Federal Bank Business Loan Details

Federal Bank Business Loan has been on offer for quite some time now and since it was introduced, entrepreneurs and business individuals have taken advantage of the scheme to expand their business. This loan is designed to further the economic interests of Micro, Medium and Small Scale Business Enterprises. Issued at affordable interest rates, any business owner in need of fresh capital may apply for the loan. Here are some of the features of this Business Loan by Federal Bank.

  • The loan is curated for SME's and MNC's got business expansion
  • Speedy application processing and loan disbursal
  • Interest rates range from 8.75%-9.20%
  • Multiple repayment options for all customers
  • Minimal documentation required to apply for the loan

To apply for this loan, you can visit any of Federal Banks? branches to fill out an application form. Or better still, you can do so online by logging onto MyMoneyMantra?s website to apply online.

Eligibility for Federal Bank Business Loan

Before a business owner can receive this loan from Federal Bank, he or she must provide proof of eligibility.  Below we highlight some of them.

  • The applicant must be at least 23 years of age
  • A healthy credit history with minimal debt liability is a must to access this loan
  • A healthy credit score
  • Monthly Business income must be large enough to cover 40% EMI deduction
  • The loan is solely for Salaried Professional, Self-employed and business owners
  • The business must have been in existence for at least 3 years running

Types of Federal Bank Business Loan

To broaden the options available to Entrepreneurs and business establishments, Federal Bank currently offers as many as 8 different types of loan schemes. Each loan is designed for specific business purposes and they are issued at different rates of interest and tenure. Some of the loans are meant for increasing trading investment or to boost cash flow. Others are essentially meant to procure equipment and machinery for production. There are also loans for business expansion or rent securitization. Whatever your business needs are, Federal Bank has got you covered. Some of the loan schemes offered under the Business Loan category are:

  • SME Parametrized Scheme
  • Business Loans for Professionals
  • Federal Goldsmith Loan Scheme
  • General Credit Card Scheme
  • Commercial Vehicle Finance
  • Loan to Mobile/DTH/Other Recharge Vendors
  • SME Loan against Property
  • Loan against Rent Receivables

To provide you with a clear picture for each loan type, skim through the table below to find out more. Also make sure that you do your due diligence before deciding on any loan, in particular, to go for.

 PurposeInterest rateMaximum Loan AmountTenureRepayment optionsBest for
SME Parametrised SchemeFor setting up a new small scale trading/service/processing/manufacturing business or expanding an existing one12.20%-14.45%Up to 5 Crore120 Months maximumCheque/ ECS, Mobile Banking/ Internet Banking/ Standing OrderSetting up a new small scale business
Business Loans for ProfessionalsFor varieties of purposes including debt repayment, loan takeover and investment. There are no restrictions12.20%-14.45%Up to 2 Crore84 Months maximumCheque/ECS/ Mobile Banking/ Internet Banking/ Standing OrderProfessionals in need of funds to settle pressing concerns
Federal Goldsmith Loan SchemeFor Equipment/Machinery acquisition or expansion of existing business operations and working capital12.24%-14.45%Up to 500 Lakh84 Months maximumCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderProducers and manufacturers looking to expand their industrial unit
General Credit Card SchemeFor Rural and Semi-rural financing of economic activities7.09%-9.30%Based on the entire household? income and cash flow84 Months maximum or moreCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderRural traders and Agriculturist with little or no security cover and documentation
Commercial Vehicle FinanceFor buying or hiring commercial vehicles for business operations10.35%-12.40%2 Crore84 Months maximumCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderEntrepreneurs and Enterprises in need of vehicles to transport goods and commuters
Loan to Mobile/DTH/Other Electronic Recharge VendorsFor Boosting working capital of vendors9.08%-12.40%Up to 300% of average daily amount paid to telecom company24 Months maximumCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderVendors to increase trading funds
SME Loan Against PropertyFor Business Growth of an existing business12.00%-15.15%Up to 5 Crore120 Months maximumCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderMedium and Small Scale Enterprises pursuing an expansionist strategy
Loan Against Rent ReceivablesFor ensuring constant rent inflow on properties leased to tenants12.10%-13.60%Up to 20 Crore120 Months maximumCheque/ ECS/ Mobile Banking/ Internet Banking/ Standing OrderProperty owners in need of regular income from their real estate investment

Advantage of taking Federal Bank Business Loan

If you are a business owner looking to take up a business loan from Federal Bank, here are some of the advantages of doing so.

Low Processing Fees: The processing fee for taking up this loan is quite affordable. Federal Bank will not charge you more than 0.5% of the loan amount as a processing fee. This will go a long way to reduce potential indebtedness.

