Life+bank=wealth! | Dinakaran

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S. VijayakrishnanBusiness Loan Schemes A year’s total sales are calculated to determine the business loan amount. For new business/industries the sales amount estimated in the project draft report is taken as a measure. 20% of the total sales amount is given as cash loan by the bank. Generally all banks follow this metric. Simplified business loan Commercial loan scheme has been implemented in all banks for immediate cash requirement of individuals engaged in manufacturing or service sector, small, micro and medium enterprises / business enterprises, self-employed, wholesale / retail traders. Accordingly, a minimum amount of Rs.10 lakh and a maximum amount of Rs.25 lakh can be availed through the simplified loan scheme. The loan applicant has to pay 10% of the total amount as investment. This means that if it is a commercial purchase, 90% of the price will be provided by the bank as a loan. Similarly, if the buyer pays the price of the goods sold by the merchant within one to three months, the bank provides a loan of 90% of its value. For this loan, the bank takes goods and outstanding sales receipts as first collateral and immovable property as collateral. Also bank deposits and insurance policies in the borrower’s name will be assessed and taken as collateral. In this, the cash loan is reviewed every year based on the sales, profit, asset and debt value of the business and is updated, or the loan amount is increased/decreased. A two-year renewal of the cash loan is sufficient if the well-performing business organization scores high as per the project evaluation of the bank. Companies with such high scores do not have to offer anything else as collateral. Instead these are included in the loan insurance plan. In case of excess loan facility the loan amount will be determined on a rotating basis. This means that the merchant can deposit his excess money into the credit account and use it when he needs it. Interest will be calculated by the bank only on the outstanding loan amount. Cash Loan + Installment Loan Earlier cash loan and installment loan were offered separately. But in new banking the combination of the two gives an overall credit surplus. If a person is doing business then the bank calculates the monthly/annual income, asset/loan details of other members of his family and determines the loan amount. The family’s ability to repay loans can help in times of trouble if the business does not make the expected profits. Under this new loan scheme, business startups can get a loan from the bank by providing collateral up to Rs.15 crores. The loan amount can be used as per the needs of the business. Interest is calculated only on the amount so utilized. Business / Industry Expansion New machines according to emerging technologies. Banks provide installment loans for electronic devices, software, hardware, vehicles, appliances and other needs. For that, project draft report, machine, equipment, price list of goods, own investment details should be submitted to the bank along with the application. Minimum loan for business expansion is Rs 10 lakh and maximum loan amount is Rs 20 crore. The bank has loan schemes with installments ranging from five years to twenty years. Business installment loan The bank provides loans up to a minimum of Rs 25 lakh and a maximum of Rs 10 crore for manufacturing, hospital and other medical establishments, restaurants, transport companies operating at least 25 vehicles. The applicant has to pay 25% of the total project cost as investment. Bank will lend 75%. The loan repayment period is 8 years. The applicant has to pay a consideration fee as determined by the bank for availing the loan. Solar Loan Scheme Bank provides loans for setting up of solar equipment, logistics, machinery with a capacity of one megawatt. Maximum loan amount is Rs.4 crores. The applicant has to pay 25% of the total assessment as investment. The loan repayment tenure is 10 years. There is an application processing fee.Commercial Vehicle Loan It offers loans of up to Rs 50 lakh to Rs 50 crore for purchase of vehicles for business purposes. The bank lends to all investments which include the cost of the vehicle along with road tax, vehicle insurance and vehicle registration. A vehicle purchased through a loan will be registered as a mortgage with the bank. The property is mortgaged against the value of the vehicle. The owner of the collateral can be the borrower or a third party. If a third party is the owner of the property then he is liable for the loan and must sign the loan agreement. The property will be registered in the owner’s name after the full payment of the loan balance. The fees for these should be paid by the applicant in the respective period at the office of the Registrar. The loan repayment period is five to seven years.Rental mortgage loan If a person or a company owns a building, if it is rented or leased