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  • Commercial Loans is Rated as "Great!" by 92905 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

    • Citibank Personal Loan
      "Not satisfied"
      0.5 2.0/5 "Expected more"
      I have taken my personal loan with CITI bank 10 years back. I have a faced a major issues with EMI deductions and i have even raised a complaint also then the step was taken but i have went through a lot of issues due to that . My Credit score was also affected which was very disappointing . I have taken 50,000 and the interest rate was satisfactory .
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 20, 2018
    • Kotak Personal Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      The process in getting the loan had been very good and verification process had been very simple and easy. The loan amount which they had provided had been satisfactory which was about 2,20,000 and the interest rate with them also had been okay which was 18%. Overall it had been a good experience.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Satisfactory"
      0.5 4.0/5 "Great!"
      My experience was quite satisfactory with bank bazaar . This is my first experience and there are no complaints.The website is very user friendly and easy to navigate . The web portal's accuracy and speed is good therefore I would recommend this site to all.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      It had been a very good experience with this Personal loan and the process in getting this loan had been smooth and easy. The loan amount which they had provided had been satisfactory and the interest rate with them had been nominal when compared with the market rate. The customer support of them and their staff responses had been good while the processing of the loan.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Very good"
      0.5 4.0/5 "Great!"
      My personal loan was taken with HDFC Bank. The loan amount was 3 lakhs and the interest rate was stayfscatory . The process was very smooth and there is no processing fee here. I completely satisfied with the service here and i liked the coordination also., The loan was approved on time so I would like tor recommend to others.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Awesome Service"
      0.5 5.0/5 "Blown Away!"
      I've been using the BankBazaar platform for a while. I never faced any issues with their services. I've applied for a personal loan via Bankbazaar and the whole application and the documentation process was smooth and hassle free.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 20, 2018
    • Citibank Personal Loan
      "Very good service"
      0.5 5.0/5 "Blown Away!"
      I've taken a personal loan from the Citi bank for Rs. 5.7L for 4 years. It was very good, The interest was normal. I got the loan amount with in a week. There was a bank strike other than that there were no issues during the loan application.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Very good service"
      0.5 5.0/5 "Blown Away!"
      I've been using the BankBazaar platform for a while. I applied for a ,personal loan via BankBazaar. It was very good, the customer support follow up was also very good. BankBazaar is a convenient platform to apply for various financial products online. I even recommended BankBazaar to some of my friends.
      Was this review helpful? 0
      , pune
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Better Service"
      0.5 4.0/5 "Great!"
      I took a personal loan from the HDFC Rs. 3.6 Lacs for 5 years. It was amazing, I applied directly but rejected the application. When I applied online I got the loan amount with in 5 days. The interest rate is normal when comparing with the other banks
      Was this review helpful? 0
      , pune
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      The process in getting this loan had been smooth and easy, where the loan amount which they had provided also had been satisfactory as well. The interest rate which they where charging had been nominal and there has not been any processing fee or any sort of extra charges which they had charged so far. Overall it had been a good experience with them.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Very good service"
      0.5 4.0/5 "Great!"
      I took a personal loan from the HDFC bank for 2.5 lacs, it was a good experience, the interest was lower. I got the loan amount2-3 days. There were some issues with the address verification. Overall it has been a very good experience in taking a personal from the HDFC bank.
      Was this review helpful? 0
      , kurnool
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I've been using the BankBazaar services for a while. They offered Excellent service, I got the loan with in 2 days. The customer support follow up was also good during the application. I never faced any issues during the application.
      Was this review helpful? 0
      , kurnool
      Reviewed on Jul 20, 2018
    • Fullerton Personal Loan
      "Very good service"
      0.5 4.0/5 "Great!"
      I took a ,personal loan from the Fullerton Rs. 2Lacs for 5 years. The loan experience was good, rate of interest is high. The whole application and the documentation process was smooth and hassle free. I got the loan amount quickly.
      Was this review helpful? 0
      , kurnool
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I took a personal loan from the HDFC bank for 2 lacs, I applied at the branch and it was also pre-approved . There were no hassles during the application and documentation. It was a smooth personal loan experience. The interest rate was also nominal.
      Was this review helpful? 0
      , haridwar
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I've been using the BankBazaar platform for a while. The response was good. The customer support follow up was also good during the application process. I never faced any issues during the application and the documentation. BankBazaar is a convenient platform to compare and choose various banking products.
      Was this review helpful? 0
      , haridwar
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Good"
      0.5 3.0/5 "Satisfactory"
      I have taken my personal loan via BANK BAZAAR . The customer service and responses was up to the mark. The website is very user friendly and easy to understand but few information which is given on the website is not consistent which can be worked on .
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 20, 2018
    • HDB Financial Services Personal Loan
      "Very good"
      0.5 4.0/5 "Great!"
      My personal loan was taken with HDB FINANCE. The loan amount was 3,30,000 and the interest rate was satisfactory and the tnrue period was 3 years,. I had a very smooth process here but the documentation was but tedious sine they requested lot of documents to submit but the process was very nominal. They have sanctioned the loan with the committed time.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Normal service"
      0.5 4.0/5 "Great!"
      The process in getting this personal loan had been a little slow and the process has took some delay. The loan amount which they had provided had been satisfactory but the interest rate has been a little high when compared with the market rate. I have taken this loan for the Home Renovation.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 20, 2018
    • HDFC Bank Personal Loan
      "Average Service"
      0.5 3.0/5 "Satisfactory"
      I took a personal loan from the HDFC bank for 2.3 lacs, the experience is good, The interest rate was normal. I got the loan amount with in 7 working days, the customer support follow up was also very good. it was a hassle free loan experience with the HDFC bank.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 20, 2018
    • Bank Bazaar Personal Loan
      "Average Service"
      0.5 3.0/5 "Satisfactory"
      I've been using the BankBazaar platform for a while. The service was good, customer support was good. I got the loan pretty soon. BankBazaar is a convenient marketplace to apply for for various financial products online.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jul 20, 2018
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