Term loan in India: Features, interest rates and eligibility

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Overview

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Overview

Understanding Term Loans for Businesses

Every business needs funding from time to time. Be it for procuring raw materials, paying wages to staff, acquiring new space for expansion, or meeting cash-flow requirements, access to adequate finances is necessary for any business owner. However, they must analyze their precise needs and opt for a suitable funding avenue.

Tata Capital Term Loans are designed to help you meet all your business requirements without any hassles. Also known as installment loans, these loans are perfectly suited to fund your business expansion and growth. You can upgrade your workplace infrastructure, invest in the latest technology, strengthen your Research and Development (R&D) department, and do much more with the help of our tailored term loans. You can apply online and avail of up to Rs. 5 crores through a quick, digital process.

Rates and Charges

Particulars	Term Loan
Customer ROI	9.00% - 21.00%
Processing Fees	Minimum 1% of Sanctioned Amount
Stamp Duty	As per Stamp Duty Circular, Varies from State to State
Foreclosure Charges	Upto 6%

What is Term Loan and its Meaning?

A term loan is a special kind of loan that is given by banks or Non-Banking Financial Corporations (NBFCs) to business owners so that they can meet their short-term and long-term capital requirements. That is why term loans are classified as short term loans and long term loans. Term loans are usually given as a line-of-credit or loan limit against the assets or collateral submitted by the borrower.

Penal Charges

(i) Default in payment of interest and/or principal amounts @ 18% p.a. on the defaulted amount

(ii) Dishonour Charges: Rs. 670/- (Rupees Six Hundred and Seventy only) for every Cheque/ Payment Instrument/ ECS Dishonour.

(iii) Non-creation/perfection of security: @ 2% on the outstanding principal amount will be charged for the period of delay in respect of delayed/non-submission of security/collateral-related documents and non-perfection of security.

*Charges to be paid along with applicable Tax

Schedule of Other Charges

Description	Periodicity	Penalty Amount
Delayed/non submission of stock statement	To be submitted quarterly by the 10th of every Calendar Quarter	Additional one time charge of Rs 20,000/- per Quarter
Delayed First Insurance cover note . and non renewal of Insurance on the due date	First Insurance:- within 30 days from disbursement date. Renewal : as and when due	Additional one time charge of Rs 20,000/- per financial year
Non-adherence to the financial covenants of the sanction letter	At the time of Review /Renew of account	Additional one time charge of Rs 20,000/- per financial year
Documentation charges	Rs 5,000/-
Stock Audit charges	Rs 5,000/-
ROC and CERSAI filling	Rs 5,000/-
Valuation charges	As per actuals
TSR fees / Title search fees	As per actuals
Security trust fees	As per actuals

Charges to be collected along with applicable Tax.

Features of a Term Loan

With Tata Capital, you can avail of a term loan of up to Rs. 5 crores digitally to meet all your short-term and long-term business requirements with ease. Below are the prominent features of Tata Capital Term Loans:

High Loan Amount

At Tata Capital, we provide term loans of up to Rs. 5 crores via our scorecard based digital journey. You can use this amount to meet all the financial requirements of your business.

Highly Customizable Loans

Our term loans are highly customizable to suit your precise requirements. We provide short-term loans and long-term loans as per our customers’ needs.

Affordable EMIs

Your term loans EMIs would be affordable as our interest rates are highly competitive. You can take the help of a term loan EMI calculator to know your EMIs in advance.

Pre-approved Offers

You can check your exclusive pre-approved offers and avail of higher loan amounts and lower term loan interest rates. We also provide instant disbursal of funds into your bank account.

Benefits of a Term Loan from Tata Capital

Below are the reasons why you choose Tata Capital Term Loan to meet all your business's financial requirements:

Competitive interest rates

Instant disbursal of funds

Multiple repayment options

Flexible loan tenure

100% digital process

Swift response

Personalized approach

Term Loan Eligibility

At Tata Capital, we offer term loans to business owners who can fulfill our simple eligibility criteria. We ask for some basic requirements in terms of annual turnover, and credit score, among others. Your exact term loan eligibility may depend on your credit profile and funding requirements.

Term Loan EMI Calculator

A term loan EMI calculator estimates the monthly installments you will have to pay by the term’s end, including the total interest payable. Once you enter the loan amount, interest rate, and loan tenure, the tool computes the EMI amount you are liable to pay each month. Knowing your monthly loan expense helps in better financial management.

