Best commercial banks in India
In the age of commercialization, people are choosing banks according to their financial needs and also looking for those banks who can also fulfil their requirements. There are multiple options of commercial banks in India that people can apply for the loan such as private sector banks, public sector banks, foreign banks, Regional Rural Banks, and more.
Features of commercial loans
- Commercial loans are offered to a business entity and not to individual consumers.
- It can be utilised by organisations to handle financial expenses like purchasing equipment, buying and installing machinery, buying office, purchasing vehicles, construction, and renovation of office location, purchasing inventory, and more.
- These loans can be secured and unsecured. For secured loan organisation have to provide collateral or security to the lender. In this case, the organisation has to pay the lower interest rates as the level of risk is low for the lender.
- Commercial loans are provided to the user for a short period. It can be range from 30 days to 1 year. Sometimes it gives long tenure too but that will depend on the lender.
- Commercial loans cover revolving lines of credit, short-term debt, long-term debt, etc. for the user.
- Commercial loans are mostly having fixed interest rates or floating interest rates. If the user has a fixed interest rate then that may remains fixed throughout the tenure period. If you have a floating interest rate, the interest rate will fluctuate according to the market.
- You can repay a commercial loan through post-dated cheques, Electronic Clearing Services (ECS), Standing Instruction (SI), etc. at the time of loan approval.
- Commercial loans also help companies in purchasing supplies, funding the production process, handling payroll needs, and more to maintain inspiration.
- These loans are sometimes required to offer to self-employed professionals or non-professionals so that it can be easy to purchase property or any other asset of their firm’s requirements.
- The applicants can be lawyers, doctors, engineers, architects, consultants, contractors, etc. and they will have to apply for the loan on behalf of their company.
- It can be utilised for expanding company operations too.
Best Public Sector Banks in India 2020
- State Bank of India
- Punjab National Bank
- Bank of Baroda
- Union Bank of India
- Canara Bank
- Central Bank of India
- UCO Bank
- Bank of Maharashtra
- Axis Bank
- Bandhan Bank
- HDFC Bank
- DCB Bank
- Federal Bank
- ICICI Bank
- IndusInd Bank
- IDBI Bank
Eligibility criteria for Commercial loan users
- Partnership firms, sole proprietorship firms, self-employed professionals, and non-professionals private limited companies, public limited companies can apply for commercial loans in India.
- The business entity for commercial loan users should have a good turnover. But the turnover requirement will differ from lender to lender.
- The borrowers should meet the minimum annual income requirement as a firm.
- The firm should be in profit for a certain period, which will be mentioned by the lenders.
- The minimum age criteria of an individual are 21 and a maximum of 65 years who are applying for a loan on behalf of the company.
- The company should be interested in applying for a commercial loan and should have been in business for a certain period which will be fixed by the lender.
Documents required for commercial loans
If you are applying for a commercial loan, on behalf of a firm you will have to compulsorily submit certain documents to the banks and they include:
- PAN card for firms, companies, and individuals
- VAT, GST, statements for a certain period
- Balance sheet
- Income tax returns for a certain period
- Profit & Loss statement for a certain time
- Bank statements
- Business continuation proof
- Certified copy of partnership deed
- Sole proprietorship declaration
- Board resolution
- Certified copy of Memorandum and Article of Association
Commercial banks do play an important role for the user to fulfil their short-term and mid-term credit requirements. However, commercial banks do not provide long-term credit for over 15 years or more. The user will get funds at commercial banks that belong to the general public and are withdrawn at a short notice, thus, commercial banks prefer to provide credit for a short period.