A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. For example, many banks have term-loan programs that can offer small businesses the cash they need to operate from month to month. Often, a small business uses the cash from a term loan to purchase fixed assets such as equipment for its production process.
A term loan is for equipment, real estate or working capital paid off between one and 25 years. The loan carries a fixed or variable interest rate, monthly or quarterly repayment schedule, and a set maturity date. The loan requires collateral and a rigorous approval process to reduce the risk of repayment. A term loan is appropriate for an established small business with sound financial statements and a substantial down payment to minimize payment amounts and total loan cost.
Term loans are Secured Loans. The asset that is purchased using the term loan amount, will serve as a primary security and other assets of the company will be serving as collateral security.
The loan has to be repaid within the fixed term regardless of the firm’s financial situation.
The interest rate on the loan is charged after evaluating the credit risk of the proposal, the loan amount and tenure for which the loan is taken. The interest rate will be subject to a minimum lending rate. The rate is negotiated between borrowers and lenders at the time of distributing the loan.
The term loan’s maturity lies between 5 -10 years. The repayment of the loan is made in instalments. The tenure can be rescheduled to help borrowers deal with the financial emergencies.
The lender will ask the borrower not to raise additional loans and to repay the existing loans and maintain a minimum asset base.
Term loans can be converted into equity according to the terms and conditions that have been laid out by the lender.
Financial institutions impose a penalty on the defaults.
Commitment fee is charged on the unutilized loan amount.
The principal loan amount is to be repaid after the initial grace period of 1 – 2 years.
Commercial banks’ term loan are repayable in equal quarterly instalments whereas financial institutions’ term loan are repayable in equal semi-annual instalments.
Servicing burden of the loan declines over time. The interest will be less and the principal repayment will remain constant.
1. Loan Application form
2. KYC (applicant & co-applicant) -
• Id proof - Aadhar card (UID), clear copy of pan card/passport/driving licence. (Pancard must or Pancard issuing letter)
• Signature proof – clear copy of pan card/bankers verification/passport/driving licence.
• Address proof - Aadhar card (UID), latest post paid telephone bill and electricity bill/ valid rent agreement.
• ID proof of firm - firm pan card (clear copy of pan card or pan card issuing letter)
• Office address proof - latest post paid telephone bill (must) and electricity bill valid rent agreement.
• Partnership deed and partnership registration certificate.
• Debtors & creditors certificate
• Turnover C.A certified certificate /GST return (YTD)
• Latest 3 years ITR acknowledgement copy of applicant & all co-applicant
• Computation of income, trading & profit & loss a/c, & balance sheet with all annexures (for non-audited- C.A certified with membership no.)
• Annual audit report & tax audit report in case of audited firm.
• Form 16 a (TDS certificate), if applicable.
• Net worth Certificates of proprietor, all partners, guarantors.
• latest 180 days major current A/c , Cash Credit a/c , OD A/c statement (in case of switching over bank) (applicant & all co-applicants)
• Loan statement & NOC documents – all running loan statement starting to till date & latest closed loan NOC
• Primary banking - latest 365 days major account, Current A/c, Cash Credit A/c, OD A/c statement.
• Secondary banking - latest 180 days major saving A/c (Applicant & all Co-applicant)
• Loan statement & NOC documents - all running loan statement starting to till date & latest closed loan NOC
5. Property documents for security purpose -
• Previous & current sales deed
• Plant & machinery list
• Plant & machinery current valuation report
• Margin money
• Property photographs
• Previous property search & valuation report
6. Other business relevant documents -
• Business profile of firm / company
• Profile of promoters/ guarantors
• Corporate brochure
• Business experience supporting documents
• Business references
An Doubt Rubber Financial Expert will first understand your business, Partners, Partnership structure and other relevant details to draft a Partnership Deed that is acceptable to all Partners.
Based on your requirements and the service level you have requested from Doubt Rubber, we will help you register the Partnership Deed with the relevant authorities to make the Partnership a Registered Partnership Firm.
Based on the package you had selected, we will help you obtain PAN and TAN registration for your Partnership Firm from the relevant Authorities once the Partnership Firm is registered.