Types of Term Loans

Different types of term loans are available to suit every borrower’s funding requirement. These are categorized based on funding amount, borrower’s repayment capacity, and the availability of funds or regular cash flow.

1. Short-Term Loans :

The duration of a short-term loan is between 12 and 18 months. However, some lenders may also provide short-term loans with a flexible tenure of up to 8 years or 96 months. Short-term loans are taken to fulfill immediate, medium-sized funding requirements.

2. Intermediate-Term Loans :

The tenure for an intermediate or mid-term loan is usually up to 96 months. The loan amount is sufficient to meet the big-budget funding requirements of businesses, such as boosting working capital, purchasing machinery, etc.

3. Long Term Loans :

Long-term loans come with an extended tenure and affordable interest rates. You can use these secured loans to meet lump-sum funding requirements. The low EMI amounts allow you to conveniently repay the loan over a long tenure.

Term Loan Examples:

Short-term loans are ideal for immediate needs—for example, a boutique taking a 12–18-month loan to stock up for the festive season. Intermediate-term loans (up to around 7–8 years) suit bigger upgrades, like a manufacturer buying new machinery and repaying comfortably over a few years. Long-term loans work best for large, long-horizon goals, such as a company funding a warehouse or factory, with the loan repaid over 10–15 years through lower EMIs.

How to Manage Your Term Loan Repayment Schedule?

To manage your term loan repayment schedule effectively, start by creating a clear monthly budget to ensure timely EMI payments. Moreover, set up auto-debit to avoid missing due dates. Another effective strategy for term loan repayment schedule management is to maintain an emergency fund, covering at least three EMIs, to handle unforeseen expenses.

Monitoring your loan account regularly to track repayments and interest charges is also advisable. Whenever possible, make part-pre-payments to reduce overall interest and tenure. If income increases, consider increasing EMI amounts for faster closure. You must also stay in touch with your lender in case of payment issues.

How to Apply for a Term Loan with Tata Capital?

If you fulfill the eligibility criteria for a term loan, you can start with the application process online or offline.

1. Click ‘Apply Now’ on this page.

2. Fill out your personal details, along with the loan amount.

3. Enter your 10-digit mobile number for OTP verification.

4. Press ‘Proceed’ after agreeing to the terms and conditions.

5. Upload necessary documents for identity proof, address proof, business financials, etc.

6. Complete all other formalities and submit.

7. Your loan will be approved after verification, followed by the disbursement of the money into your bank account.

To apply for the loan the traditional way, visit the nearest Tata Capital branch. Fill out the term loan application form, attach the required documents, and submit to a branch executive.

Factors Influencing Term Loan Approval

Several key factors influence short-term and long-term loan approval.

1. Credit score: A higher credit score shows responsible repayment behavior and increases the likelihood of approval.

2. Income stability: Consistent income or business profits assure lenders of your repayment ability.

3. Existing liabilities: Ongoing loans or debts are assessed to understand your overall repayment capacity.

4. Loan purpose: Clearly defining the loan’s use, like expansion, equipment purchase, or working capital needs, builds lender confidence.

5. Collateral: The value and quality of pledged assets can affect approval and term loan interest rates.

6. Debt-to-equity ratio: A manageable ratio reflects an optimal balance between debt and equity, showcasing better repayment capacity.

7. Industry risk: Businesses operating in high-risk industries are less likely to receive loan approvals compared to businesses operating in low-risk industries.

FAQs on Term Loans

The term loan interest rate is calculated based on factors like the loan amount, tenure, borrower’s credit score, business financials, and prevailing market rates. Lenders may offer fixed or floating interest rate options.

Yes, a term loan can be used for various business purposes such as expansion, equipment purchase, working capital needs, or infrastructure development, depending on the lender’s policies and loan terms.

You need to submit identity proof, business registration documents, financial statements, income tax returns, bank statements, and proof of business ownership to apply for a term loan.

Generally, the term loan repayment schedule ranges from 1 to 10 years, depending on the loan amount, borrower’s repayment capacity, and lender’s terms and conditions.

Some lenders allow partial or full pre-payment of term loans after a minimum lock-in period. However, pre-payment charges may apply based on the loan agreement and the lender’s policy.

You can check your eligibility on Tata Capital’s website by providing basic details like business type, income, loan amount, and tenure. The online eligibility calculator gives instant results on eligibility, while the term loan EMI calculator instantly estimates the EMI you are liable to pay on your loan.

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