to another person or company for a fixed period of time, the bank receives the monthly rental amount and gives a certain amount as a loan to the owner of the building. This is an installment plan. Under this scheme you can avail loan from Rs.10 Lakh to Rs.5 Crore. This loan is secured by property. The loan amount is 95% of the lease term rent or 70% of the property value whichever is less. Each month’s rent is directly credited to the loan account received from the bank. For this purpose an agreement will be registered between the borrower, lessee and the bank on stamp paper. The bank sets a consideration fee for this loan and collects it as an advance from the applicant. Small, Micro and Medium Business Credit Cards Credit cards are issued by banks for the financial needs of retail traders, village industries, self-employed persons and those registered under the Government’s Udayam Small Enterprise Scheme. This card can be used for purchases of capital goods, raw materials, and business related needs. With this card you can get a loan of up to Rs.10 lakh. No margin upto Rs.50000/- loan amount. Margin is 20% for loan amount above that. No collateral is required for this loan. Administered by credit insurance scheme. The repayment period is three years for cash loans. It is updated every year. Installment loan to be repaid in seven years. Warehousing Receipts The receipts of public warehouse managers who store goods for production and marketing in warehouses with financial credit, indicate the cost value of the goods stored and the period of storage. The seller or manufacturer cannot immediately sell the goods and get paid. Funding is needed to continue their production. So banks accept the certified receipt of the warehouse containing the stored goods as collateral and lend to the owner. The bank gives loan up to 35% of the market value of the stored goods. If you want a loan amount more than that, you can get a loan according to the approval of the respective bank’s high office. A warehouse receipt can be obtained by remitting the outstanding amount along with interest to the bank till the storage completion date mentioned in the warehouse receipt. The loan amount is determined based on the value of the goods in the warehouse. Food Processing Industry Loan Banks provide loans for fruit and vegetable processing industry, food grain milling industry, dairy products, poultry, egg, fish, meat processing industry, oilseeds, coffee beans, tea grading and processing. Applicant has to pay 20% as investment. The remaining investment amount is provided by the bank as cash and installment loan. Grants are provided by the government through bank loan account to those approved by the government department for these works. Gold Jewelery Mortgage Loan for BusinessmenBanks offer loans to businessmen on collateral of gold jewelery ranging from Rs 1 lakh to Rs 50 lakh. The loan amount will be determined according to the quality of the gold jewelery and its market price. This loan amount along with interest has to be repaid within a period of one year. There is a processing fee for this loan. There is no penalty interest if the loan balance is repaid before the stipulated time. Interest is charged only for the period of outstanding loan. Biofuel Credit Banks provide loans to biofuel extraction industries for setting up infrastructure, biomass supply and aggregators, fuel storage and distribution. Loan up to 75% of working capital requirement. The property is required to be mortgaged against the loan. The loan repayment period is 15 years. Car Loans for Businessmen The bank offers new car loans as a special scheme to businessmen who have already availed cash loans and installment loans. If the loan amount is up to Rs.10 lakh, the applicant has to pay 15% as his investment. In case of more than Rs.10 lakhs the amount payable by the applicant is 20% of the cost of the car. The loan amount is determined by including the cost of the car along with road tax, insurance and registration fees at the local transport office. There is a processing fee for this loan. The loan should be repaid within five to seven years. Until then the vehicle will be mortgaged in the name of the bank. Apprenticeship as a profession Banks formulate and implement credit schemes for small, micro and medium enterprises, keeping in view the facilities required by the customers to grow their business, reduce risks and keep pace with technological developments. Banks continue to provide technical, management development training and consultancy to MSMEs. Banks support and encourage entrepreneurs through entrepreneurship development programs in collaboration with entrepreneurship development institutions. Banks offer a wide variety of current accounts, transaction products and deposit schemes to suit every need of the sector. Let’s take a look at some of the new credit and support programs that are useful in the context of many changes in corporate liquidity metrics.