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  • Commercial Loans is Rated as "Great!" by 91556 Users

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    Commercial Loans

    A commercial loan, as the name suggests, refers to a loan that is offered to a business by a financial institution. This type of loan can be utilised for commercial purposes. This loan is provided through a debt-based funding agreement between a business entity and a lender. Both banks and non-banking financial corporations (NBFCs) offer commercial loans to companies and firms. Commercial loans are not offered to individual loan applicants for personal reasons.

    These loans help corporations meet their financial expenses for their various activities. Some of the expenditures include working capital expenditures, operating expenses, etc. Commercial loans are sometimes known as business loans too. These loans are typically offered for a short tenure. The tenure can range from 1 month to 1 year depending on the company’s requirements.

    These commercial loans are very helpful to small businesses that may not have sufficient funds to take care of different financial requirements. Many small businesses may not be eligible to apply for regular loans due to eligibility criteria, high upfront fees and charges, and strict regulatory obstacles. Hence, small businesses have to rely on alternative debt products for financial assistance and these can be consumer credit, unsecured loans, commercial loans, a line of credit, term loans, etc.

    In India, one can choose from business loans and business installment loans provided by banks and NBFCs.

    Features of Commercial Loans

    • Commercial loans are provided to a business entity and not to individual consumers.
    • They can be utilised by organisations to handle financial expenses such as purchasing equipment, buying and installing machinery, purchasing inventory, buying office furniture, purchasing vehicles for company purpose, construction, renovation of office location(s), etc.
    • Commercial loans can be secured or unsecured in nature. If an organisation chooses a secured commercial loan, then they will have to provide a collateral or security to the lender. In this case, the interest rates will be lower as the level of risk is low for the lender. If a company wants to apply for an unsecured commercial loan, then the rate of interest will be slightly higher as the lender will face a higher level of risk since there is no security involved in this loan agreement. If you take a commercial vehicle or asset loan, this particular vehicle or asset will be hypothecated to your lender.
    • Commercial loans are provided for a short period. This can range from 30 days to 1 year. It is sometimes given for a longer tenure too. This will depend on the lender. When you apply for commercial equipment loans or commercial construction loans, you can choose a longer tenure for up to 4 or 5 years.
    • Commercial loans can cover revolving lines of credit, short-term debt, long-term debt, etc.
    • Commercial loans are offered at fixed interest rates or floating interest rates. If you have a fixed interest rate, your interest will remain fixed throughout the tenure. If you have a floating interest rate, your interest will fluctuate with changes in the market.
    • You can repay a commercial loan through post-dated cheques, Electronic Clearing Service (ECS), Standing Instruction (SI), etc.
    • Typically, when you make the last payment of your commercial loan, the asset that is hypothecated with your lender will now be in your name and you can revoke the lien of the lender on your company’s vehicle or asset.
    • Commercial loans also help companies in purchasing supplies, buying raw materials, funding production processes, handling payroll needs, etc.
    • Commercial loans can be taken for purchasing real estate properties too. These loans will be commercial mortgage loans that help a firm in purchasing commercial properties.
    • Commercial loans are sometimes provided to self-employed professionals or non-professionals so that they can purchase property or any other asset for their firm’s requirements. These individual loan applicants can be lawyers, doctors, engineers, architects, consultants, contractors, etc. and they will have to apply on behalf of their firm.
    • These loans can be utilised for expanding company operations too.

    Eligibility Criteria for Commercial Loans

    • Partnership firms, sole proprietorship firms, public limited companies, private limited companies, and self-employed professionals and non-professionals can apply for commercial loans or business loans in India.
    • The business entity that needs a commercial loan should have a good turnover. The turnover requirement will differ from lender to lender. You can check with your lender.
    • Each loan applicant should meet the minimum annual income requirement as a firm.
    • The firm should have been making profits for a certain period, which will be specified by the lender.
    • The company interested in a commercial loan should have been in business for a certain period, which will be mentioned by the lender.
    • The minimum age criterion for an individual who is applying on behalf of his or her firm is typically 21. The maximum age requirement is 65 years. This can change from lender to lender.
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    Documentation Process for Commercial Loans

