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Overview

Indian Banking industry is incomplete without the name SBI. State Bank of India, popularly known as SBI, is the largest bank in the country and has the maximum number of branches and customer base. The products and services offered by the Bank are considered to be among the most preferred options as they are very economic and are tailor made to suit the needs of Indian masses.

SBI caters extensively to the retail as well as corporate and SME sector. It provides many types of business loans for the corporate and SME sector so as to enable them to meet their many fold requirements.

Some of the business loans of SBI and their highlights are mentioned hereunder.

SBI Business Loan

CORPORATE BUSINESS LOANS

SBI has a very huge range of business loan products for all types of organizations whether in manufacturing sector, trading or service sector. The types of loans depend on the needs of the organization like working capital needs, project financing needs, expansion of business or line of products and much more. The details of the types of corporate business loans offered by the Bank and the specific needs or target group are discussed below.

Working Capital Finance 

The working capital finance provided by the Bank is to satisfy the working capital needs of the organization and keep the wheels of the business moving. These types of loans are usually short term in nature and renewable depending on the credit profile of the applicant organization, relationship with the Bank, etc. Such loans are approved on the basis of a stringent in-house valuation of the viability of the loan.

Project Finance 

State Bank of India is the go to Bank for financing any major or minor projects whether they are related to extension of the business, development of a new line of business, modernization of existing or new infrastructure or non-infrastructure projects. The various benefits of the Bank’s Project Finance loans is highlighted below,

  • High expertise and experience in engineering financial packages that come with complex or unique financial requirements.
  • The Project Finance strategic Business Unit of the Bank is armed to ensure that the organizations get the best and uniquely structured financial solutions that are in coordination with various other streams of the Bank like the International Division of the Bank, SBI Capital Markets, etc.
  • The largest network of branches in the country ensures a smooth and timely delivery of the project specific finances as per the needs of the organization.
  • SBI not only plays the lead role as a financer in many projects but also has many allied roles like a Security Agents, Monitoring or TRA Agents, etc.

SBI provide project financing in many infrastructure and non-infrastructure related projects like,

  • Transport and Logistics
  • Energy
  • Water and Sanitation
  • Communication
  • Social and Commercial Infrastructure
  • Tourism
  • Hospitality
  • Educational Institutions
  • Auto Components
  • Textiles

Deferred Payments Guarantees

State Bank of India has the provision to arrange or extend deferred guarantees to industrial projects that procure imported equipment or machinery. This facility is a standby credit of the Bank that guarantees deferred payments on behalf of the borrower. Such facilities are usually extended for purchase or payments of capital intensive equipment, turnkey contracts, etc.

Corporate Term Loan

SBI Corporate Term Loan is a very effective tool for a number of financing needs of the organization like a business expansion, technological upgradation, R&D investment, repaying a huge debt and much more. These loans also have a unique facility that enables the corporate borrowers to take advantage of the international interest trends as compared to the domestic rates which will in turn help the corporate to minimize their debt cost.

These loans come with tenure of 3-5 years as well as with the option of fixed or floating rate of interest depending on the borrower’s needs and discretions and their risk profile.  Also, repayment of these loans can be linked to the borrower’s cash accruals.

Structured Finance 

SBI structured finance is a business loan that requires the assembling of unique credit configurations which are needed to meet the complex fund requirements of large industrial and infrastructure projects. Such finance is usually a combination of funded and non-funded facilities including other credit enhancement tools. These unique features make it a good fit for the multi-layer financial requirements that are most often found in large and long-gestation projects.

Such structured financing gives the organization the benefit of huge experience and global presence of the Bank which can be used to get the involvement or participation of many international agencies.

Dealer Financing

Dealer Financing option of the Bank is available to select dealers across the country. SBI provides working capital finance as well as term loans to the dealers as a measure to support the corporate distribution network.

Such finance provides the dealers the opportunity to avail low cost credit facility from the bigger players in the corporate world.

SBI has the facility to extend the dealer financing in the form of 

  • Bill discounting
  • Cash credit facility

Channel Financing

Channel Financing is the unique financing module of the Bank that enables the borrower to meet their fund requirements of the supply chain directly at the supplier’s end. This ensures a smooth and uninterrupted business flow at the borrower’s end. The borrower gets the credit for the tenor of the loan thereby safeguarding the liquidity of the organization. SBI provides prompt realization of the dues at the supplier’s end through its vast network of branches which make it more or less a cash sale ensuring a steady and smooth supply to the borrower.

