SBI has different Term Loan products to boost SME sector depending on purpose of the business they setup. Products are: General purpose term Loan for SSI upto Rs. 50 lakhs, Open term Loan upto Rs. 2.5 Crore and Corporate term Loan upto Rs. 10 Crore or no cap for Corporates.
1. General Purpose Term Loan for SSI Sector (Up to Rs. 50 Lakh)
This product is for existing borrowers for any general commercial purpose such as shoring up of Net Working capital, substitution of high cost debt, R&D, ISO certification etc, subject to disbursement being made in line with the specific purpose approved. Maximum loan available is Rs 50 lakhs repayable in maximum period of 5 years.
1.1 Eligibility for General Purpose Term Loan
- Existing small scale industries with credit rating of SB-7 above. Units should have minimum limit of Rs 25 lacs.
- Units should have earned profits in each of the preceding 3 years.
- The unit should not have a history of default.
Any general commercial purpose such as shoring up NWC, substitution of high cost debt, R&D, quality up-gradation for ISO certification, etc.
1.3 Margin for General Purpose Term Loan
Minimum of 25% for acquisition of assets, i.e., quantum of loan should be restricted to 75% of project cost
1.4 Interest Rate
Floating interest rate linked to Base Rate
1.5 Repayment Period for General Purpose Term Loan
- 3-5 years.
- The repayment is structured in monthly or quarterly installments, according to the cash generation cycle.
1.6 Security for General Purpose Term Loan
- Primary: Extension of Hypothecation charge over current and fixed assets
- Collateral: Extension of charge over existing collateral.
- Others: Personal guarantees of the promoters/partners of the unit.
2. Open Term Loan (Up to Rs. 2.5 Crore)
A pre-sanctioned term loan with limit upto Rs 2.5 crore for existing or new corporate or non-corporate customers in manufacturing sector and upto Rs 1 crore for hotels, hospitals, educational institutions in service sector.
The scheme provides option of multiple disbursements for multiple purposes like expansion / modernization, substitution of high cost debt, up-gradation of technology, energy conservation system, acquisition of software, hardware, visits abroad for acquiring technology, finalizing deals, participation in fairs, market promotion etc.
The sanctioned limit is valid for 1 year. Margin requirement is 10%.
The borrower can utilize pre-approved sanction to plan capital expenditure and negotiate with suppliers of machinery and finalize best possible contract.
2.1 Target Group
- All units under manufacturing sector.
- Under Service sector: Educational Institution, Healthcare Industry (Hospital, Doctors, Pathological Labs, and Nursing Home), Hospitality Industry (Hotels, Restaurants, and Health Club etc), and Transport Operators.
2.2 Quantum of Finance
Upto Rs 2.50 crore for both manufacturing and services enterprises, subject to credit rating and purpose of the loan.
2.4 Repayment Period
3- 5 years.
2.5 Interest Rate
Floating rate linked to Base Rate.
2.6 Security for SME Open Term Loan
- Primary Security: Hypothecation / pledge of the assets proposed to be purchased out of the term loan.
- Collateral Security: Extension of charge over current assets, fixed assets, and other existing collateral if any.
- Others: Personal guarantees of proprietor /partners/promoters.
3. Corporate Loan (From Rs. 25 Lakh up to Rs. 10 Crore / No Cap)
The scheme provides term loan for all existing customers and established non customers (subject to takeover norms of the Bank) in manufacturing sector for repayment of high cost debt, VRS scheme expenses, on going capital expenditure such as replacement of parts of machineries, up-gradation and renovation, shoring up of net working capital, R&D expenses, acquisition of tools jigs etc.
Quantum of Finance is minimum Rs.25 lakhs and maximum Rs.10 crores for non Corporate and no cap for Corporate borrowers. No Margins are required under the scheme. A maximum of three corporate loans can be outstanding per borrower at any point of time.
3.1 Target Group of Corporate Loan
Existing and new companies / partnership / proprietor firms engaged in manufacturing activity.
3.2 Purpose Corporate Loan
On going capital expenditure/ technology up-gradation/ renovation, Repayment of high cost debt, VRS scheme, acquisition of trademarks, patents, shoring up NWC.
3.3 Quantum of Finance
- Upto Rs 10 Crores for non corporate borrowers
- No cap for corporate borrowers
3.4 Interest Rate
At least one step higher than the applicable rate as per internal rating.
3.5 Security for Corporate Loan
- Primary Security: Charge on the assets created from financial assistance.
- Collateral: Land, building etc.
- Others: Personal Guarantee of Promoters / Partners / Proprietor.
3.6 Special Features of Corporate Loan
- Units facing liquidity crunch can avail this product for shoring up of working capital funds
- Units planning to launch new products and require to spend on advertisement, promotion can avail this product.
Documents Required For SBI SME Term Loan
- Proof of identity: Aadhaar Card / Voter’s ID Card/ Passport/ Driving License/ PAN Card / signature identification from present bankers of proprietor, partner or Director (if a company).
- Proof of residence: Recent telephone bill, electricity bill, property tax receipt/ passport/ Voter’s ID Card of proprietor, partner or Director (if a company).
- Proof of business address
- Proof of Minority
- Last three years balance sheets of the units along with income/sales tax returns etc. (APPLICABLE FOR ALL CASES FROM RS. 2 LACS AND ABOVE). However, for cases below fund-based limits of Rs.25 lacs if audited balance sheets are not available, then unaudited balance sheets are also acceptable as per extant instructions of the bank. For cases of Rs.25 lacs and above, the audited balance sheets are necessary.
- Memorandum and articles of association of the Company/ Partnership Deed of partners etc. (Only if applicable).
- Assets and liabilities statement of promoters and guarantors along with latest income tax returns (Only if applicable)
- Rent Agreement (if business premises on rent) and clearance from pollution control board if applicable (Only if applicable)
- SSI registration if applicable.
- Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan. (APPLICABLE FOR ALL CASES FROM RS. 2 LACS AND ABOVE).
- In case of takeover of advances, sanction letters of facilities being availed from existing bankers/ Financial Institutions along with detailed terms and conditions.
- Profile of the unit (includes names of promoters, other directors in the company, the activity being undertaken, addresses of all offices and plants, shareholding pattern etc. (APPLICABLE FOR CASES WITH EXPOSURE ABOVE Rs.25 LACS).
- Last three years balance sheets of the Associate/Group Companies (If any). (APPLICABLE FOR CASES WITH EXPOSURE ABOVE Rs.25 LACS).
- Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like capacity of machines, capacity utilization assumed, production, sales, projected profit and loss and balance sheets for the next 7to 8 years till the proposed loan is to be paid, the details of labour, staff to be hired, basis of assumption of such financial details etc. (APPLICABLE FOR CASES WITH EXPOSURE ABOVE Rs.25 LACS).
- Review of account containing month wise sales (quantity and value both), production (quantity and value), imported raw material (quantity and value), indigenous raw material (quantity and value), value of stocks in process, finished goods (quantity and value), debtors, creditors, bank's outstandings for working capital limits, term loan limits, bills discounted. (APPLICABLE FOR CASES WITH EXPOSURE ABOVE Rs.25 LACS).
- Photocopies of lease deeds/title deeds of all the properties being offered as primary and collateral securities.
- Position of accounts from the existing bankers and confirmation about the asset being Standard with them (In case of takeover).
- Manufacturing process if applicable, major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major competitors and the company's strength and weaknesses as compared to their competitors etc. (APPLICABLE FOR CASES WITH EXPOSURE ABOVE Rs.25 LACS)