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MSMEs (Micro, Small and Medium Enterprises) play a key role in the economy of a developing country like ours. Micro, small and medium-sized enterprises employ a large sector of the population, ensure the development of the rural economy, make optimum usage of local resources, help in poverty alleviation, and mobilizing capital. MSMEs occupy a key role in the supply chain of large scale factories and industries.
Though MSMEs play a key role in the development of the nation, most MSMEs in the country face a severe shortage of working capital. Unlike corporates that can borrow from banks and NBFCs using collaterals, MSMEs do not have many opportunities to raise working capital and to boost their cash flow.
This is where MSME loans from Union Bank of India come into the picture. MSME loans are a special category of loan products that help in raising the working capital of micro, small and medium enterprises.
In recent years, the government of India has announced various initiatives for the growth of MSMEs like TReDS, Stand-up India, Prime Minister Mudra Yojna, Start-up India and several more. Union Bank of India offers a wide range of loan products that cater to the financial requirements of MSMEs. Here, in this guide, you can find all that you need to know about MSME loans from Union Bank of India – types of loan products, features, eligibility requirements, loan limits and FAQs.
Union Bank of India is one of the long-standing banks in the country. Started operations over a century ago on 11th November 1919 in Bombay, today, the bank has over 4200+ branches all across the country and has over 36,000+ employees. The bank’s head office building in Mumbai holds the prestige of being inaugurated by Mahatma Gandhi, the father of the nation in 1921.
It is to be noted that the bank has shown a continuous profit in all the 100 years of its operation. Union Bank of India plays a key role in helping the economic growth of the country by offering credit to businesses across different sectors. The bank has a large customer base of over 5.7 crore people and all its branches are 100% digitalized.
Union Bank of India offers a wide range of MSME loans to cater to the needs of different businesses. Here are the various MSME loan categories from Union Bank of India.
1. Union Mudra
Eligibility Criteria: All micro-enterprises involved in trading, manufacturing and professionals in service sectors like architects, doctors, chartered accountants, etc.
Type of Loan: Term loan, a working capital loan or composite loans
Loan Limits: Under the Mudra scheme, borrowers can avail loans up to Rs. 10 lakhs. Mudra loans are further classified into various categories based on the sanctioned loan amounts.
Rate of Interest:
The rate of interest charged depends on the loan amount.
The repayment tenure depends on the type of loan availed.
2. Union TReDS
TReDS (Trade Receivables Discounting System) is a digital platform for MSMEs provided by Union Bank of India. Using the Union TReDS, MSMEs can auction their receivable to online bidders. This helps MSMEs get financing at a lower cost.
3. Union GST Input Credit
This scheme is also available to export credit agencies and bullion traders, provided they comply with all the regulatory guidelines of the RBI.
Type of Loan: It’s a working capital loan offered on Adhoc basic, i.e. short term loans.
The sanctioned loan amount is the lower of the above two funds.
1% over the rate of interest approved for the working capital loans.
The loan must be repaid in either:
The entire loan amount must be repaid within six of receipt of the input credit.
4. Union Trade Plus
Type of Loan:
Eligible borrowers can avail loans up to Rs. 10 crores under this scheme.
The rate of interest charged depends on the amount borrowed, the collateral security submitted and credit rating. Get in touch with the nearest Union Bank of India branch to find the rate of interest that applies to you.
5. Union Start-up
To be eligible for this loan, the business unit must be certified as a “start-up” under the Start-up India scheme of the GoI (Government of India). This loan is offered to start-up for development, innovation or commercialization of new products or services.
You can avail concession over the eligible rate of interest.
Processing Charges: NIL
Collateral: Not Mandatory
6. Union Turnover Plus
All micro and small enterprises irrespective of whether they are engaged in manufacturing, service or trading activity are eligible for this loan.
Type of Loan: The Union Turnover Plus loan offers need-based working capital to MSEs that adopt digital channels for business transactions. The amount of loan sanctioned depends on the projected sales turnover of the MSE.
Loan Limits: Maximum available loan limit under this category is Rs. 5 crores
Rate of Interest: As per prevailing interest rates for micro and small enterprises.
Repayment Tenure: As per the needs of the borrowing MSEs. The loan can be renewed once every 12 months.
7. Union Liqui Property
Purpose of the Loan
*The interest rates are subject to revisal periodically.
