Business Loan

Terms and Conditions:

1. Loan Nature & Eligibility:
   • A Business Loan is offered to proprietorships, partnerships, companies, and MSMEs for business-related financial needs.
   • Loans may be secured (with collateral) or unsecured (based on creditworthiness).
   • Eligibility is determined based on:
     • Business vintage and turnover
     • Financial statements and repayment capacity
     • Credit history of the business and promoters
2. Purpose of Loan:
   • Business Loans are granted for legitimate business purposes such as:
     • Working capital requirements
     • Business expansion
     • Purchase of equipment or inventory
     • Cash flow management
3. Documentation & KYC:
   • Applicants must submit:
     • KYC documents (PAN, Aadhaar, etc.)
     • Business proof (GST, registration certificate, licenses)
     • Financial documents (ITR, bank statements, balance sheet)
   • All applications are subject to verification and due diligence.
4. Loan Amount & Tenure:
   • Loan amount and tenure are based on:
     • Business performance
     • Credit profile
     • Nature of the loan (term loan / working capital)
   • The sanction terms will be clearly mentioned in the loan agreement.
5. Interest Rate:
   • Interest rates may be fixed or floating, depending on lender policy.
   • Rates are determined based on risk assessment, credit profile, and market conditions.
   • RBI allows lenders flexibility in setting spreads, with provisions for revisions over time.
6. Repayment Terms:
   • Loans are repaid through:
     • EMIs (term loans)
     • Overdraft/Cash Credit (working capital)
   • The repayment schedule will be shared in the sanction letter and agreement.
   • Timely repayment is mandatory to maintain a good credit profile.
7. Charges & Fees:
   • Applicable charges may include:
     • Processing fees
     • Documentation charges
     • Penal interest for delayed payments
     • Foreclosure/prepayment charges (if applicable)
   • All charges must be dislosed upfront as per RBI transparency norms.
8. Prepayment & Foreclosure:
   • As per recent RBI directions:
     • No prepayment charges on floating-rate loans for individuals and MSMEs (from 2026 onwards).
   • Terms for other categories will be specified in the loan agreement.
9. Collateral & Security:
   • Secured loans may require:
     • Property, machinery, or other assets as collateral
   • Unsecured loans are granted based on business cash flow and creditworthiness.
   • The lender may create a charge on assets until full repayment.
10. Default & Asset Classification:
    • Delay or non-payment may result in:
      • Penal charges
      • Negative credit impact
      • Legal recovery proceedings
    • As per RBI norms:
      • Accounts may be clasified as SMA (Special Mention Account) or NPA (Non-Performing Asset) in case of default.
11. Transparency & Fair Practices:
    • Lenders must:
      • Provide a sanction letter with all terms and conditions
      • Clearly disclose interest rates, charges, and repayment schedule
    • Borrowers must formally accept the terms before disbursement.
12. Regulatory Compliance:
    • Business Loans are governed by:
      • RBI guidelines
      • Banking Regulation Act, 1949
      • Applicable financial and digital lending laws
    • Lenders must follow fair lending, transparency, and data protection practices.