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  • Federal Short-Term Loans for Corporates

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  • If you are planning to expand or upgrade your business, the first step that you should take is to ensure that the entire process does not impact the finances of your company. Federal Bank offers short-term loans to medium to large-size enterprises that might face the challenge of shortage of working capital at the time of a business expansion or operational upgrade. Whether it is to finance the purchase of vehicles, equipment, machinery, etc. for business purposes or to make advance or bonus payments to the employees of the company, entrepreneurs can avail this loan to take care of all their business credit requirements. This loan can also be used to meet the working capital requirements of a company when it is undergoing an upgrade or expansion, and to take care of any mismatch in the cash flow for a short span of time.

    With competitive rates, a simple loan application process, and quick disbursal of loan amount, the Federal Short-Term Loans for Corporates is one of the best choices available for business owners in the market to help take care of their business financial needs. Under this scheme, a business with funded or non-funded exposure of at least Rs.25 crore can also secure a loan.

    How Can Federal Short-Term Loans for Corporates Be Used?

    The loan amount borrowed under this scheme can be used by medium and large corporates for the following purposes:

    • This loan can be used to meet the working capital requirements of an enterprise at the time of an expansion or upgradation.
    • The funds borrowed under this scheme can be used to make advance or bonus payments to the employees.
    • Entrepreneurs can apply for this financing plan to purchase items such as equipment, machinery, vehicles etc. for business purposes.
    • The cash received under this scheme can also be used to take care of any mismatch of the cash flow temporarily.
    • Using the loan amount received under this scheme, merchants can repay any existing tied-up term loan that they might have availed previously.
    • By applying for this loan, business owners can take care of their any kind of a business credit need such as any long-term loan that is currently tied up as well as inflow of cash accruals.

    Features and Benefits of Federal Short-Term Loans for Corporates

    • Easy application process - Since Federal Bank offers a simple loan application process, customers can be assured that their loan requests will be processed and approved without any hassles.
    • Quick loan disbursal - The bank understands the importance of time when it comes to debt repayment. Therefore, owing to the fast loan application process, it approves the loan and disburses the loan amount to the borrower’s active bank account in no time.
    • Competitive rates - Low rates of interest on this loan means that the borrower will not have to pay a high amount of interest while repaying the loan. This further translates that such types of loans that carry extremely competitive rates are accessible to all kinds of customers.
    • Flexible loan tenure - This loan offers customers the flexibility to select a repayment plan that not only suits their requirements and circumstances, but also their repayment capacity. This reduces the chances of the borrower defaulting during the repayment of the loan.
    • Collateral and third-party guarantee requirement - Under this scheme, customers can offer their current/fixed assets as collateral. This can even include tangible security such as bank deposits, immovable properties, etc. Furthermore, partners, proprietors, or promoters of the business should offer personal guarantee along with a corporate guarantee in order to secure this loan.
    • Hypothecation requirement - This financing plan mandates that the borrower will have to hypothecate his or her current and fixed assets. The individual can also choose to hypothecate the assets, machinery, etc. of the business or extend the hypothecation charge over the fixed and current assets.

    Eligibility Criteria for Federal Short-Term Loans for Corporates

    Before you choose to apply for this loan scheme, you should learn whether you are eligible for this scheme or not by checking out the list mentioned below:

    • This loan is available for only medium and large-size corporates.
    • The business must have received a satisfactory rating from an external credit rating agency.
    • In order to be eligible for this scheme, the company should have a minimum turnover worth Rs.500 crore.
    • An enterprise with funded or non-funded exposure worth at least Rs.25 crore can also avail a loan under this scheme.

    Federal Short-Term Loans for Corporates Interest Rates

    The rate of interest provided by Federal Bank to its short-term loan borrowers is usually based on several factors such as credit history, loan amount, repayment tenure, etc. While the interest rate offered by the bank varies from customer to customer, it is also necessarily based on the Marginal Cost of funds-based Lending Rate (MCLR).

    Check out the ongoing MCLR offered by Federal Bank effective from 16 August 2018 mentioned in the table below:

    Marginal Cost of Funds-Based Lending Rate (MCLR) Tenure Benchmark Rates (MCLR) (p.a.)
    Overnight MCLR 8.75%
    1-month MCLR 8.85%
    3-month MCLR 9%
    6-month MCLR 9.10%
    1-year MCLR 9.20%

    Learn about the current rates of interest offered by Federal Bank as on August 2018 to various applicants mentioned in the table below:

    Type of Borrower Range of Spread-Over MCLR
    Loans to small and medium enterprise (SME) manufacturer, trader, contractor, or service provider 3.70% p.a. to 5.20% p.a.
    Rent securitisation loans 3.10% p.a. to 4.60% p.a.
    Loans available for residential and commercial real estate developers 3.85% p.a. to 5.35% p.a.
    Micro business loans with aggregate credit limit up to Rs.25 lakh 3.00% p.a. to 6.15% p.a.
    Small business loans with aggregate credit limit ranging between Rs.25 lakh and Rs.2 crore 3.10% p.a. to 6.15% p.a.

    Please note that the rates mentioned above are subject to change without any prior indication. Therefore, it is advisable to get in touch with the bank prior to applying for a loan in order to learn about the latest interest rates being offered. This will help eliminate any future surprises after the loan application has been processed.


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