Seamless Application Process: The process of applying for this loan is relatively easy and straightforward. You can either go to any of their branches or go online to fill and submit an application form.

Minimal Documentation: The number of documents required are very few and easy to access.

Affordable Interest Rates: Receiving a loan at single-digit interest rates is one of the positive features of this loan. The rates are affordable hence repayment won?t be difficult as long as your business enjoys regular cash flow.

Extended Repayment window: Some of the business loans on offer have tenure of five years while others can last for as long as seven years. This opens up the opportunity to repay the loan in small installments without risking the financial health of your business.

Flexible Repayment methods: You can take advantage of any of the various repayment methods available to customers such as cheques, Standing order, Mobile Banking, etc

Documents required for Federal Bank Business Loan

Here is a detailed shortlist of documents all applicants are expected to submit along with their loan application form.

Salaried Professionals

  • Proof of Identity ? PAN Card, Voter ID, Passport, Driver License
  • Proof of Address ? Ration Card, Electricity Bill, Rent Agreement, Voter ID, Passport
  • Proof of income ? Bank Statement for the last 6 month, Salary Slip for the last 3 months, Form 16 for 2 years

Self- Employed/Business Owners

  • Proof of identity ? Voter ID, Passport, Driver License, PAN Card
  • Proof of Address ? Ration Card, Telephone Bills, Electricity Bills, Passport, Trade License, Lease Agreement, Sale Tax Certificate
  • Proof of income ? Audited Balance Sheet and Profit and Loss A/C, ITR for a 2 year period, Income Computation by a Certified Accountant, Proof of business Continuation, Trade Tax, Sales Tax Certificate, Copy of tax receipts paid to local tax agencies

Why Apply for Federal Bank' Business Loan through MyMoneyMantra?

The decision that informs your decision on the lender to pitch your tent with is a decision that should not be made ignorantly. Due to the large number of banks offering Business Loans to entrepreneurs it can be quite challenging to identify the lender whose scheme best serves your business? interest.  Each lender be it a bank or an NBFC operates in the market using their own lending policy which varies. As for their eligibility criteria, no single bank has exactly the same criteria.  To protect business owners from making a wrong choice MMM was created to provide them with expert guidance.

On the website, there is quite a lot of information about the individual loan schemes offered by notable Banks and NBFC's in the country. If you apply for a business loan via MyMoneyMantra, you can be sure of doing so with the full knowledge of what each particular scheme has to offer your business. Some of the things the website can help you with include:

  • Aiding in your eligibility valuation to see if you qualify for a business loan offered by any lender
  • Evaluate your repayment capacity based on your current income
  • Provide accurate information about the processing fee for each loan scheme as well as details of other financial requirements
  • Aid in the documentation process without delays
  • Analyze the repayment history for each loan under the business loan scheme
  • Provision of expert advice regarding the best scheme for your business.

How to use MyMoneyMantra Business Loan Calculator?

When applying for a business loan, what should be of utmost priority to you should be the cost of the loan. You should also be interested in the potential effects such a loan will have on your investment decisions. If you take up a loan with a high marginal cost, your business may run into cash flow problems sooner or later. To make sure that you are doing your financial planning just right, you will need a tool to guide you as you decide on which lender to apply for a business loan. It is for this reason that this calculator was designed.

MyMoneyMantra?s Business Loan Calculator is a convenient online tool which can be used to do the following

  • Do market research on the available loan schemes in the financial market
  • Choose a lender whose rates are affordable
  • Ascertain the processing fees, prepayment charges and interest rates attached to each individual loan
  • Evaluate your eligibility for each loan scheme

There is a lot that you can do with MMM's calculator beyond what has been mentioned above. It will also interest you to know that you do not have to be an experienced user of the tool to utilize it effectively. It is easy to use and all it takes is a few steps to apply for a business loan using the tool.  Just follow these steps.

  • Visit MyMoneyMantra' website and pick Business Loan
  • You will be asked to provide relevant information such as the amount you want, interest rate and tenure for your EMI to be calculated (note that you can adjust the figures if you so wish)
  • A list of lenders whose schemes suit your search will be displayed on your screen
  • Pick the lender whose terms is of interest to you and proceed
  • Provide accurate information on the fields displayed on your screen
  • After submitting your application form, a representative from MMM will get in touch with you to guide you as you complete the documentation process
  • If your application is successful and the lender approves it, the funds will be credited to your bank account.

Why use a Business Loan Calculator?

There are different reasons why applicants use a Business Calculator when applying for loans in general. Some of the common reasons behind their decision are:

#1 They wish to know just how much they can get

Many borrowers like to know how much they are eligible for as loan before they apply for it. This is understandable since getting a much lower amount than is required may be counterproductive to business growth. With a business calculator, you are in the best position to know how much a particular lender is likely to offer you.