Equipment Leasing

SBI is a prominent and an experienced name in Lease Financing. Lease financing enables the borrowers to acquire expensive equipment that are essential for the borrower’s project or organization. Such lease financing options can be treated as standalone contracts as well as part of structured financing.

Loan Syndication 

SBI provides a syndicated credit solution for its corporate clients as well as industrial projects. This is feasible on account of the huge experience of the Bank and the reputation that precedes it enabling the Bank to assemble or consolidate the loans or advances from many well known and reputed organizations whether from the domestic market or the international market or a combination of both.

Construction Equipment Loan 

This type of loan scheme is specific to the construction industry where SBI provides loans to the construction companies (that have the required credit rating) for purchase of new machines or equipment or vehicles that are required as part of the construction projects or as standard construction equipment. The highlights of such loans are enlisted below.

  • Tenure for such loans is 4 years
  • Quantum of finance is from Rs. 3,00,00,000 to Rs. 10,00,00,000
  • Repayment of these loans can be done via EMIs or a variable repayment schedule that is linked to or based on the cash flows of the entity.
  • Loan sanction can be disbursed to the borrower in many tranches provided a minimum of 10% of the amount sanctioned for any tranche is disbursed within 12 months of the date of sanction depending on the requirement of the equipment or vehicle or machinery to be obtained within the specified time.

Trade and Service Sector Finance 

SBI provides structured finance for the purchaser of new trucks or tankers or trailers or luxury buses, etc as well as for working capital needs of such entities against receivables. Takeover by other Banks or Financial Institutions is not permitted under this scheme.

Finance can be provided in the form of Bill Finance, Cash Credit facility, Term loan against Asset Acquisition, Letter of Credit or a Bank Guarantee.

The key features of this finance are mentioned below.

  • Maximum tenure under the scheme is 5 years
  • Amount of finance under the scheme is minimum Rs. 10,00,000 and maximum Rs. 10,00,00,000 for corporate sector.
  • Margin requirement is 20% 
  • EMIs will start 2 months after the disbursement of the loan
  • SBI requires hypothecation of the vehicles finances as primary security
  • Personal guarantee of promoters and two third party guarantors as well as unencumbered vehicles or immovable property of minimum 25% of the value of the loan amount is required as collateral by SBI under this type of financing.

SME BUSINESS LOANS

State bank of India has one of the largest varieties of loan products for the SME sector. These loans include not only based on the type of the business but also the mode of loan. Some of these types of loans offered by the Bank for SME sector are,

  • Asset Backed Loans
  • Asset Backed Loans Commercial Real Estate
  • Cotton Ginning Mills
  • Doctor Plus
  • Export Packing Credit
  • E Dealer Finance Scheme
  • E Vendor Financing Scheme
  • Fleet Finance
  • Lease Rental Discounting
  • Medical Equipment Financing
  • SME EBiz Loans
  • SBI Simplified Business Loans
  • Stand Up India
  • PM Mudra Yojana
  • Warehouse Receipt Financing
  • Finance to Food Processing Industry
  • Loans to Business Correspondents
  • SME Smart Score
  • SME Credit Card

Following are the highlights mentioned of some of the above loan products

Asset Backed Loans

These loans are targeted for all the business units that are involved in manufacturing and trading activities and that are looking to finance for their current assets or fixed assets for business purpose, expansion, modernization or working capital requirements.

This loan is in the nature of an overdraft facility with a minimum loan of Rs. 10,00,000 to a maximum loan of Rs. 20,00,00,000 with a tenure ranging from 1 year to a maximum of 15 years. SBI requires a cash margin up to 25% of the loan value for Non-Fund Based facility and has an overall processing charge of about 1% of the loan amount (maximum Rs. 10,00,000).

Asset Backed Loans Commercial Real Estate

SBI offers such loan facility to the Proprietorship/ Partnership Firm/ Companies for creation or acquisition of real estate (such as office buildings, retail space, industrial or warehouse space, multiplex, hotels, cold storage, amusement parks, etc.) where the potential of repayment is usually through the lease or rental receipts or sale of the asset as well as for working capital requirement or fixed asset requirement of the entity.

