Common Fee And Charges Applicable On Business Loan

by Bhavna S. Financial Advisor

Introduction

The business loan helps the owner to accumulate funds for all their business requirements. They thoroughly check the amount they will be spending to get a business loan or the repayment period and so on.

It will help the owner to choose for the best deal as per the requirements and benefits attached to it. Let’s take a look at the standard fee and charges applicable on small business loan:

Processing Fee

Processing fees are charged on the loan amount to cover some cost that is involved in the processing of business loan application. It also includes other costs such as the cost of approval of the loan, checking of CIBIL score, etc.

Processing loan is pre-deducted from the loan amount, which means that the lender deducts the processing fees from the loan amount before crediting the loan amount to the business owner’s bank account.

Online Convenience Fee

For online access to the loan amount, the lenders charge online access fees. It is levied in order to provide the details of the loan account online.

The lender provides a unique ID and password by which the owner of the business can access the loan account. Also, some lenders offer mobile applications for the convenience of the borrowers. These applications are generally free of cost.

Interest Rate

The interest rate is the cost of borrowing the funds and the fee charged by the lender. It is charged on an annual basis, and it is calculated on the loan amount.

Interest rate and loan amount combined makes the EMI amount. It is paid during the loan tenure.

EMI Bounce Fees

In case, the owner fails to pay the EMI amount, then they are charged for missing the EMI. It is the late payment fee levied by the lender. This creates a negative impact on the CIBIL score of the owner of the business.

Penal Interest on Late Payment

In case of late payment of EMI or when the repayment is not made or in default the lender levies an interest on the business loan applicant.

Also Read: What Are The Financial Options Available For Retail Business In India?

Prepayment Charges

One avails a small business loan or business loan when funds are insufficient. But there is an uncertainty of the future. There may be chances that the borrower accumulates funds for repayment of the loan before the tenure of loan matures.

In case the borrower wants to foreclose the loan account, a penalty is charged on it which is called prepayment charges. But some NBFCs do not charge any penalty on prepayment or foreclosure of the loan account.

It is must that the borrower has a thorough knowledge of all these common fees and charges so that the lender doesn’t levy any hidden fees on the loan amount.

Following are the interest rate on a business loan in India:

Bank	Loan Amount (INR)	Interest Rate (Business Loan)	Lowest EMI per lac for Max Tenure (INR)	Processing Fee on the Loan Amount
SBI	1 billion maximum	11.20% - 16.30%	2, 594 for 48 months	2% - 3%
RBL Bank	10 lacs maximum	20% and above	2, 649 for 60 months	3%
HDFC Bank	50 lacs maximum	15.50% - 18.30%	2, 808 for 48 months	0.99% - 2.50%
Kotak Bank	75 lacs maximum	16 – 19.99%	2, 432 for 60 months	Up to 2%
ICICI Bank	40 lacs maximum	12.90% - 16.65%	2, 270 for 60 months	0.99% - 2%
Axis Bank	50 lacs maximum	15.50% to 24%	2, 405 for 60 months	Up to 2%
Bajaj Finserv	30 lacs maximum	18% and above	2, 938 for 48 months	Up to 2%
Standard Chartered	75 lacs maximum	13.50% - 20%	2, 301 for 60 months	2%
Tata Capital	50 lacs maximum	18% and above	2, 938 for 48 months	1.5% - 2.5%

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Created on Mar 26th 2019 03:59. Viewed 398 times.

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