    While applying for a commercial loan, a firm or individual will have to compulsorily submit certain documents to the lender and they include:

    • PAN card for firms, companies, and individuals
    • VAT or GST statements for a certain period
    • Balance sheet
    • Income tax returns for a certain period
    • Profit and Loss statement for a certain period
    • Bank statements for a certain period
    • Proof of continuation in business. The company can submit trade license, sales tax certificate, Income Tax Returns, establishment certificate, etc.
    • Certified Copy of Partnership Deed
    • Sole Proprietorship Declaration
    • Board resolution
    • Certified true copy of Memorandum and Articles of Association

    Fees and Charges for Commercial Loans

    While applying for a commercial loan, a company or a self-employed individual will have to pay certain fees and charges. Apart from paying the interest rate, the loan applicant may have to pay loan processing fee, amortisation fee, stamp duty, cheque swapping fee, legal or incidental charges, cheque bouncing charges, late payment charges, pre-payment charges, etc. The charges will be mentioned to you by your lender before you apply for the loan. You can view your commercial loan policy document for full information about the various fees and charges.

    As a company, a commercial loan is a great financial instrument for meeting the various financial requirements extensively. While applying for a commercial loan, the organisation should prove that it has a regular, good cash flow. This will help the lender be confident that the borrower can repay the loan installments in a timely manner. In some scenarios, lenders may ask the loan applicant to take insurance for assets that have been purchased with the loan, especially if the assets are of high value.

