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Union Bank of India MSME Loan

Overview

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.

About Union Bank of India

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.

List of MSME Loans from Union Bank of India

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.

Mudra Loan Sub TypeLoan AmountMargin
ShishuLoans up to Rs. 50,0005%
KishoreLoans from Rs. 50,000 to Rs. 5 lakhs10%
TarunLoans from Rs. 5 lakhs to Rs. 10 lakhs10%

Rate of Interest:

The rate of interest charged depends on the loan amount.

Interest Rate
Loan ParticularsFor Micro Enterprises
Advance up to Rs. 50,000MCLR + 0.40%
Advance above Rs. 50,000 and up to Rs. 2 lakhsMCLR + 0.90%
Advance above Rs. 2 lakhsMCLR + 1.65%

Repayment Tenure:

The repayment tenure depends on the type of loan availed.

  • For working capital loans – up to 12 months, it can be renewed under certain guidelines.
  • For term loans – up to a maximum period of 84 months (7 years).

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

Eligibility Criteria:

  • The borrower should be registered under the GST Act.
  • The borrower has to provide details of all input credit pending for the last three months, certified by a registered chartered accountant.
  • The rating of the account must meet the norms of the investment grade.

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.

Loan Limits:

  • Maximum 20% of the existing fund based on working capital limits OR
  • 80% of input tax claim due

The sanctioned loan amount is the lower of the above two funds.

Rate of Interest:

1% over the rate of interest approved for the working capital loans.

Repayment Tenure:

The loan must be repaid in either:

  • A single payment OR
  • A maximum of six EMIs

The entire loan amount must be repaid within six of receipt of the input credit.

4. Union Trade Plus

Eligibility Criteria:

  • This loan scheme is available to all trading enterprises classified under MSE.
  • The business must submit proof of income tax returns and operation for at least one financial year.
  • The credit rating of the business should fall between CR-1 and CR-4.

Type of Loan:

  • Working Capital loan for trading businesses
  • Term loan for own business use

Loan Limits:

Eligible borrowers can avail loans up to Rs. 10 crores under this scheme.

Rate of Interest:

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.

Repayment Tenure:

  • For working capital loans – the repayment tenure depends on the requirements of the borrower.
  • For term loans – the maximum repayment tenure is up to 7 years.

5. Union Start-up

Eligibility Criteria:

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.

Type of Loan:

  • Term Loan
  • Working Capital

Loan Limits:

  • Minimum – Rs. 0.10 crores (Rs. 10 lakhs)
  • Maximum – Rs. 5 crores

Rate of Interest:

You can avail concession over the eligible rate of interest.

Repayment Tenure:

  • For working capital loans – maximum repayment tenure of up to 12 months.
  • For term loans – the maximum repayment tenure is up to 10 years.

Processing Charges: NIL

Collateral: Not Mandatory

6. Union Turnover Plus

Eligibility Criteria:

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

Eligibility Criteria:
  • All business enterprises irrespective of whether it’s a company, partnership, proprietorship, trust, charity or association.
  • The businesses should have been operational for at least two years.
  • The credit rating of the borrower should not be below UBI-5 for new borrowers and UBI-4 for existing borrowers.
  • Enterprises that are involved in businesses of speculative nature like real estate are not eligible.

Purpose of the Loan

  • To meet working capital requirements
  • To increase net working capital
  • For purchase/renovation/construction of shops, offices, factories or godowns
  • For purchase of equipment, machinery
  • For consolidating debts

Type of Loan:

  • Term loan
  • Overdraft facility

Loan Limits:

  • Minimum – Rs. 0.10 crores (Rs. 10 lakhs)
  • Maximum – Rs. 10 crores

Rate of Interest:

RatingMicroSmallMediumOthers
CR-1MCLR+1.90%MCLR+2.15%MCLR+2.40%MCLR+2.90%
CR-2
CR-3
CR-4MCLR+2.90%MCLR+3.15%MCLR+3.40%MCLR+3.90%
CR-5
CR-6MCLR+3.40%MCLR+3.65%MCLR+3.90%MCLR+4.40%

*The interest rates are subject to revisal periodically.

Repayment Tenure:

  • Term loan to be repaid within a maximum tenure of 120 months (10 years).
  • Overdraft facility is available for a maximum period of 1 year, which can be further extended on a case-by-case basis.

8. Union High Pride

Eligibility Criteria:

  • All micro and small enterprises irrespective of whether they are engaged in manufacturing, service or trading activity are eligible for this loan.
  • The credit rating of the enterprise should be between CR-1/UBC-1 to CR-3/UBC-3.
  • The business must have been operational for at least one financial year and income tax returns must have been filed for the corresponding years of operation.

Type of Loan:Term loan for any business-related activity

Loan Limits:

  • Minimum – Rs. 1 crore
  • Maximum – Rs. 25 crores

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

Eligibility Criteria:

  • All MSME units engaged in manufacturing or service and not covered under Union Trade Schemes.
  • The credit rating of the enterprise should be between CR-1/UBC-1 to CR-4/UBC-4.
  • The enterprise must have maintained satisfactory credit dealing with Union Bank of India for a minimum of two years.
  • The account should be regular and must not have any existing over-dues.