Key highlights of such loans are,

  • Tenure – 72 months
  • Margin – 25% for both working capital and fixed assets
  • Amount of loan – Minimum Rs. 10,00,000; Maximum Rs. 20,00,00,000 for Tier II and Tier II Branches and Rs. 50,00,00,000 for Tier I branches
  • Processing fees – 1% (maximum Rs. 10,00,000)

Cotton Ginning Mills

SBI provides these loans specifically for the new or existing profit making mills engaged in cotton Ginning. These loans are in the nature of term loans or cash credits for the purpose of working capital requirements or for acquisition of any machinery or factory building or for modernization or expansion purposes. Loans are given based on the project outlay or are need-based depending on the type/purpose of the loan. Tenure is around 5 to 7 years for term loans and working capital loans have to be repayable on demand.

Doctor Plus Schemes

This loan scheme of the Bank is a term loan specifically targeting to finance the medical professionals of allopathic discipline, to help them in buying medical equipment, setting up of clinics, nursing homes, pathology labs, etc.

SBI provides loans from Rs. 10,00,000 to Rs. 5,00,00,000 at a margin of 15% and repayment tenure of 3 years to 7 years (including the moratorium period of 6 months).

Medical Equipment Finance

This is another finance scheme related to the medical profession where the Bank provides finance specifically for purchase of medical equipment as well as funding of ancillary equipment. This is a term loan ranging from a minimum of Rs. 10,00,000 up to a maximum of Rs. 20,00,00,000 at a margin of 15% and repayment tenure of 3 years to 7 years (including the moratorium period of 6 months). SBI does not require any tangible collateral for loans up to Rs. 2,00,00,000 and above this limit the Bank requires a tangible collateral of up to 25% of the value of the loan.

E Dealer Financing Scheme 

The purpose of this scheme is to provide finance to authorized exclusive dealers or stockist or distributors or franchisees of Industry Majors in order to purchase inventory at adequate collateral. SBI provides up to 100% finance for a credit period of up to 90 days and a collateral ranging from zero up to 50% of the loan value depending up on the tie-up. Quantum of loan granted is usually need based but also depends on the past performance or projected sales of the dealer or the limits recommended by the Industry Majors.

SME EBiz Loans

This loan scheme is targeted for the sellers registered on any e-commerce and selling their products online for a minimum period of 6 months. SBI provides a cash credit facility of minimum Rs. 50,00,000 to a maximum of Rs. 5,00,00,000 based on the turnover of previous 12 months at a staggered processing fee of 1% of the loan amount for the first year and then 0.35% for the subsequent years.

Simplified Small Business Loan

Simplified Small Business Loans is a general purpose loan for current asset or fixed asset requirements of the business. Loans under this scheme are for all business units engaged in manufacturing, services activities along with self-employed and professional individuals, wholesale/retail trade. SBI provides loans up to 10 times the average monthly balance in current account in the preceding 12 months with respect to a minimum of Rs. 10,00,000 and a maximum loan of Rs. 25,00,000 at a margin of 10% that  has to be ensured through stocks and receivables. Tenure for such loans is 5 years and a minimum collateral requirement of 40%.

Stand Up India

SBI Stand Up India loans are a composite loan (working capital as well term loan) for SC/ ST and Women entrepreneurs in setting up Greenfield Projects under manufacturing and services or the trading sector. Loans from Rs. 10,00,000 to Rs. 1,00,00,000 can be availed at a margin of 10% for a maximum period of 7 years (including the moratorium period of 18 months) and a processing charge of 0.2% of the loan amount under this scheme.

These were details of some of the loans offered by the Bank for Corporate as well as SME sector. SBI offers many other loan products as part of its business loans. Customers can contact the Bank for all the details required with respect to such loans or any other products of the Bank. Customers can visit the Bank at the nearest Branch or through the customer care service of the Bank.

FAQs – SBI Business Loans

1. Does SBI provide loans for e-commerce sellers?

Sellers on e-commerce platforms (that have a presence on such platforms for a minimum period of 6 months) can avail a loan under the Bank’s SME EBiz Loan.

2. What is the minimum loan that can be availed under Construction Equipment Loan?

The minimum loan that can be availed under Construction Equipment Loan is Rs. 3,00,00,000.

3. Can a person get a loan for acquisition of medical equipment?

SBI provides loans for acquiring medical equipment under its Doctor Plus Scheme or Medical Equipment Finance.

4. What is the maximum tenure under the Stand Up India Scheme of SBI?

SBI provides tenure of 7 years for Stand Up India including the moratorium period of 18 months.

5. What is the margin requirement for Trades and Service Sector Finance?

SBI provides loans to the Trade and Service Sector Finance at a margin of 20% at least.

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