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Oriental Bank of Commerce MSME Loan

Overview

Businesses require financial support from lenders at many junctures. This can be for the purpose of expansion, purchase of production equipment or to ease out working capital needs. Micro, Small and Medium Enterprises (MSME) loans are available for these purposes. Oriental Bank of Commerce MSME loans have different schemes to suit different businesses. There are 7 different schemes being currently offered by the bank covering both manufacturing and service sector. The loan can be applied quickly through their website making the process simple and quicker. More details on the loan can be read below.

List of Oriental Bank of Commerce MSME Loans

Oriental Bank of Commerce MSME Loans have seven different schemes. The details are outlined below:

1) Loan to Educational Institutions - TL

Loan to Educational Institutions – TL is a term loan. The main purpose of offering this financial assistance is to construct/expand/modernize current educational institution for the purpose of education. Under this loan, the educational institution can purchase instruments meant for imparting education/training, infrastructural requirements, vehicles, computers etc. This loan cannot be utilised for the purchase of land alone, however, if the purchase of land which is a part of a project can be considered under this scheme.

The security and margin details of this scheme is as follows:

Margin
  • 25% of the project cost
  • If land is also financed as part of the project, minimum margin is 50% of the land cost
  • 50% of the sanctioned loan amount can only be used towards the purchase of land
Primary Security

Hypothecation of all movable assets

All cash flows of the institute

Registered mortgage of land and building of the educational institution

Collateral Security

Registered mortgage of land and building of another institute of the borrower

Realizable value of the land in case of partially constructed property
Personal guarantees of Promoters/Trustees/Members of the Society/ Proprietor/Partners/Directors of the institution
Minimum overall security coverage cannot be less than 200%

The rate of interest on this loan is linked to the Internal Credit Risk Rating of the borrower.

Eligibility

All educational institutions, schools including play schools, colleges and other education bodies set up by firms, companies, trusts or society are eligible to apply for this loan.

2) Loan to Educational Institutions - OD

Loan to Educational Institutions – OD is an overdraft by nature. This does not exceed 50% of the realisable value of the property. This type of loan is helpful to certain educational institutions who require non-fund-based credit facility.

Primary Security

Hypothecation of all movable assets

All cash flows of the institute to be routed through Trust and Retention account

Overdraft facility not to exceed 50% of the realisable value of the property

If the educational institution is already a term loan user from the bank, the primary security mortgaged with the bank against the term loan can be treated as the collateral security for the overdraft loan

Collateral Security

Equitable/Registered mortgage of Land and Building of the institute

Realizable value of the land in case of partially constructed property
Personal guarantees of Promoters/Trustees/Members of the Society/ Proprietor/Partners/Directors of the institution

The repayment period for this loan is one year with renewal process done on an annual basis. The rate of interest will be decided on the classification of the borrower as per RBI guidelines and is linked to the Internal Credit Risk Rating.

Eligibility

  • Any trusts/societies/partnership firms/proprietorship/private/public companies running an educational institution
  • Should be operational for a minimum of 2 years
  • New and Existing customer of the bank are eligible
  • All transactions are to be routed through the Trust and Retention Account of the bank
  • The borrower cannot be listed in the defaulters category circulated by RBI/CIBIL

3) Oriental SME Development Scheme

This term loan needs to be repaid in 60 months exclusive of moratorium. The main purpose of Oriental SME Development Scheme is to provide credit to SMEs for the purchase of machinery, equipment, meet the initial cost of set-up, R&D facility, marketing and advertising expenses. The moratorium period is a maximum of 12 months. The loan amount is a minimum of Rs. 10 lacs and a maximum of Rs. 250 lacs.

Security requirements of this loan are:

Primary: Assets that are created out of this loan become primary security to the loan.

Collateral: The mortgage of the land and building that belongs to the promoters or the guarantors become the collateral for this loan. The personal guarantee of the directors and owners of the property can be offered as collateral security.

The rate of interest is MCLR + 2% for amounts up to Rs. 25 lacs and as per rating for SME accounts above Rs. 25 lacs.

Eligibility

  • Existing partnership firms, proprietorship, private and public companies that come under the purview of SME definition in the MSMED Act.
  • The business should have been established for a minimum of one year and profit making.
  • Entry level rating should be a minimum of IMACS 5
  • Satisfactory CIBIL report

4) Oriental SME Transport Scheme

Oriental SME Transport Scheme is used to purchase transport vehicles for delivery of products and services to educational institutions, hospitals and medical units. Purchase of vehicles for transporting students, faculty members, staff and medical personnel are eligible. Only new vehicles are financed under this scheme. The minimum amount of loan is Rs.10 lacs and maximum is Rs. 250 lacs. The moratorium period is 3 months as per the requirements of the borrower.

