Types of Corporate Loans
A term loan is a loan required to be repaid in regular payments for a stipulated period. It can be secured or unsecured. The loan amount available is dependent on the company’s credit history. It has a fixed tenure. If the loan is unsecured, the tenure will range between 1 and 5 years. If secured, the tenure can go up to 15 to 20 years.
A term loan is typically taken for specific purposes, such as capital expenditure. The approved sum is disbursed by the lender in a lump sum amount.
2. Loan Against Securities
A loan against securities is for those investing in financial instruments like insurance, mutual funds, bonds, fixed maturity plans, or exchange-traded funds. The borrower needs to pledge their security, and the loan repayment term is renewed yearly.
3. Letter of Credit Facility and Bank Guarantee
LC or Letter of Credit is a credit limit used by businesses engaged in international trade because they deal with unknown suppliers, requiring assurance of payment. It is a payment instrument in which NBFCs and banks offer a monetary guarantee to enterprises engaged in the export and import business in case of any default or payment delays.
4. Cash Credit Facility
A cash credit facility is a short-term loan extended to a company by a bank. The company can withdraw money from a bank account without maintaining a credit balance. The account is limited to borrowing up to the borrowing amount.
5. Overdraft Facility
Overdraft facility is a type of funding offered by banks to its account holders to withdraw cash from their account even if the account balance is zero. The interest is charged on the utilised amount from the sanctioned limit. The sanctioned credit limit depends on the account holder’s credit history, relationship with the bank and repayment history.
An overdraft facility is typically offered against securities or collaterals.
Eligibility Criteria for Corporate Loan
- The applicant must be between 21 to 65 years of age.
- Corporate loans are sanctioned to existing businesses which have been in action for at least five years and have made profits for at least two years.
- The company must have a good credit rating and a good track record.
- The business should have a minimum annual income of Rs. 1.5 lacs.
- The business should have a minimum turnover of Rs. 40 lacs.
- Proprietors, self-employed individuals, partnership firms, entrepreneurs and private limited companies in trading, services or manufacturing are eligible for a corporate loan.
Documents Required to Apply for a Corporate Loan
- PAN Card for individual/company/firm
- Proof of identity – driving license, Aadhaar Card, Passport, Voter’s ID Card and PAN Card.
- Address proof – driving license, Voter’s ID Card, Aadhaar Card and passport
- Bank statement of the previous six months
- Proof of continuation – trade license, ITR, sales tax certification or establishment certificate.
- After being audited or CA certified, present the latest ITR and computation of income, profit & loss account and balance sheet for the last two years.
- Other necessary documents – certified copy of partnership deed, sole proprietorship declaration, certified true copy of Memorandum & Articles of Association & Board resolution.
Features and Benefits of Corporate Loan
Running a successful business is a capital-intensive task. To ensure smooth business operations, enterprises incur certain expenses that must be paid on time. When capitalising on market opportunities, businesses must have easy access to capital. Look at the features and benefits of a corporate loan to leverage it.
- Higher loan disbursal amounts – Working capital and business expenditures require sufficient finance. Business loans can go up to 40-50 lacs to fund business-related expenses.
- Less documentation – The corporate loan process requires minimal documentation.
- Quick disbursal – Minimal documentation means less time for your loan application to be processed; therefore, the loan amount is disbursed within three to five working days.
- Competitive interest rates – The interest rates on corporate loans are highly competitive. It depends on the purpose of the loan, tenure, creditworthiness, repayment history, etc.
- Flexible tenure – The tenure of the loan can be customised according to your business requirements.
- Collateral-free loans – Corporate loans are an unsecured offering where businesses can quickly access funds without security or collateral.
- Tax deductible – The interest paid on a corporate loan is tax-deductible.
Corporate loans – Interest rates
The interest rate varies from bank to bank depending on the financial stability of the company and business requirements, along with the enterprise’s loan repayment history (if any), credit history, etc.
Corporate loan repayment terms depend on the sole discretion of the lender. While some restrict it to twelve to forty-eight months, other offer flexible tenure of five years.
Find Your Best Bet on Corporate Loans Through the Smart Credit Ecosystem of Yubi Loans
An essential component of any business is managing finance, and it is unarguably the most critical element of the business as well. Especially for SMEs, timely finance is the key to making the most of business opportunities. When an existing business or industrial house needs to generate funds or working capital, it applies for a corporate or business loan. Funds made available through this loan are used for the smooth functioning of operations and care for short-term and long-term expenses. For instance, it could be used to meet the daily costs, fund working capital, renovate the firm, upgrade machinery, or do other expansion-related activities.
Getting a Corporate Loan
A corporate loan is approved for any existing business successfully running for a minimum of 5 years and having earned profits at least during the last two years. Apart from this, the organisation must also have a good credit rating and track record. It should also have a good market reputation as a flourishing business. Further, organisations that had taken loans in the past, their repayment records are also considered before a loan is sanctioned.
