Answers To Your Common Funding Questions

The minimum ticket size is ₹5 Crore, with no upper limit, subject to project viability and lender appetite.

Collateral requirements range from 40% to 100% of the loan value depending on your credit rating and the sanctioning institution's policy.

Yes. For new businesses, a proven track record is not mandatory — a strong project report and promoter profile are evaluated instead.

Cash Credit is typically secured against stock/goods hypothecation, while Overdraft is a flexible limit against approved securities or banking relationship, with interest charged only on the amount drawn.

Interest is calculated daily on the fluctuating outstanding balance and is usually charged at the end of each month.

Yes, periodic stock statements and margin maintenance are standard requirements for cash credit facilities.

Term Loans generally range from 1 to 10 years depending on the purpose and asset being financed.

Rates depend on your credit profile, banking relationship and the lender's prime lending rate at the time of sanction.

Most lenders allow prepayment, subject to applicable foreclosure charges as per the sanction letter.

Credit Monitoring Arrangement (CMA) data is a structured financial analysis lenders use to assess repayment capacity and decide the credit limit for corporate borrowers.

Corporate loans typically require an operating history; newer companies may be considered under project loan or venture-capital routes instead.

Each director must submit individual PAN, Aadhar, 3 years' IT returns and personal balance sheet along with net-worth certification.

3 years' financial statements, audit report, banking statements, cash-flow projections and a Detailed Project Report (DPR).

Yes, in select cases, though lenders generally prefer builders with an established track record and may apply stricter terms for new builders.

Loan amount depends on project viability, builder track record, and each lender's internal credit and risk policy — sanctioned amounts can vary between institutions for the same project.

Self-owned commercial property that is currently leased to and occupied by a tenant, generating rental income.

It is based on the discounted present value of future lease rentals along with the underlying property's market value.

LRD tenures can extend up to 15 years, subject to the remaining lease term and lender policy.

No. Unsecured business loans do not require collateral, security or a guarantor.

Eligible borrowers can avail up to ₹5 Crore under this facility, subject to lender assessment.

Proprietorship firms, partnership firms, private limited companies and limited companies are all eligible.

Yes, both resident and non-resident Indians can avail this facility, subject to the shares being on the lender's approved list.

Approved-securities lists vary by lender — if one bank does not accept your shares, another lender's list may include them.

Yes, borrowers can opt for an overdraft facility against approved shares held by themselves or their immediate relatives.

A Performance Guarantee assures completion of contractual obligations, while a Financial Guarantee assures payment of a financial obligation if the applicant defaults.

Contractors and vendors bidding for government, PSU or large corporate tenders are most commonly required to submit one.

Your guarantee type, banking track record and overall financial position determine the limit, security and margin required.

An LC is a primary payment mechanism used mainly in trade transactions, while a Bank Guarantee is a secondary assurance that pays out only if the applicant defaults.

Suppliers/exporters benefit from payment assurance, while buyers/importers benefit from the bank verifying shipment before releasing payment.

No, LCs are also used in large domestic trade transactions where buyer and seller want payment assurance.

VC funding is equity participation — investors take a stake in your company instead of charging interest, and returns come from the business's growth, not fixed repayments.

Yes, many venture investors fund pre-revenue or early-revenue start-ups based on team strength, market opportunity and growth potential.

Equity dilution is structured to match funding raised; terms are negotiated so promoters typically retain operational control at early stages.

Yes. Lenders assess self-employed applicants on business income shown in returns and on banking conduct rather than on salary slips. Two to three years of filed returns is the usual expectation.

A top-up is additional funding on a housing loan you are already repaying, at close to the housing-loan rate. It is one of the cheapest ways to raise personal or business capital, and the paperwork is far lighter than a fresh loan.

No. You can get sanctioned first and identify the property afterwards; the lender then completes a legal and technical check on the property before disbursement.

Interest and principal on a housing loan attract deductions under the Income Tax Act, subject to the conditions and limits in force. Please confirm the current position with your chartered accountant — we do not give tax advice.

Yes. Import transactions are usually structured with a letter of credit for the supplier alongside the term loan, so the supplier is assured of payment and you repay over the machine's useful life.

Lenders typically fund a substantial share of the invoice value and expect the balance as your margin contribution. The exact share depends on the machine, its resale market and your financials — the sanctioning lender decides it.

