Difference between start-up and SME loan or IDFC FIRST Bank Business Loans

Difference between start-up and SME loan or IDFC FIRST Bank Business Loans

IDFC FIRST Bank offers loans for a business that are tailor-made to suit the needs of your business. IDFC FIRST Bank, having the lineage of IDFC FIRST, understands the importance of finances in running and expanding businesses. In line with one of its main objectives of lending to small businesses including SMEs and MSMEs, the bank offers business loans to satisfy a variety of financial needs of the SME and MSME sector. IDFC FIRST Bank has also partnered with Capital Float, a Bangalore-based online-lending platform to offer digital lending to small businesses throughout India.

The different types of loan for business especially the SME loans and the MSME loans include

  • Cash/credit overdraft
  • Term loan
  • FD backed loan
  • Business installment loan

IDFC FIRST Bank extends these loans under various terms and conditions. The features of these loans are as follows

Cash/credit overdraft

The cash/credit overdraft is a product that helps existing businesses to overcome the short-term requirement of credit for various uses such as the purchase of raw materials, paying for utilities, paying salaries and rent. This is essentially a short-term extension of credit and the bank uses the following parameters to decide on the extent of overdraft

  • Magnitude of business turnover
  • Favourable collateral terms

The bank offers affordable SME loan interest rates and also provides working capital advisory services from its expert pool.

Term loan

The term loan is an excellent product that you as a small or medium business can avail of for your future expansion. Since you have a relationship with the bank, you can easily avail this facility and expand your business in a timely fashion. The favourable terms include

  • The tenure can extend to 5 years
  • Tenure is flexible
  • Affordable interest rate

This is one of the most useful facilities from IDFC FIRST Bank that you can avail of for achieving your future expansion goals.

FD backed loan

The FD backed loan is a convenient product that allows you to use any FD you may have with IDFC FIRST Bank. This is the quickest way to obtain a loan from IDFC FIRST Bank for meeting your emergency requirements. In fact, the loan is almost like an ‘over the counter’ product.’ The salient features of this loan includeb

  • Maximum amount of loan up to 90% of FD amount
  • The interest rate is a few basis points higher than FD interest rate
  • Tenure of loan linked to FD maturity period

If you have an FD with the bank and also have a business relationship, this is the simplest and cheapest form of loan you can avail of from the bank.

Business installment loan

A business installment loan is an unsecured loan that you can avail of just like an EMI loan where you can take a loan for a fixed tenure and repay through EMIs or other convenient repayment options. All types of business entities can avail this loan irrespective of their ownership type. The main features of this loan are

  • Loan amount up to Rs 40 lakh subject to the nature of profitable business, income and repayment capacity
  • The loan amount can go higher than the cap depending on the credentials of the business and its owner
  • Tenure – up to 60 months for doctors and 48 months for other professionals and non-professionals subject to conditions
  • Proof of minimum 3 years of business existence
  • A collateral free loan
  • Simple processing formalities including low fees and door-step services
  • Comprehensive insurance coverage
  • Balance transfer facility of other loans – convenient to consolidate all other loans under this loan so as to pay one EMI

The business installment loan works like any personal loan which is easy to obtain and repay because of the EMI facility.

Simple formalities

The IDFC FIRST Bank business loans are almost paperless and easy to obtain. Typically, the loan documents required are as follows

  • KYC depending on the type of ownership including KYC for individuals as well as entity
  • 3-years audited balance sheet and auditor’s report
  • 3-year latest ITR
  • 12-month latest bank statement

24/7 Access

You can monitor your SME loan online quite easily using the 24/7 service through the IDFC FIRST Bank Mobile App. The features of the 24/7 access include

  • Loan summary, loan details
  • Periodic updates – balances,
  • Document downloads
  • Next payment date alert

You can have the loan details at your fingertips anywhere, anytime through the app.

The IDFC FIRST Bank’s business loan product is a boon to SMEs and MSMEs to meet all their financial requirements in a one-stop fashion. You can get all the facilities through the technology that IDFC FIRST Bank employs besides the much needed funds for your business needs.