8. Union High Pride
Type of Loan:Term loan for any business-related activity
Rate of Interest: 1% less than the applicable rate for MSME
Repayment Tenure: As per the conditions specified by Union Bank of India
9. Union SME Plus
Purpose of the Loan:
10. Union Parivahan
This loan is available to all business units of the following types – sole proprietorships, HUFs, partnership concerns, Limited Companies, businesses engaged in transportation.
Purpose of Loan: To purchase new vehicles for the business
Type of Loan: Term Loan
The rate of interest charged depends on the amount borrowed:
Repayment Tenure: Maximum of up to 60 months (5 years).
11. Union Progress
All micro and small business concerns irrespective of whether they are proprietorships, partnerships or limited liability companies.
Purpose of Loan:
Loan Limits: Maximum up to Rs. 1 crore
Rate of Interest: As per the existing rate of interest for micro and small enterprises
Repayment Tenure: Maximum repayment period of 84 months.
12. Union Nari Shakthi
The Union Nari Shakthi is a type of MSME loan from Union Bank of India that is offered to micro and small enterprises owned and operated by women entrepreneurs. If the concern is a partnership or company, then the majority of partners/directors should be women.
The enterprise can be a proprietorship, partnership or Limited Liability Company with a credit rating not less than UBI-5. The credit rating can be UBI-4 for existing borrowers.
Nature of the Loan:
Processing Charges: Nil
13. Union Trade
This depends on the value of collateral security submitted.
Repayment Tenure: Maximum of 84 months (7 years), including moratorium period.
14. Union Procure
The purpose of the Union Procure MSME loan product is to finance receivable via bills discounting, supplied by the borrower (vendor) to concerned corporates.
Vendors who supply products to large corporate borrowers of Union Bank of India are eligible for this loan
Interest Rate: MCLR + 4.15%
*Interest rates are subject to revision from time to time.
Repayment Tenure: On maturity of the bill.
15. Union Dealer Finance Scheme
This is a special category of MSME loans offered to select authorized dealers and franchisees of OEM (Original Equipment Manufacturers) and Corporates.
Eligibility Criteria: To be eligible for this loan, dealers have to be operational for more than one year.
Nature of Loan: Working capital facility for day-to-day expenses.
Rate of Interest: 1 year MCLR + 1.00%. If the internal credit rating of the dealer is poor, then the interest rate charged is 1 year MCLR + 1.75%.
Repayment Tenure: The dealer has to make the repayment within the agreed credit period.
16. Standup India
This is a special financing scheme for women entrepreneurs and SC/ST entrepreneurs. This loan aims to provide bank loans for women and people belonging to SC/ST categories to set up a Greenfield project. The project can be either in the manufacturing, trading or services sector.
Type of Loan: Composite loan including working capital loan and term loans.
Rate of Interest: Depends on the current interest rates offered by the bank.
Repayment Tenure: Loans should be repaid within a maximum period of 7 years.
17. Union Trade GST
Purpose of the Loan: To fund the working capital requirements of MSMEs.
The rate of interest ranges between 1 year MCLR + 0.75% and 1 year MCLR + 1.25%.
Union Bank of India makes it easy for borrowers to apply for MSME loans. Borrowers can use the online application portal to submit details of their loan requirements as well as to provide details about their business, etc.
Alternatively, borrowers can also visit any nearest Union Bank of India branch to submit their loan applications in person.
While applying for an MSME loan from Union Bank of India, the borrower has to provide KYC details of the self as well as the enterprise. Here are some of the documents that you are required to submit:
Apart from these basic documents, the borrower may be required to submit additional proof as and when required.
1. What is the mode of repayment of MSME loans from Union Bank of India?
You can repay the loan online in easy EMIs using ECS or direct debit. Alternatively, you can also visit the nearest Union Bank of India branch to repay the loan via cash or dd.
2. Is the interest rate floating or fixed for MSME loans?
Union Bank of India offers a fixed interest rate for MSME loans. However, the interest rates for new borrowers may be revised from time to time.
3. What is the tenure for MSME loans?
It depends on the loan product you choose. Get in touch with your loan officer to find the tenure for your preferred MSME loan product.
4. How do I know if my business is a micro, small or medium enterprise?
According to the MSMED (Micro, Small and Medium Enterprises Development) Act of 2006, MSMEs are classified based on the investment in machinery and plant (for manufacturing companies) and investment in equipment (for service enterprises).
5. Does Union Bank of India have special branches for handling MSMEs?
Yes. You can find the specialized MSME branches list by visiting the website of Union Bank of India.
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