Yes, that is a machinery mortgage. The equipment is valued, charged to the lender, and funds are released against it — often faster than arranging property-backed finance.

Frequently, yes. A machine earns nothing until it is commissioned, and most lenders will consider a moratorium covering that period on a case-to-case basis.

Trusts, societies and Section 8 companies all borrow for educational purposes. The lender examines the trust deed or bye-laws to confirm that borrowing and creating security are permitted, and who is authorised to sign.

That is exactly the structuring this sector needs. Repayment can be shaped around the collection calendar rather than forcing an equal monthly outflow in months when nothing is collected.

Not always. A registered long lease is often acceptable, particularly where the institution has built on the land and the lease has a long unexpired term.

Yes. It is common to structure one term loan covering civil work and equipment together, with disbursement staged against actual progress.

Most commonly doctors and dentists, chartered accountants, company secretaries, architects and engineers in practice. Other regulated professions are considered where the lender recognises the qualification.

Yes, though a new practice is assessed differently from an established one — the lender leans more on the qualification, the location and any co-applicant income.

It can be either way. Equipment is often financed as its own facility, secured on the machine, while fit-out and premises are funded separately at a different tenure.

A full hospital or diagnostic-centre build is project finance and is structured as such, with staged disbursement against construction progress.

Eligibility is set by the RBI framework in force and is defined by the borrower's sector and status. Because the framework is revised from time to time, eligibility is confirmed against the current rules at the start of every transaction rather than assumed.

Hedging, arrangement, legal and documentation costs all matter, and the RBI caps the all-in cost. A transaction should be judged on the fully hedged cost in rupees, not on the headline foreign-currency rate.

A foreign equity holder is a recognised lender under the framework, subject to the conditions applicable to that category. This is one of the most common ECB structures.

Reporting is done through the authorised dealer bank — a loan registration number is obtained before drawdown and returns are filed monthly thereafter. We coordinate that with your bank.

A loan is repaid with interest whatever the project earns. In a joint venture the partner shares the outcome — better if the project performs, worse if it does not — and usually shares control as well. Which is right depends on how much certainty you need and how much of the upside you are willing to share.

That is the classic case for a land-owner joint venture. You contribute the land, the developer funds and executes, and you take an agreed share of the revenue or of the built area. Ownership questions are settled in the joint-venture agreement drafted by your legal counsel.

No. We identify and introduce partners and work through the commercial structure with you. The agreement itself must be drafted and vetted by your own legal counsel, and the tax position confirmed by your chartered accountant.

Yes, and it usually is. Construction finance or a project loan is commonly raised by the venture once the structure and approvals are in place.

It is decided on the lender's own valuation, not on the price you paid or the circle rate. Lenders fund a share of that valuation and the share varies with the property type — a self-occupied residential property is treated more generously than an industrial shed in a thin market.

Yes, in two ways: a balance transfer to another lender with a top-up, or a second charge where the existing lender permits it. Which one works depends on your current lender's terms and how much of the earlier loan is repaid.

No. Rented residential and commercial properties are commonly funded, and the rent itself can strengthen the case. Where the rent is the main repayment source, lease rental discounting is often the better structure.

Substantially, and the tenure is far longer. That is the whole reason to use one: the same requirement funded unsecured costs several percentage points more and has to be repaid in a fraction of the time.

No. The bank or NBFC lends; CGTMSE guarantees a share of that loan against default. You still have to satisfy the lender that the business can service the borrowing — the guarantee removes the collateral problem, not the credit assessment.

Up to 85%, depending on the borrower category and the loan size, with the higher slabs reserved for micro enterprises, women-led units and units in specified regions. The exact slab in force is confirmed with the lender at sanction, because the Trust revises them.

A guarantee fee in the first year and an annual service fee thereafter, both computed on the guaranteed amount and both set by the Trust. They are charged to you along with the lender's own interest, so a CGTMSE loan should be compared on total cost, not on the headline rate.

Both. Term loans and working-capital limits are eligible, and it is common to cover a composite facility. What matters is that the activity qualifies and the enterprise is registered as micro or small.

That is precisely the situation the scheme was created for. The absence of collateral is not a disqualification here — the business's own viability is what the case rests on.