SBI Business/SME Loan: Benefits, Features, Documents, Eligibility

SBI Business

SBI Business loan is one of the most popular and is available to large corporations and medium-sized and small-scale businesses. The loans are quite affordable as they have reasonable interest rates starting from 11.20% p.a and are quickly applicable through an online process with superior customer service. 

With its rich legacy of over 200 years, the State Bank of India (SBI) is a Fortune 500 company. The company has it headquarter in Mumbai, and is one of the most trusted Bank by Indians through generations. SBI holds one-fourth market share with over 22,000 branches that serve over 45 crore customers with an undeterred focus on innovation and customer-centricity.

The Bank has effectively broadened its organization through its different auxiliaries, i.e., SBI General Insurance, SBI Life Insurance, SBI Mutual Fund, SBI Card, and so forth. Developing with times, SBI keeps reclassifying banking in India, as it expects to offer viable Banking solutions.

SBI Business loan is one of the most popular and is available to large corporations and medium-sized and small-scale businesses. The loans are quite affordable as they have reasonable interest rates starting from 11.20% p.a and are quickly applicable through an online process with superior customer service. 

The SBI Business Loan offers extended financial help against any security with a reasonable valuation and a fitted loan application process to meet your particular business prerequisites. The Bank offers both secured and unsecured loans as per the requirement of the business credit. The Bank also has various business loan schemes; depending on it, an applicant can avail of a business loan up to rs.500 crores.

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Features & benefits

There are many features and benefits of an SBI Business Loan. Below are a few we have mentioned:

A varied range of loans: The business loans of SBI are assorted for a wide range of clients. A borrower can avail SBI Business Loan ranging from Rs. 10,000 to Rs. 500 Crores, depending on the business profile and its requirements.

Relaxed Application Process: The application procedure for an SBI Business Loan is simple and quick to follow. You can get through the whole process in a few minutes without difficulty. 

A minimal rate of interest: An applicant can avail of an SBI business loan at a very minimal rate of interest depending on the Marginal Cost of Funds based Lending Rate (MCLR).

Collateral-free Business Loans: One of the benefits of SBI business loans is that MSMEs can get them without any collateral. State Bank of India offers collateral-free Business Loans with EMIs up to Rs. 1 Crore.

Flexible Repayment Tenure: There is a flexible loan repayment period in SBI that ranges from one year for working capital to 15 years for financial loans.

Business Loans for Women: SBI offers business loans to women who can take various advantages from it. Women business people can benefit from a 0.05% financing cost decrease for credits going from Rs. 2 Lakhs to Rs. 50 Lakhs.

Organizations owned by women or organizations with over half of their organization shares claimed by ladies’ industrialists can profit from an extraordinary grant presented by the State Bank of India called the ‘Stree Shakti Package.’

Read More : Axis Bank Business Loan: Features, Benefits, Interest Rates

Interest Rates

SBI business loans are minimal compared to others, and it varies based on the borrower’s eligibility. An applicant can get a loan from SBI depending on factors like business stability, profitability, the revenue of the business, CIBIL score and tenure of business. 

Below is the applicable rate of interest & other fees in SBI business loans:

  • The sanctionable loan amount is a minimum of Rs. 10,000 and a maximum of Rs.500 crores
  • The applicable rate of interest: Varies depending on the applicant’s profile and the requirement of the business
  • Processing fees: It may range from 1%-5% depending on the amount sanctioned
  • The time taken to disburse the loan depends on the business loan applied.
  • Duration of repayment: It is based on business necessities, and compensation is given from 12 months to 5 years.
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Factors that aspect SBI business loan interest rates

There are certain factors on which SBI calculates the interest rate of the business loan. A few of them are:

Amount of loan-Based on the loan amount an applicant has applied for, SBI calculates the interest rate. If the loan amount is higher, the rate of interest will be lower.

CIBIL score-An applicant’s CIBIL score also affects the interest rate for a business loan. If your CIBIL score is low, the interest rate will be high. SBI considers 700 as a good CIBIL score for a lower interest rate for a business loan.

Business experience-When an applicant has a significant experience in business, say more than three years, SBI offers a business loan at a lower interest rate. 

Revenue: SBI offers a business loan at a lower rate of interest-based on the monthly payment. When the monthly income is higher, lower is the interest rate.