The security of the loan is the hypothecation of the vehicle using the loan. The bank’s name is entered into the registration certificate. Tangible collateral amounting to 50% of the loan amount needs to be taken for above Rs. 5 lacs. Personal guarantee of the directors and owners is required.

The rate of interest of Oriental SME Transport Scheme is MCLR + 2 % for limits up to Rs. 25 lacs and as per rating for SME accounts above Rs. 25 lacs.

Eligibility

  • Any partnership firms, proprietorship, private or public companies that come under the definition of SME under the MSMED Act
  • The business should have been established in their line of business for at least 3 years and should be profit-making entity
  • Entry level rating should be a minimum of IMACS 5
  • Satisfactory CIBIL report

5) Oriental SME Equipment Loan Scheme

The main purpose of this loan is to finance the cost of acquiring new equipment. It includes the cost of alterations to the existing machinery and adopting measures for enhancing energy efficiency. The maximum loan amount is 80% of the total equipment cost, subject to Rs. 500 lacs.

The security for this loan comes out of first charge over assets created with personal guarantees from the promoters and directors. The margin is 20%. The maximum repayment period for this loan is 5 years including moratorium. The rate of interest is BR+2% for limits up to Rs. 25 lacs and as per rating for SME accounts above 25 lacs.

Eligibility

  • Any existing partnership firms, proprietorship, private or public limited companies
  • The business should have been established in their line of business for at least 3 years and should be profit-making entity
  • Entry level rating should be a minimum of IMACS 5
  • Satisfactory CIBIL report

6) Oriental Budget Hotels & Restaurants

This is primarily a term loan and working capital can be provided as overdraft. The main purpose of this loan is to meet the credit requirements for purchasing land or property and upgrade/renovate or expand existing units. The maximum loan amount is Rs. 10 crores and overdraft facility can be taken for a maximum of Rs. 0.50 crore.

Margin25% for both term loan and Working Capital
Primary Security

Hypothecation of all movable assets

Mortgage of project land with existing/future constructions

Collateral SecurityMinimum 25% of the loan amount by mortgaging immoveable property

The repayment period is a maximum of 10 years.

Eligibility

  • Any individual, proprietorship, partnership firms, limited liability partnerships, private and public companies can apply.
  • Units under the Micro, Small and Medium Enterprises in the Service Sector with investments in equipment value exceeding not more than Rs.5 crores.
  • Business unit must have valid license to conduct business as per the local rules.

7) OLA Tie-up for financing taxies

The purpose of this loan is for the purchase of taxis for operating commercial passenger vehicles. The loan limit is Rs. 10 lacs per vehicles subject to an aggregate maximum limit of Rs. 50 lacs. Up to 10 vehicles per entity can be purchased. The margin amount is 10% of the on-road price. The rate of interest is one-year MCLR+1.50% for loan up to Rs. 10 lacs and One-year MCLR+2% for loan above Rs. 10 lacs.

Eligibility

  • Any individual, partnership, sole proprietorship, private or public limited companies
  • Any individuals or business entities requesting loans for more than one vehicle having minimum 3 years of business experience in the field
  • All financed vehicles must be driven by persons having valid driving license
  • Borrower must get valid permit to use the vehicle as per applicable motor rules

How to apply for Oriental Bank of Commerce MSME Loan

Oriental Bank of Commerce MSME Loans can be applied online through the official website of the bank. They also run a scheme wherein MSME loans can be applied in one hour provided the applicant meets the basic eligibility requirement for the scheme chosen. With online application, one can easily track the status of the loan and related details. One can also drop at the nearest bank branch to discuss the details of the loan and purchase it directly. Oriental Bank of Commerce offers doorstep banking wherein a bank representative will meet you at home or office to present the loan product and help with the application process.

FAQs: Oriental Bank of Commerce MSME Loan

1. What is the margin for Loan to Educational Institutions - TL?

The following margin is applicable for Loan to Educational Institutions-TL:

  • 25% of the project cost
  • If land is also financed as part of the project, minimum margin is 50% of the land cost
  • 50% of the sanctioned loan amount can only be used towards the purchase of land

2. What are the eligibility criteria for Oriental SME Development Scheme?

  • Existing partnership firms, proprietorship, private and public companies that come under the purview of SME definition in the MSMED Act.
  • The business should have been established for a minimum of one year and profit making.
  • Entry level rating should be a minimum of IMACS 5
  • Satisfactory CIBIL report

3. What is the purpose of Oriental SME Equipment Loan scheme?

The main purpose of this loan is to purchase new equipment. Alterations to existing equipment or production tools is also included in this loan.

4. What is the maximum loan amount that can be taken for Oriental Budget Hotels & Restaurants?

The maximum loan amount is Rs. 10 crores and overdraft facility can be taken for a maximum of Rs. Rs. 50 Lakhs.

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