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Lofty goals do not beget scholars. Indian parents of the millennium are desirous of educating their children in a state-of-the-art institution with great infrastructure. They seek new opportunities and avenues for the growth and development of their children – and they are willing to pay the price for this.
Setting up a school, however, is not an easy task – especially if it must provide all the varied channels for growth such as sports, technology, and academics. The infrastructure alone is a costly affair, let alone technology and foreign collaborations. This can make setting up a school an extremely costly affair.
Recognizing the need for better schools that provide better opportunities to children, Banks and NBFCs now offer loans for schools. An individual or organization desirous of setting up a school can avail of loan for the specific purpose of opening a school rather than a general business loan.
Below are some of the institutions that offer loan for schools in India.
About Loans for Schools
Offered by Bank of Baroda, this loan is for establishment of new schools as well as for repairs, renovation, upgradation, and enhancement of existing schools. The maximum amount available is 25 lakhs. The school or prospective owner must submit detailed project plans and cost to the bank. Only 75% of the total project cost will be approved as a loan subject to an overall limit of INR 25 lakhs.
Rate of interest on Bank of Baroda loans for schools ranges from 10.6% to 11.85%. The interest rate varies with the amount of loan and term among other things. The loan term may extend up to 7 years, which includes a moratorium of 2 years.
The loan requires collateral and hypothecation of property for which the loan is being taken. The following assets may be purchased with the loan amount –
The assets purchased will be hypothecated to the bank for the loan term.
The bank also requires personal guarantee of the promoters, trustees, or founders of the institution as security against payment.
ICICI Bank is another Indian Institution offering loans for schools and colleges. The loan may be utilized to set up new operations or expand, upgrade, or renovate existing ones. The following are some ways in which you can get an ICICI Bank’s loan for schools and colleges -
The rate of interest, EMI, and repayment mode as also the term of the loan will vary depending on the type of loan you opt for and the amount you need.
Another source of loans for schools is the Varthana secured and unsecured loans. These loans are offered by Varthana – an NBFC operating in the financial and educational sector. The organization offers both secured as well as unsecured – collateral free – loans.
The general eligibility criteria for secured loan is –
The criteria for unsecured loans includes –
ISFC (Indian School Finance Company) Private Limited is an NBFC that offers education loans to private institutions for -
Loans offered by IFSC are term loans and the loan amount varies depending on whether the loan is secured or unsecured. The upper limit for unsecured loans is 15 lakh while that for secured loans is 2 crores.
Most banks and NBFCs offer loans for education as well as for educational institutions. You may explore various options and compute EMI using the online EMI calculator tool before deciding upon the type of loan you need and the amount.
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