Business Loans offered by NBFCs empower your business and take it to new heights. Lulu Finserv offers business loans for the MSME sector and have designed our offering to match your unique needs. We offer business owners and entrepreneurs, small business loans to ensure funding is never an obstacle when striving towards success. We have optimised every step of the way to promise a hassle-free and time-efficient experience. Business Loans are instalment loans for the purchase / Renovation / Stock Addition / Asset Purchase for the purpose of upgradation of business to the next level. A Business loan can be availed by Individuals, Sole Proprietors, Partnership Firms, Private and Public Limited Companies, Limited Liability Partnerships, Trusts, and Societies and who satisfy the credit parameters prescribed by Lulu Finserv. MSME loans are instalment loans given for manufacturing activities and service Enterprises in the MSME segment as per the MSME definition in the MSMED Act.
Definition of MSME
a) A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹1 crore and turnover does not exceed ₹5 crore;
b) A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹10 crore and turnover does not exceed ₹50 crore; and
c) A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.
d) All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’
How to utilize the Business loan Proceeds?
Lulu Finserv would assess the credit worthiness of the applicant, approve, and disburse the Unsecured loan or mark a hypothecation lien on the Stocks, Receivables, Assets as security. Collateral of property will be insisted based on the product norms. Lulu Business loans can be used to meet any business-related expense without restriction.
Business owners can use the capital to:
Eligibility criteria for Business Loans
Individuals / Self-employed professionals [Firms / Companies or any other legal entity engaged in manufacturing / Service Trading are eligible to be financed under the scheme. New or existing units can be considered under the scheme and the net worth of the borrower/s shall be positive. Take over loans are also permitted under the scheme. Borrowers enjoying other credit facilities with other Banks / FIs can also be considered under the scheme. However, it will be ensured that same asset is not already financed. Businesses filing GST returns shall be most preferred One Co -applicant is mandatory for all types of Business / MSME loans in the name of individuals and sole proprietorship concerns. Spouse / Family Member can be a co- applicant / Guarantor. Personal guarantee of all partners in partnership firms and major Directors in the case of companies. Owner of property shall invariably join as co-applicant. In order to qualify for business loans, you must maintain a good CIBIL score. Usually, the Bureau score stipulated by NBFCs for Business Loans is at least 650.
Documents required for Business loans.
Loan Application form / CKYC Application form duly filled in with all details, photograph, and signature separately for Applicant, Co-applicant & Guarantor(s) The following are the list of documents normally sought by NBFCs for granting business loans.
Proprietary Firms / Partnership Firms / LLP / Private Limited Ltd / Public Limited Company.
Gold is popularly considered a good investment option in India and this is why most people possess gold jewellery. It is usually kept either in their houses or in bank lockers. One of the reasons why most Indian families hold onto gold is that the yellow metal retains its value over time, even if it goes through price volatility. And, in most cases, these families fall back on gold during tough times. Whether the challenge is raising funds for building a house, funding a child’s higher education, or even emergency medical expenses, a quick gold loan is the first back up for many. Availing a gold loan might seem very simple and easy at first. You might think that all you have to do is walk into a reliable gold lender’s branch and pledge your gold in return for a good amount of money. However, did you know that there are certain things you need to be aware of before you apply for a gold loan? Knowing these things in advance will help you not only maximize the amount you get from your gold loan but also ensure that it is protected. You will be able to repay the gold loan and get back your precious commodity.
Important points to consider:
As per RBI guidelines, loans sanctioned by Banks and NBFCs against pledge of gold ornaments and jewellery for non-agricultural purposes should not exceed 75 per cent of the value of gold ornaments and jewellery.
In order to standardize the valuation and make it more transparent to the borrower, the gold jewellery accepted as collateral is valued at the average of the closing price of 22 carat gold for the preceding 30 working days as quoted by the India Bullion and Jewellers Association Ltd (IBBA), as advised by RBI.
Since the LTV norm of 75% is not applicable to Agricultural loans, many banks offer more than 75% LTV for gold loans, classifying the loans as agricultural loans, which they may not publish. By classifying such gold loans as agricultural loans banks are trying to meet the RBI direction to banks that 18% of their total advances shall be compulsorily given for agriculture. While giving such loans at a higher LTV, banks will insist for proof of land holdings like latest Land Tax paid receipts etc. NBFCs are not given any agricultural targets and not permitted to give agricultural loans.
The ceiling rate for granting the loan conforming to the guidelines issued by RBI from time to time as also the rate per gram under each scheme are updated in their website by all NBFCs. The day’s limit for LTV shall be displayed prominently at the Branches in a prominent place.
To determine the maximum permissible loan amount, the intrinsic value of the gold content shall only be taken, and no other cost elements shall be added thereto. Quantum of finance shall be decided based on the net weight of gold of hallmarked 22 carat ornaments tendered as security, its purity and subject to RBI guidelines regarding loan to value (LTV). The total eligible amount of the loan shall be calculated by the lender based on the weight of the gold net of stones and impurities weight and subject to deductions for lower purity, wastages etc as applicable.
Considering the risk gradation arising from differential rates, as a general rule, LTV and interest rate on the loan should be correlated i.e. a lower LTV loan shall get the benefit of a lower rate of interest.
The purity of gold in terms of carat and the accrual weight shall be furnished to the borrower at the time of accepting the gold for pledge. If the gold is of purity less than 22 carats, the Company shall translate the collateral into 22 carat and indicate the exact grams of the gold given as collateral. In other words, jewellery of lower purity of gold shall be valued proportionately. Eg. If the ornament is of 20 carats, the total weight (excluding stones and impurities) shall be divided by 22 and multiplied by 20 to arrive the proportionate weight.
While accepting gold as collateral, the Lenders shall give a certificate to the borrower on their letterhead, of having assayed the gold and state the purity (in terms of carats) and the weight of the gold pledged.
Lenders will have suitable caveats to protect them against disputes during redemption on the certified purity. The undertaking letter in vernacular signed and delivered to us by the customer, takes care of this.
The LTV shall be maintained not only on the date of giving the loan, but shall be maintained on an ongoing basis, throughout period of the loan. This is the reason why NBFCs offer a lower LTV than the permitted 75% for many of their schemes and give incentives for periodical servicing of interest or introducing interest jumping gold loan schemes.
During the inspection of the NBFCs by the RBI, they will thoroughly check whether the LTV norms are complied with, and if found violated, will impose a penalty, and also make it known to public. Recently RBI had penalized some NBFCs for the LTV violation.