With the spectacular growth of Indian economy, the commercial or Business loans are now popular category of loans offered by almost all banks in both public as well as private sector. The main aim of these loans is to help upcoming traders, businessmen and professional, start or expand their commercial activities in a redefined manner. Such loans are provided to facilitate trade and smooth functioning of business activities. Loans to self employed but skilled professions such as CA, Architects, Doctors are also a part of this loan category. These loans are available at attractive interest rates and low EMIs to widen the customer base and the strategy is adopted by all most all banks.
The maximum loan amount under business loans for professionals varies in banks, depending on the financial standing of the customer, his repayment capability, repayment tenure of the loan etc. Banks generally provide loan from Rs.25000 to a maximum of Rs.25 lakh for these skilled professionals. The repayment is done through Equated Monthly Installments or EMI. Tangible security against the loan amount has to be provided in certain cases. But the loan approval depends heavily on the business plan. The profitability aspect, prospective growth need to analysed before the banker to make the loan availability procedure more lucid.
The payable interest is fixed according to the prime lending rate. It can be taken by clients on a fixed or fluctuating basis according to their needs. Interest can be discounted depending on the customer's past credit profile and his financial capacity. The interest is generally calculated on the diminishing balance or the remaining amount. Professionals can apply for the business loans by visiting the bank's premises or applying through the online mode. Various banks charge a nominal processing fee which is around 1% of the loan amount from the customers. Apart from business plan, the security is a must in many of the cases. For security, you can use National Savings Certificates, Government Bonds, Bank's Term Deposits, Assignment of Life Insurance Policies, approved shares & bonds etc.