative centre that will be functioning
- To look after day-to-day costs of the business
- To grow the continuing company in its industry markets
Top Categories of Corporate Loans in India
- Term corporate business loan:
The available funding from corporate term loans can be used for any business expense as per the need. Whether it is for infusing a performing capital, buying or renovating machinery or property, purchasing equipment, or upgrading technology, it is a suitable financing option.
Interest rates can either be fixed or floating on these loans. Generally, for an unsecured corporate advance, it may come with a tenure ranging up to 3 years and up to 15 years for its secured alternative.
- Secured corporate loans:
This loan is for those who are looking forward to making long-term business investments which also leads to revenue generation far into the future instead of immediate returns. In these types of loans, the borrower needs to collateralize any of the eligible business or personal assets as security. The loan repayment term gets renewed each year.
- Overdraft facility:
These facilities enable company owners to debit their accounts below Rs. 0. Every bank will have a pre-decided limit about the amount that can be availed as overdraft financing. It varies with respect to the type of security the borrower has pledged. Also, interest rates are charged only on the amount spent.
- Money credit service:
It is a kind of business loan where the borrower obtains money for their business assets like receivables or stock. The cash flow allowed to be withdrawn is around 70% of the total value of the asset extended and the repayment term gets renewed every year.
- Channel financing:
Channel funding is probably the entry that is newest among the list of forms of corporate loans in India. Right here, the objective is to enable businesses to improve their networks of vendors. The loaning allows distributors to obtain the funding for the necessary expenses. The framework associated with the payment routine can be per the needs of the debtor.
- Working capital GST corporate loan:
This loan offers borrowers access to instant funding when in need of quick cash. The thing that is amazing about the GST loan is that it cuts down paperwork to a minimum. The fund available is determined based on the borrower’s GST return.
The Procedure to Get Corporate Financing in India:
Complete the following steps to avail the required corporate finance.
- Check eligibility criteria via various online calculators available.
- Visit the desired lender’s website or office.
- Fill up the application form and provide essential documents needed.
- Complete lender verification to receive advance approval.
Eligibility Criteria to Avail Corporate Loans in India:
- The borrower must be at least 21 years old and must not exceed the age limit of 65 years.
- Borrower must have an updated ITR filing certificate.
- Borrower needs to produce bank statement of the past 6 months to show financial stability.
- Annual income must be more than Rs.50 Lakh to avail business loan.
- Borrower’s business must have a clean record of accomplishment and no existing overdue loans.
Required List of Documents for Loan Application:
- Proof of identity like Aadhaar card, driving license, passport, voter ID card, etc.
- PAN card
- Proof of address like Voter ID card, Aadhaar card, electricity bill, telephone bill, bank passbook’s front page, etc.
- Proof of continuation of business like ITR filed, establishment certificate, MOA (Memorandum of Association), trade license, etc.
- Bank statements of the last six months
- The latest bank statement, along with the audited total income, profit and loss account and balance sheet of the past two years.
- Other documents like certified copies of the Memorandum of Association, SPICE-A, partnership deed (in case of partnership business), Article of Association and the declaration of sole ownership.
A corporate loan can help your company in financing continuous business growth expenses, repaying large expense debt, technology up-gradation, R&D spending, using particular money streams that accrue into the company, implementing exceedingly early retirement schemes, and supplementing capital that is working. Corporate term financial loans could be organized underneath the FCNR (B) scheme as well, because of the alternative of switching the currency denomination in the last end of interest periods. This can help you make the most of global rate of interest styles vis-a-vis rates that are a domestic decrease in the debt price.