Project Loan availability and eligibility criteria

Project Loan availability and eligibility criteria

Project loans are available for an amount up to 70% of the project cost,
Project loans are available for a repayment time from 10 years to 25 years.
Project loans are available for self-employed persons that either want to start a new project or already have their own project or their own company; it depends on their company's credibility and their yearly turnover.

Eligibility Criteria: -

The Project loans in India solely depend on the nature of the industry for which the loan is applied for. As there are no specific conditions required for the eligibility, the only concern of the bank remains in the profitability of the industry. Any firm having nice income, a reliable credit balance along with credibility in the market is eligible to apply for a Project Finance India

Types of Term Loans in India

A term loan is a bank loan provided to a company, with a fixed repayment tenure and often featuring amortization of principal. If this loan is in the form of a line of credit, the funds are drawn down shortly after the agreement is signed. Otherwise, the borrower usually uses the funds from the loan soon after they become available. Bank term loans are very a common type of loans. These loans are of three types: -

Short-term Loans (up to two years) for various short-term requirements including bridge loan, Corporate Loan etc.

Medium-term Loans (more than two years to eight years) for business expansion, technology up-gradation, R&D expenditure, implementing early retirement scheme, Corporate Loan, supplementing working capital and repaying high cost debt

Long-term Loans (more than eight years to up to 15 years) - Project Finance for new industrial/infrastructure projects Takeout Finance, acquisition financing (as per extant RBI guidelines / Board approved policy), Corporate Loan, Securitisation of debt

These loans are targeted for the business segments such as: -
             Manufacturing industry
             Infrastructure projects
             Airports (brownfield)
             Urban infrastructure projects
             Participation in Private Equity
             Promoter funding

Medium Term Loans

Purpose of these loans is to increase enterprise’s capital and to help in improvement of current ratio and also for meeting genuine business requirements. This loan can also be utilised for repayment of other loans related to business purpose. This loan is provided for Micro, Small & Medium Enterprises as per Regulatory definition and all other entities with annual sales turnover of Rs. 1/- crore to Rs. 150/- crores. This loan is only provided when a company has good credit history. Loan amount can be up to 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. 5 crores. The repayment tenure should not be exceeding 3 years, to be repaid in equal quarterly or half-yearly instalments. As security or collateral 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 1.25 can be provided.

Whenever you opt for a term loan, please keep in mind to compare the exact EMIs or amortization for the term loan, tenure of the term loan and documents required for term loan by the banks to choose from which bank you want to take the loan. If a person asks for fees to get your loan sanctioned, never listen to that man. Always provide document to one bank only and to an authorized vendor and authorized bank employee. Under any circumstances you should never provide banks with false documents or false information as this may lead to you being declared a fraud or even blacklisting you for any future loan approval. Never sign a blank document regarding your loan. There are many frauds looming in the market that can con you of your money, so be careful when you apply for loan and do so with authorized vendors and bank employees. 

Term Loan Advantages and Disadvantages

Advantages of term loans

             Short Term loans are usually given without any collateral.
             Easy and fast processing
             Less paperwork required
             Can provide you much needed cash easily
             You can schedule your repayments according to your income.
             Rate of interest is quite competitive.

Disadvantages of term loans
             Banks usually provide these loans for short tenure.
             25% of the required amount is to be arranged by company itself.

Banks/NBFCs that provides term loans in Delhi-NCR

Almost every bank available in market today provides Term loan. Banks/NBFCs that provide Term loans from Delhi, Noida, Ghaziabad, Faridabad, Sonipat and Gurgaon at: -

             State Bank of India (SBI)
             Punjab National Bank (PNB)
             Axis Bank
             ICICI Bank
             HDFC Bank
             HSBC Bank
             Canara Bank
             Punjab & Sind bank
             Dena Bank
             Yes Bank
             Standard Chartered Bank
             Karur Vysya Bank
             Syndicate bank
             Barclays Finance
             RBS Bank
             Fullerton India
             Kotak Bank
             Andhra Bank
             ING Vysya
             Corporation Bank
             United Bank of India (UBI)
             Vijaya Bank
             Bank of Baroda
             Bajaj Finance
             Dhanalakshmi Bank
             IDBI Bank
             Karnatka Bank
             Oriental Bank of Commerce (OBC)
             Indian Overseas Bank(IOB)
             Union Bank
             L.I.C. (Life Insurance company) housing finance
             Indian bank
             UCO bank
             Allahabad bank
             Muthoot finance
             Kotak Mahindra bank
             Reliance capital
             GE money
             TATA capital
             ABN AMRO bank

Documents required for a term loan

Documents required by various financial institutions to process the term loan application are: -

             Copy of SSI registration certificate
             Copy of firm registration certificate
             Copy of partnership deed in case of partnership
             Bio-Data and Net worth Statement
             Copies of audited Balance sheet and profit & loss account
             Other documents as required depending on the bank loan applied from

Term loan interest rates

Term loan interest rates in India depends on various factors. The key features that determine you term loan interest rates are

             Your company status
             loan amount needed by you
             tenure of repayment
             Either you provide a collateral or not
             Your relationship with the bank you intend to take your loan from

Depending on the bank you are taking term loan from and the term loan related factors mentioned above, the average interest rates will be PLR + weightage of risk.

Processing fees for a term loan vary from 1% to 5% of the loan amount.

If you want to pay the term loan amount before agreed time period then there will be a pre-payment penalty applied by the bank. The pre-closure/prepayment/foreclosure charges are 1% to 4% of pre-closed amount.

The term loan amount ranges between Rs 10 lakhs to Rs 500 crores for small term.

Steps for Term Loan Approval Process

Before your term loan application is approved there are some steps to be followed. Nearly all of the term loan lenders who operate in India follow the same steps, so it is a good idea to educate you about them so that the approval of your term loan can proceed quickly. Here is the procedure

First you should do a little research on what type of term loan you want to get. This way you will have an idea of how much you need to borrow as well as knowing if you can actually afford the loan.

Next if you do some research on all of the lenders and loan products on the market you will be able to find one that suits your requirements.

The next step is to either apply for the term loan online, in person at your bank's branch or over the phone. You will be required at this stage to provide term information about yourself.

Next step is to provide the bank with the required documents asked by them, make sure you provide no false information to them as provide with false information may lead to you being declared fraud or even Blacklisted.

After that the bank will assess your company's profitability, the bank will also evaluate your company's status in the market.

After the assessment, when bank is fully satisfied, the final step in the loan approval process is to actually sign and return the loan application form/format/letter to the finance company.

After this your loan will be approved and the money will be transferred to your account.

Reasons for Rejection of Term Loan application
Reasons for a loan application to be rejected may be: -
Company has a bad credit history.
Company is classified as unstable.
Company's current profit is insufficient to be able to make the loan repayments.
Company already has too many loans and its debt level are too high.
If company has filed for bankruptcy before then you may not be approved.

Time taken for Term Loan Approval
You will find that in India approval of a term loan can take a few days. In some rare cases you may even be able to get instant term loan approval. Actually, the time that it takes to get approval will depend on how complete the information that you provide is and whether or not that information places you in a high or low risk category. Generally, the lender will put the money into your loan account within a day or two after your term loan is approved and signed.