Corporate loans can be of two types – secured or unsecured. In the case of secured loans, collateral has to be provided, which the lender shall sell if you fail to repay the loan. The secured loan is available at lower interest rates and prolonged extended repayment periods. In an unsecured loan, you do not have to submit any security. However, it would be best to have a high credit rating to avail of an unsecured corporate loan. Such unsecured loans are disbursed generally for immediate or short-term funding needs.
Depending upon your needs, you can select the right one out of the various forms of corporate loans offered by the loan providers. The multiple forms of credit provided under corporate loans include Term Loans, Line of Credit, Working Capital loans, Promoter Funding, Structured Finance, Venture loans and Export & Bill Financing, to mention a few.
The Fastest and Cheapest Way to Get a Term or Working Capital Loan
Why Choose Yubi Loans To Get A Corporate Loan?
Yubi Loans is India’s largest online debt marketplace which provides access to both borrowers & lenders and facilitates a complete debt ecosystem from discovery and execution to fulfilment.
Yubi Loans Platform Offers the following Distinctive Features & Benefits:
- Discovery: With Yubi Match®, the proprietary AI/ML engine, now get discovered by 500+ lenders and enterprises across the rating spectrum.
- Interoperability: Integrated solutions for different stages of the client’s lifecycle and access to diverse debt instruments with a single click.
- Execution: Using our advanced decision-making suites, Yubi Analytics® and Yubi Automate® now close deals 5x faster than the market with complete transparency.
- Fulfilment: With Yubi Monitor®, monitor your assets portfolio and sustain high asset quality with 100s of data points segmented into automated custom reports, along with custom alerts and early warning signals.
Yubi Loans has helped businesses to manage various finance programs seamlessly while bringing in operational efficiency for their teams. Funds raised through this platform helped many small & mid-size businesses scale profitably at an accelerated pace.
Why Is The Yubi Loans Platform For You?
Yubi Loans is a complete debt platform with multiple products catering to your specific debt requirements.
✓The tenor of 3 to 180 months
✓Quantum of ₹ 5 to 500 Crores
✓5x quicker transaction time
An intuitive and ‘easy-to-use’ platform, Yubi Loans enables a customised online experience for you. Using Yubi Loans, get discovered by 500+ lenders that meet your criteria and avail a seamless end-to-end experience. This platform facilitates various forms of corporate loans, including Term Loans, Working Capital loans, Promoter Funding, and Structured Finance.
How to Get A Corporate Loan Through Yubi Loans?
Now that you have evaluated your requirements and are determined to move forward, the corporate loan application comes next. Here is how you can apply and get a corporate loan:
Step 1 – Fill in the form on this page or visit the Yubi Loans page
Step 2 – Fill in your basic details
Step 3 – Our representative will get in touch with you and explain the process
So, what are you waiting for? Act now!
A corporate loan is a significant segment of financing. Most NBFCs and banks offer corporate financing in India at reasonable interest rates. The loan amount and tenure are based on business requirements and factors like fund requirements, company size, creditworthiness, loan repayment history, etc. The intended borrower can approach their nearest NBFC or bank to learn more about their products. Alternatively, they can register on the Yubi platform to connect with 750+ lenders and find suitable products for their requirements.
Most corporate loans are unsecured; hence, banks have strict elibility criteria for sanctioning the loan. Some of those criteria are:
- The borrower’s personal and business credit score. Borrowers must have a good credit history for getting the loan approved.
- Banks check the bank statements of the business owner to ensure the business has a good cash flow.
- The loan repayment capacity of the borrower.
- Banks ask for several documents for sanctioning corporate loans, such as identity proof (voter’s ID card, passport, driving license, Aadhaar card, PAN card, etc.), financial documents (income & profit and loss account for the last two years, last two years ITR along with computation of balance sheet, etc.), business ownership proof, income proof (bank statements of the last six months), etc.
Choose the Yubi Loans platform because business owners can connect to over 750 lenders, including banks and NBFCs. Borrowers can interact with lenders to discuss their specific loan requirements and business objectives, ask for interest rates and make an informed decision. Moreover, you can compare the different interest rates on the same platform and choose the lender that suits your individualised needs. Also, you can quickly upload the relevant documents without any fuss.
A pre-closure payment means closing the corporate loan before the set tenure and part-payment means paying the partial amount that is less than the whole amount owed.
Yes, the interest rate for business loans may differ for different applicants. The rates are typically dependent on factors like the applicant’s credit history, stability in banking activities, annual income, credit score, etc. These factors help determine the risk factor of the borrower. The higher the risk, the higher will be the interest rates.
The financial statements of a business, like the balance sheet, profit and loss statement, etc., are required by lenders to ascertain the applicant’s creditworthiness. If there’s stability in these statements, it makes the applicant a low-risk candidate. Therefore, it helps quick approval of loans with a lower interest rate.
Other than the interest rates, a corporate loan applicant must be aware of the processing fees for the loan and the pre-closure charges (if any). These charges may increase the total debt to an extent. Therefore, the applicant must check these charges beforehand.
Pre-closure payments depend on the lender. Typically, individual banks have a 6-month lock period.
The time taken to get a corporate loan depends on your chosen lender, the type of loan and the loan amount.