Since we know the rate of interest and other factors affecting the SBI business loans, let’s have an idea of who all are eligible for an SBI Business loan. Below are the parameters:

  • An applicant can avail of the SBI Business Loan only if they are an Indian resident with a running business with a residual amount and can repay the loan.
  • Organizations that fall under the SME classifications are qualified to apply for an SBI Business Loan.
  • An applicant must be in the current business for at least three years and have five years of total business experience to qualify for an SBI business loan.
  • There is also an age criterion to qualify for an SBI business loan. An applicant must be at least 21years and not over 65years at the time when the loan matures.
  • The applicant’s business should have annual revenue of at least Rs.40 lakhs.
  • The applicant’s business should generate a minimum annual income of Rs.1.5 lakhs.
  • An applicant’s CIBIL score also matters. It should be decent and generally over 700 to have low rate of interest on the loan. Banks are expected to confirm that the applicant has not defaulted on any other financial institution about past loans.

Read More : Business Loans and Top 14 Types of Business Loans

Documents Required to apply

  • The application form is duly filled with two recent passport-size photos.
  • Identity proof- PAN Card, Voter ID, passport or driving license
  • Proof of Residential address- Registered Rent Agreement, Utility bill of minimum three months
  • Proof of business – GST/ registration of Service tax, organization’s consolidation details including address verification of the company, P&L Account and Balance Sheet guaranteed by a CA, confirmation of the business’ presence, a duplicate of the association deed and business profile.
  • For Private Limited company and Partnership firms, KYC documents of Directors & partners.
  • Existing loan bank statements and sanction letters
  • All the lawful, property-related records like past Title Chain, for example,
  • Allotment Letter, Latest Property Tax Receipt, Letter of possession, etc.

Application Process

  • An applicant needs to follow the below steps to apply for a business loan in SBI:
  • Visit the SBI official website, and tick on ‘Business.’
  • You will see a section ‘SME’, select your loan type, and click on ‘apply now.
  • Upon that, it will direct you to a new page where you must fill up all given details and click on ‘Submit’.
  • Once you complete it, an SBI representative will contact you and assist you with the process of applying for the business loan.

If you wish to know more before applying your business loan and donot rely on online processes, you can visit your nearest branch and speak to the bank associates. They will guide you with the requirements for the application process. 

Need-based Assessment while authorizing Credit Limit

  • No requirement of any Financial Statement
  • Ensure the cover is accessible for five years; thus, the maximum period is as long as 60 months for Mudra Scheme advances.
  • Last 12 months, the average balance in the current record of 10 times, dependent upon a minimum amount above Rs. 10 lakh and a maximum up to Rs.25 lakh.

Different SBI SME Government Schemes

There are different business loan schemes that SBI offers initiated by the Indian government. 

PMMY- MUDRA Yojana of Pradhan Mantri

  • This scheme was established by the Prime Minister in 2015 to provide financial assistance to non-corporate micro-enterprises.
  • With this scheme, loan amounts of up to Rs. 10 Lakhs can be availed.
  • The products are named Shishu, Kishore, and Tarun to arrange the endeavours as indicated by the development and financing needs of the beneficiary. 

Read More: L&T Finance Holdings Ltd Business/SME Loan

PMEGP – Prime Minister’s Employment Generation Program

  • This scheme gives monetary help to individuals who need to begin new organizations and is run by the Khadi and Village Industries Commission (KVIC) runs this scheme.
  • This monetary assistance is accessible to anybody beyond 18 years old.
  • When it is a manufacturing sector, the maximum venture cost should be Rs. 25 Lakhs.
  • When it is a business/service sector, the maximum venture cost should be Rs. 10 Lakhs.
  • The candidate probably finished the eighth norm to get sponsored for more than Rs. 10 Lakhs in the manufacturing area or more than Rs. 5 Lakhs in the firm area.

CGTMSE- Credit Guarantee Fund Trust for Micro and Small Enterprises

  • The Ministry of MSME laid out CGTMSE to make bank credit accessible to SMEs without submitting any collateral. 

  • This scheme’s primary objective is to put the best accentuation on the project feasibility.

  • To give financing exclusively on the subsidized premier security of the subsidized speculations. Moreover, the moneylender using the assurance office ought to bend backwards to provide a composite credit to the borrowers, permitting them to get both term credits and working capital from a solitary source.
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Stand Up India

Under this scheme, each bank branch will provide an amount from Rs. 10 Lakhs to Rs. 1 Crore to at least one Scheduled Tribe (ST) and Scheduled Caste (SC) as one lady borrower. The borrower can use the loan to start a new business in the manufacturing or service areas. The online process for the loan application is also available. Applicant can also select their favoured moneylender under this scheme. On the other hand, they can apply face to face in their favourable branch. To know more details on SME loans from SBI Business Loan. You can email [email protected] or call at  +918886666821.

FAQ’s

What is the eligible business experience for an SBI business loan?

What is the period that you can avail of an SBI Business Loan?

What is the maximum amount an applicant can borrow under the SBI Simplified Small Business Loan scheme?

Under what category does SBI Simplified Small Business Loan fall?

Under what terms does SBI approve machinery and working capital loans?

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