Purpose of the Loan:

  • To meet urgent working capital needs of the business
  • To meet unforeseen seasonal demands
  • To balance mismatch in cash flows
  • For the purchase of tangible fixed assets like equipment, machinery, tools, etc.
  • To improve and expand a factory or office
  • For investment in intangibles like IT, software and other infrastructure

Type of Loan:

  • Working capital loan
  • Term loan

Repayment Tenure:

  • Term loan to be repaid within a maximum tenure of 60 months (5 years).
  • Working capital loan to be repaid within three months of availing the facility.

10. Union Parivahan

Eligibility Criteria:

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

Loan Limits:

  • Maximum of Rs. 500 lakhs in cases where Union Bank of India has a tie-up with the vehicle manufacturer
  • Maximum of Rs. 200 lakhs in cases where Union Bank of India does not have a tie-up with the vehicle manufacturer

Rate of Interest:

The rate of interest charged depends on the amount borrowed:

Loan AmountRate of Interest
Up to Rs. 50,0001 year MCLR + 0.40%
Above Rs. 50,000 and less than Rs. 2 lakhs1 year MCLR + 0.90%
Above Rs. 2 lakhs
  • For enterprises with a credit rating of UCR-1 to 4: 1 year MCLR + 1.40%
  • For enterprises with a credit rating of UCR-5: 1-year MCLR + 1.90%

Repayment Tenure: Maximum of up to 60 months (5 years).

11. Union Progress

Eligibility Criteria:

All micro and small business concerns irrespective of whether they are proprietorships, partnerships or limited liability companies.

Purpose of Loan:

  • To meet business requirements like the purchase of equipment, machinery, construction of office, vehicles and other fixed assets.
  • To generate working capital

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

Eligibility Criteria:

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:

  • Term loan
  • Cash credit

Loan Limits:

  • Minimum – Rs. 2 lakhs
  • Maximum – Rs. 1 crore

Rate of Interest:

Rate of Interest
Micro EnterprisesMCLR + 1.90%
Small EnterprisesMCRL + 2.40%

Processing Charges: Nil

Repayment Tenure:

  • For working capital loan, the maximum repayment tenure is one year
  • For term loans, the maximum repayment tenure is 84 months

13. Union Trade

Eligibility Criteria:

  • Retail traders, wholesale traders, departmental store owners, supermarkets, malls, groceries, co-operative stores and other consumer durable store owners are eligible for this loan.
  • This loan is available to existing as well as to new partnership concerns, limited liability partnerships, limited liability companies, and proprietorship concerns.
  • To be eligible for this loan, the firm has to be registered under the VAT/Shop and Establishment Act/Sale Tax Act.

Loan Limits:

  • For working capital loans, the maximum loan per party is Rs. 2500 lakhs
  • For term loans, the maximum loan per party is Rs. 500 lakhs
  • Maximum – Rs. 50 crores

Rate of Interest:

This depends on the value of collateral security submitted.

  • If collateral security is 125% or more of the total loan value, then the applicable interest rate is 1.5% less than prevailing interest rates.
  • If collateral security is 75% or more and less than 125% of the loan value, then the applicable interest rate is 0.5% less than prevailing interest rates.

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.

Eligibility:

Vendors who supply products to large corporate borrowers of Union Bank of India are eligible for this loan

Loan Limits:

  • Minimum – Rs. 25 lakhs
  • Maximum – Rs. 5 crores

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.

Loan Limits:

  • Minimum – Rs. 0.25 crores
  • Maximum – Rs. 50 crores

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.

Eligibility Criteria:

  • SC/ST and women entrepreneurs aged over 18 years
  • Loans are available only for Greenfield projects
  • In the case of non-individual enterprises, 51% of the shares must be held by the applicant women, SC/ST entrepreneurs
  • The borrower must not have defaulted on any previous loans with other banks and NBFCs

Type of Loan: Composite loan including working capital loan and term loans.

Loan Limits:

  • Loan Limits: Minimum – Rs. 10 lakhs
  • Maximum – Rs. 1 crore

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

Eligibility Criteria:

  • All MSMEs engaged in manufacturing, services or trading
  • The MSME should have been registered under the GST Act and hold a valid GSTR number.
  • The borrower should have valid GST Returns – GSTR1, GSTR4.

Purpose of the Loan: To fund the working capital requirements of MSMEs.

Loan Limits:

  • Minimum – Rs. 10 lakhs
  • Maximum – Rs. 200 lakhs

The rate of interest ranges between 1 year MCLR + 0.75% and 1 year MCLR + 1.25%.

How to apply for an MSME loan from Union Bank of India?

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.

Documentation Required for MSME Loan from Union Bank of India

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:

  • KYC details like address proof, identity proof
  • Proof of registration of business – Pan card, GST registration, partnership deed, etc.
  • Duly filled-in application form

Apart from these basic documents, the borrower may be required to submit additional proof as and when required.

MSME Loans Union Bank of India: FAQs

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).

ClassificationManufacturing EnterprisesService Enterprises
MicroInvestment up to Rs. 25 lakhsInvestment up to Rs. 10 lakhs
SmallInvestment between Rs. 25 lakhs and up to Rs. 5 croresInvestment between Rs. 10 lakhs and up to Rs. 2 crores
MediumInvestment between Rs. 5 crores and up to Rs. 10 croresInvestment between Rs. 2 crores and up to Rs. 5 crores

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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