    Personal Loan Reviews

    • review Personal Loan
      "Average service"
      0.5 2.0/5 "Expected more"
      I have taken this loan almost 3-4 years back, but the rate of interest they have been charging had been a little high. The process had been a little time consuming. I have taken this loan amount for the purchase of a car. It would have been great if it had taken less time during the process and the loan amount had been sufficient.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 21, 2018
    • review Personal Loan
      "Average service"
      0.5 2.0/5 "Expected more"
      I have taken this loan almost 3-4 years, the loan amount which they had been provided had been satisfactory. They had been provided with an average service, where they need to be improved in lot parameters. I have taken this loan for the purchase of a mobile.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 21, 2018
    • Bank Bazaar Personal Loan
      "A very good service"
      0.5 5.0/5 "Blown Away!"
      The bank bazaar service is quite responsive. The customer support service is excellent with the bank bazaar team. I Know bank bazaar for the past one year. I use the bank bazaar mobile application which is good to use and I am satisfied with it.
      Was this review helpful? 0
      , paradip
      Reviewed on May 21, 2018
    • HDFC Bank Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      The HDFC bank was ready to approve the personal loan on time. But I haven't got the loan ,because I have postponed my plan, that was the reason I haven't got the loan from them. The rate of interest and the charges are average when compared with others.
      Was this review helpful? 0
      , paradip
      Reviewed on May 21, 2018
    • Bank Bazaar Personal Loan
      "Very good service"
      0.5 4.0/5 "Great!"
      The bank bazaar service was good in concern to my personal loan application, I have got better response from the bank bazaar. I have got the immediate call back from the bank bazaar team after applying for the personal loan. I use the bank bazaar website while applying for the personal loan which is easy to use .
      Was this review helpful? 0
      , vijayawada
      Reviewed on May 21, 2018
    • Fullerton Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      The Fullerton finance limited was ready to approve the personal loan, but the required documents were not available to submit. The customer support service and the response was good from the Fullerton. The rate of interest and the charges were average here.
      Was this review helpful? 0
      , vijayawada
      Reviewed on May 21, 2018
    • HDFC Bank Personal Loan
      "Need to reduce charges"
      0.5 3.5/5 "Pretty good"
      My personal loan experience was good with HDFC bank, the loan amount was sufficient but the rate of interest was high when compared to other banks. Customer service was good and they followed up on time. I prelcosed this loan due to personal reason and i had to pay a penalty for it.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 21, 2018
    • HDFC Bank Personal Loan
      "HDFC BANK Personal Loan"
      0.5 5.0/5 "Blown Away!"
      I have my personal loan wit HDFC bank which was taken in few days. The loan amount was 50,000 and the interest rate was 15.75% which is too high . The tenure period was 12 months. The customer service and responses was really good. The loan was approve on time and I have not faced any inconvenience with the process,.
      Was this review helpful? 0
      , noida
      Reviewed on May 21, 2018
    • Bank Bazaar Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      The follow up was very good from the bazaar team and there was an executive who gave me excellent service . The requirement has been fulfilled through the bank bazaar executive. The customer support service and the response was excellent with bank bazaar.
      Was this review helpful? 0
      , hosur
      Reviewed on May 21, 2018
    • ICICI Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      The personal loan process was good from the ICICI bank but the rate of interest and the charges were quite high and they haven't gave me any chance to negotiate. They took around 3 weeks time to disburse the loan amount. The rate of interest and the charges need to be reduced.
      Was this review helpful? 0
      , hosur
      Reviewed on May 21, 2018
    • HDFC Bank Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I have my personal loan wit HDFC bank which was taken 1 year back. The loan amount was 3 lakhs and the interest rate was 10.99% which is average . The tenure period was 36 months. The customer service and responses was really good. The loan was approve don time and I have not faced any inconvenience with the process,.
      Was this review helpful? 0
      , thane
      Reviewed on May 20, 2018
    • HDFC Bank Personal Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I took a personal loan from the HDFC bank. The loan application was completely paperless. The loan amount was credited to my account quickly. Overall the whole application process was really fast and hassle free. It is so easy to apply for personal with HDFC
      Was this review helpful? 0
      , secunderabad
      Reviewed on May 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 4.5/5 "Excellent!"
      Bank bazaar is a one stop solution for all the financial products . The customer service and responses was really good. The website is very user friendly and easy to navigate . The web portals accuracy and speed is good so I would like to recommend to others.,
      Was this review helpful? 0
      , pune
      Reviewed on May 20, 2018
    • Citibank Personal Loan
      "Not satisfied"
      0.5 1.0/5 "Really Bad"
      I have approached CITI bank for my personal loan . Their interest rate was very high so I have canceled and taken with HDFC bank. I was looking for 8 lakhs and the interest rate was 15.85% which si very high . The customer service and responses was good.
      Was this review helpful? 0
      , pune
      Reviewed on May 20, 2018
    • HDB Financial Services Personal Loan
      "Satisfactory"
      0.5 5.0/5 "Blown Away!"
      I have taken my personal loan with HDFC bank 3 years back. The loan amount was 1,14,000 and the interest rate was 11-12% which is average . The customer service and responses was really good. The process was very good and they haves sanctioned the loan with the committed time .
      Was this review helpful? 0
      , aurangabad
      Reviewed on May 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      Bank bazaar is a good platform for all the financial products . The customer service and responses really good. The website has many good options on banks and interest rate . The web portal's accuracy and speed is good.My overall experience was good.
      Was this review helpful? 0
      , aurangabad
      Reviewed on May 20, 2018
    • Fullerton Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I have approached FULLERTON for my personal loan. There is no requirement for the loan as of now so i have canceled the loan process. The loan amount was 4 laksh and interest rate was 30% which is high .The customer service and responses was good.
      Was this review helpful? 0
      , aurangabad
      Reviewed on May 20, 2018
    • IndusInd Bank Personal Loan
      "Good"
      0.5 3.0/5 "Satisfactory"
      My personal loan was taken with INDUSIND BANK. They have rejected the application. They have collected all the documents. The customer service and responses was very good. I was looking for 3 lakhs and the interest rate .My overall experience was good.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 20, 2018
    • ICICI Bank Personal Loan
      "Average"
      0.5 3.0/5 "Satisfactory"
      My personal loan was taken with ICICI bank few months back. The loan amount was 4 lakhs and the interest rate was 10.99%n which is satisfactory . The customer service and responses was very good,. The process was bit lengthy and they have take much time. They have provided door step service for collecting documents.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 20, 2018
    • HDFC Bank Personal Loan
      "Very good"
      0.5 5.0/5 "Blown Away!"
      My personal loan was taken with HDFC bank few months back. The loan amount was 5 lakhs and the interest rate was 10.99% which is average . The tenure period was 5 years and the process easy very smooth. They have sanctioned the loan with the committed time.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 20, 2018
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