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5 Simple Steps to Term Loan

1
Preparation of necessary document
2
Verification of document through Bank
3
Preparation of Balance Sheet
4
Get Approval of Loan
5
Sanction of Loan Amount

Meaning of Term Loan

  • A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and either a fixed or floating interest rate.
  • A term loan is often appropriate for an established small business with sound financial statements and the ability to make a substantial down payment to minimize payment amounts and the total cost of the loan.


How does Term Loan work?

  • Incorporate borrowing, a term loan is usually for equipment, real estate or working capital paid off between one and 25 years. Often, a small business uses the cash from a term loan to purchase fixed assets, such as equipment or a new building for its production process.

Basic Documents

Document required for Company

  • Proof of Identity of Private Limited Company: GST  registration, / IT return of the concern, Water / Electricity / Registration under Shops and Establishment Act, PAN ID /Municipal tax bill in the name of the concern, Memorandum and Articles of Association

 

  • Proof of Individual Identity: Proof to be submitted for the authorized signatories and about two directors (which includes the managing director) (any one of the following): PAN card, Voter’s identity card, Driving license and Passport.

Document required for self employed Individual

  • Proof of identity of the sole proprietorship
  • Proof of individual identity
  • Three years of income tax returns
  • Three years of sales tax returns
  • Copy of periodic stock, age-wise book-debt, and creditors-statement for the latest three months
  • Copy of last 6 months bank statement of main banker/copy of bank statement for the term loan.
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Basic

All Inclusive Fees

  • Bank loan syndication for quantum of up to Rs. 50 lakhs
199999

Silver

All Inclusive Fees

  • Bank loan syndication for quantum of up to Rs. 100 lakhs
399999

Gold

All Inclusive Fees

  • Bank loan syndication for quantum of up to Rs. 250 lakhs

Basic Features

Obligation

Interest payment and repayment of principal on term loans are obligatory on the part of the borrower. Whether the firm is earning a profit or not, term loans are generally repayable over a period of 5 to 10 years in installments.

Convertibility

Term loans may be converted into equity at the option and according to the terms and conditions laid down by the financial institutions.

Security

Term loans are secured loans. Assets which are financed through term loans serve as primary security and the other assets of the company serve as collateral security.

Restrictive Covenants

Besides asset security, the lender of the term loans imposes other restric­tive covenants to themselves. Lenders ask the borrowers to maintain a minimum asset base, not to raise additional loans or to repay existing loans.

Commitment charge

A commitment charge is a charge which is imposed on the unutilized portion of the loan which has already been sanctioned from the date of execution of the loan agreement in addition to the interest payable on actual amount.

Liability of a Borrower

Term Loan is a liability accepted by the company for purchasing the fixed assets. These are repayable over a period of 3 – 10years. These can be given by Banks or other financial institution.

Less Risk to Bank & more Risk to borrower

Term Loans are less risky on the part of banks and financial institution & this source of raising funds is very risky from the company’s point of view.

Start 99999 /- all inclusive fees
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