Loan for School

Every parent wants their child to experience the best possible education and always looks for better opportunities. Public and private schools must possess advanced infrastructure well integrated with technologies. Setting up a school with the necessary education infrastructure requires substantial funding. And school loan financing is an excellent way to tackle such high costs.

Apply Loan for Schools

Benefits of School Loan Finance

School loans from banks and NBFCs help educational institutions:

  • Build, repair, maintain, and overhaul infrastructure
  • Improve sports and other extra-curricular facilities
  • Boost campus connectivity through wireless networks
  • Add additional security measures
  • Introduce dedicated online facilities such as digital libraries, question banks, archives, assessment platforms, and the like.

How Can I Apply for a Loan for Setting up a School?

All anyone needs to do is fill up the loan application form, either offline or online, and have all the necessary information & documents ready at hand.

Considerations to Make When Getting the Loan

Borrowers must have all necessary documents ready and be aware of the entire process. Below are some of the most critical documents that institutions must possess.

  • Three years of financials, if available, or at least one year of financial
  • Last 12 month’s statements of the bank where students deposit fees
  • Current loan sanctions letters & loan statements, if any.
  • PAN copy, Registration & Deed for trust or society, as applicable.
  • Main trustees’/Promoters’ PAN & Aadhar details.
  • Property documents.
  • School permissions as applicable.
  • Class-wise student strength and last three years student fees in XML format.

Loans Available for Schools

Unsecured Loans for Schools

School authorities, educational trusts, and organisations with flawless credit histories can apply for unsecured loans. The amount ranges from 10 to 50 lakhs and do not require any collateral. Strong financial capability is a requirement and the bank has the final say regarding the sanctioned loan amount.

Loans get approved within 3 to 10 days, and schools can use them for appropriate purposes.

  1. Loan Against a Private School Building: The school or property owner leases out their building to a brand or franchisee, which takes over all responsibilities and operations. In return, the owner receives periodic rental money.
  2. School Bus Loans for Schools: There are loan options available for schools to buy buses and other modes of transportation.
  3. Loan Transfer From Existing Banker: If a school finds it difficult to repay loans as necessary, specific options can help ease things up.
    1. Refinancing: When cash flows are insufficient to meet debt obligations, an educational institution can opt for refinancing and transfer its loan vehicle to another bank. They can negotiate for lower interest rates and longer repayment tenures.
    2. Consolidation: If too many loans and EMI payments become overwhelming, loan consolidation can simplify and streamline everything.
    3. Releasing Mortgaged Properties: If you have availed of a mortgage-backed loan, then loan transfers can release the mortgaged property and transfer the collateral to a much more lenient lender.
    4. Loan Top-Ups: Loan top-ups allow one to avail additional funds to their sanctioned loan amount without offering any additional security. A loan transfer is the best option if your current bank does not allow top-ups.

Eligibility for SBI School Plus Bank Loans

  • Applying educational institution must possess an excellent financial record.
  • Showcase adequate source of income
  • All operations and activities must be Government approved
  • Projects must have prior approval from Government and appropriate authorities
  • Property owners, school board members, and trustees should have good standing in the society

Which Banks Provide School Loans in India?

Some of the largest public & private commercial banks and prominent NBFCs offer loans ot educational institutions. Schools & colleges can avail secured and unsecured loans to new & existing schools and colleges.

Baroda Vidyasthali Loan

The Bank of Baroda Vidyasthali Loan is an MSME loan available to all educational institutions for construction, renovation, repair, or overhaul. Owners, and loan borrowers, need to show project plans and costs to the bank. The bank will fund up to 75% of the project costs, which will be dispensed either via term loans or overdrafts. Security is necessary if the bank deems so and depends upon the institution’s loan repayment history.

The minimum term loan amount is Rs. 25 lakhs which goes up to a maximum of Rs. 15 to 25 crores per location. The maximum loan amount for overdraft is upto Rs. 3 to Rs. 5 crores as per the location or 60% of the total project cost, whichever is lower.

ICICI Bank Loan

The ICICI Bank is one of India’s biggest private banks that offers loans for construction, repairs & renovation, expansion, and infrastructure upgrades.

Following are some of the ways through which one can get ICICI Bank loans for schools and colleges –

  • Loans against fee receivables (similar to invoice factoring, wherein the school acquires funds against outstanding student fees)
  • Overdraft for working capital funds
  • Bank guarantee for monetary commitments (The bank takes personal guarantee of the school’s financial liabilities.)
  • Term loans
  • Working Capital Loans

The bank determines the rate of interest and repayment based on the MCLR, the loan type, and the loan amount.

Varthana Secured and Unsecured Loans

Varthana is a non-banking financial institution operating in India’s educational and financial sectors. It offers both secured loans and unsecured loans for development activities.

ISFC Loans (K-12 Loans / School Financing Loans)

Institutions with solid financials, a flawless track record and exact student fees of at least Rs. 400 can apply for loans from ISFC. The Indian School Finance Company is another prominent lender offering exclusive loan financing to the education sector.

The Maximum secured loan amount is Rs. 2 crores, while the unsecured loan amount is Rs. 15 lakhs. Different types of assets are accepted as collateral.

Nature of Facility for SBI School Plus Bank Loans

The State Bank of India’s School Plus Bank Loans are available for existing schools that need funding to expand, repair, renovate, and purchase materials & avail services for school operations.

Tenure of School Plus Bank Loans

Term loans are offered at a margin of 15% of the total project cost. Repayment tenures are as follows:

  • For loan amount up to Rs. 2 lakhs, the number of EMIs is 36.
  • For loan amounts ranging from 2 lakhs to 5 lakhs, the repayment period is 60 months with an equal number of EMIs.
  • For amounts above 5 lakhs, the entire amount needs to be repaid in 84 monthly instalments.

Best Loans for Private Schools

Two of the best funding options for private schools are

Reliance Money

EMIs can be paid in several ways with lots of repayment flexibility. Reliance Money offer loans based on existing cash flows. They structure EMI payments as per the school’s academic funding business.


As mentioned above, the Indian School Finance Company offers loans of up to Rs. 2 crores to schools. Eligibility criteria include strong financials, an spotless credit history, and average tution fees above Rs. 400.

Things to consider while getting a loan for a Private School

There are quite a few lenders each with their eligibility criteria and guidelines regarding approval, the minimum & maximum sanctioned loan amount, and the process by which schools should pay them back.

Borrowers must become familiar with the process, requirements, guidelines, and constraints.

How to Apply for a Loan for Private Schools?

Yubi, India’s leading digital corporate debt platform, offers a swift and simple way to avail of school loans.

  • Register as a partner with Yubi. It’s easy, secure, and completely free.
  • Upload essential personal and business details.
  • Connect with more than 750 lenders and banking institutions & avail of diverse financing products.
  • Enjoy easy on-boarding, fast approvals, quick disbursal, and seamless debt portfolio management through our unified digital platform.

Connect with Yubi today!


Yes, there may be additional fees applicable. You may need to pay processing fees, penalties for missed EMIs, cheque bounces, loan transfers, etc.

Key factors behind the interest rate are the type of loan availed, the sanctioned amount, credit history, cash flow of schools, repayment period, and the current MCLR.

While not many lenders allow it, some, like the ISFC, let borrowers transfer their liabilities quite conveniently.

Schools, coaching centres, colleges, and universities- any educational institution can avail of the loan schemes in this article.

Certain banks sometimes ask for co-applicants and may even ask all the owners of the school property or board & trustee members to act as co borrowers.