#2 The Loan Application process can be confusing

Although loan application is relatively easy, however, there are professional terms and implications that non-professionals may not understand. To avoid making a decision that you will rue, leveraging on the experience and the competence of MyMoneyMantra experts seem like a smart thing to do. These experts will not only provide you with professional advice, but they will also guide you through the process from start to finish.

#3 Evaluate the Cost of Loan

Besides the principal amount and interest amount you will have to pay, there are several other charges that may drive up the cost of the loan. Most times, borrowers are oblivious of this fact so they end up paying a very high cost for the loan they take up. Charges like loan processing fees, prepayment charges, and penalty defaults can increase the cost. All these charges will be brought to light if you use the resources provided by MyMoneyMantra. If there are hidden charges that some lenders do not want to know about, MyMoneyMantra will bring them to light.

#4 Reveal the Repayment Schedule

Knowing just when your EMI is due is the only way you are going to avoid defaulting on the loan. And as you know, defaults attract penalty fees which you should do all you can to avoid at all cost. MyMoneyMantra?s calculator will provide you with an amortization table so you can carefully plan your EMI repayment well in advance.

#5 Information on EMI Amount

The calculator will also let you know how much you are to pay as monthly EMI on the loan amount. EMI stands for Equated Monthly installment and it represents the amount you are to pay back each month for the loan you have taken up. If you have taken up a loan with a 7 year tenure for example, MyMoneyMantra will provide you with a detailed table of how much you are to pay as EMI for each month from the first to the last month of the tenure.

These are some of the reasons why applicants use a business loan calculator and you should do the same. If you are made aware of all the vital information regarding the loan schemes on offer, you can then decide whether to apply for any of them or not.

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Federal Bank Business Loan FAQs

What are the different Business Loans offered by Federal Bank?

The Business loans offered by Federal Bank are numerous. They are

  • SME Parameterized Loan
  • Business Loan for Professionals
  • Federal Goldsmiths Loan
  • General Credit Card Loan Scheme
  • Loan to Mobile/DTH/ other electronic recharge vendors
  • SME Loan against Property

If I take up a Business Loan from Federal Bank, how do I pay it back?

There are a few ways to repay the loan. Federal  Bank has provided borrowers with a few options for convenience. They are:

  • Cheques
  • Standing Order
  • Mobile Banking
  • Electronic Clearing System

Is there a standard interest rate for all Business Loans issued by Federal Bank?

No, there isn?t a standard interest rate for all Business Loans. The rate of interest charged by the Bank varies from one borrower to the next.

How will Federal Bank determine the interest I am to pay?

Federal Bank will determine interest after reviewing the documents and application forms that you submitted. The decision on interest rate is influenced by your financial profile, credit score, prevailing interest rate (for floating loans) and other credentials.

What Can I use this Business Loan for?

Business Loans are issued to borrowers essentially for business activities. You may use the loan to start up a new venture, expand your current business, acquire new machinery, etc.

What is the maximum tenure placed on Business Loans offered by Federal Bank?

The maximum tenure placed in Business loans depends on the type of loan in question. Loan tenure range from 24 months minimum to 120 months maximum. The tenure on each loan is designed in order to create a sufficient window for borrowers to pay back within the agreed period.

At what interest rate does Federal Bank issue loans to businesses?

Currently, Federal Bank offers loans at floating and fixed interest rates. For fixed interest rates, the rate of interest doesn?t change but remains constant throughout the lifespan of the loan. Floating interest rates on the other hand changes based on the prevailing RBI rate in the economy. The RBI rate is upheld by the Reserve Bank of India. To decide on the most suitable rate to choose, do well to consult MyMoneyMantra's advisors for expert assistance.

What are the considerations involved in getting a loan from Federal Bank?

Before a loan is issued you, Federal Bank will decide whether to approve your application or not based on the following:

  • The duration at which the business has been in operation
  • Your level of experience in running the business
  • The total value of the business (asset and liquid asset)
  • The value of the Security you have presented
  • The daily cash flow of the business
  • How long you want the loan to last for

Can I use a Business Loan for anything of interest to me?

No, you may not. Most of the loans issued as business loans are meant for specific purposes which are clearly spelled out for the borrower to see. However, the business loan for professionals such as Doctors, Lawyers, Engineers, etc has no restrictions placed on them.

How long do I have to wait before Federal Bank disburses the funds I need for my business?

All it takes is a matter of days. As soon as your loan application is approved, Federal Bank will immediately credit your account with the amount. To expedite the process, make sure you only submit valid documents in the right order.