COMMERCIAL LOAN DISBURSEMENT

A loan is a specified amount sanctioned for a period of times. Loans are granted generally against the security of assets or on the personal security of the borrower. The borrowers may with draw the amount of the loan in lamp sum in installment. Similarly it may be repayable in lump sum or in installment. The State Bank of India deals with a variety of commercial loans. This include the loans granted to the micro, small and medium scale industries and in some areas agricultural sectors which are a part of commercial activities. The disbursement of loan is done on the fulfillment of the criteria that are mentioned for different types of loans. The loans are provided on varying or fixed interest rates depending upon the amount disbursed. Basically there are two categories upon which loans for SME are granted. These are one in which the amount is upto Rs. 1 crore and next is for amount which is more than Rs. 1crore.

LOAN FOR SME

The SBI SME loan i.e, for small and medium enterprise is categorized into 3 major products. Manufacturing Trade Service

Each of products has 3 facilities with a loan amount which may be upto Rs. 1 crore or above. Term Loan: Term loan facility is provided for acquiring fixed assets like purchase of land, construction of building, purchase of machinery/equipment, modernization/technology up-gradation activities. Working Capital Loan: Working capital loan is provided for funding required level of current assets, employment of labour, power & fuel charges, other pre-operative and tangible expenses to enable the units to carry on its operations at the expected levels uninterruptedly. It is provided in terms of cash credit, bill discounting, Letter of Credit, Bank Guarantee, Pre-shipment and post shipment finance working capital demand loan etc. Both Term Loan and Working Capital Loan.

Schemes of SME loan

The 3 major products in consideration with the facilities and amount are classified into different schemes. There are 8 major schemes which deals with the 3 products.

1. SBI SME Collateral Free Loan

To be eligible for this category the micro and small enterprise should be engaged in manufacturing and service sector. For Manufacturing sector, original investment in plant & machinery should be upto Rs 5 crore and for Service sector, original investment in equipment upto Rs 2 crore. Purpose Working capital needs for both Fund Based and Non Fund Based segment. Term loan for construction of Building, office, acquisition of machines / equipments including expansion and modernization of the unit. Facility The facilities that are being provided as part of the loan and its disbursement are:

 Cash Credit Term Loan Letter of Credit Bank Guarantee Quantum of Finance The total Exposure of the unit is upto Rs. 1.00 crore in which all the facilities are included such as working capital, term loan and non fund based facilities. The service charge for disbursing the loan is mentioned below: Up to Rs.25,000 = No service charge. Above Rs.25,000 but up to Rs.2 Lacs = Rs.500 Above Rs.2 lacs = 0.30% of loan amount. Max of Rs. 30lacs.

Security The assets created out of bank finance are considered as primary security. The existing assets of the borrower as per definition of CGTMSE. Borrowers eligible under the scheme will be covered under CGTMSE guarantee scheme. No collateral . No third party guarantee. Repayment Period Working Capital (WC): One year, repayable on demand. Working capital limits are renewed every two year. However, performance of the unit and conduct of account is to be reviewed annually for continuation of limits. Term Loan: Maximum Seven Years including moratorium period.

2. SME Smart Score

This scheme is available to small and medium enterprise units engaged in manufacturing, trade or services. Purpose The purpose of this scheme is to cater to the Working Capital requirements and purchase of fixed assets like land, building, plant and machinery. Facility Working capital and Term loan

Quantum of Finance For manufacturing units total limits upto Rs 50 lacs For trade & services units total limits upto Rs 25 lakhs. Margin 25% for working capital and 33% for Term Loan Interest Rate Floating Rate and linked to Base Rate Repayment Period Term loan to be repaid in 5 years excluding moratorium not exceeding 6 months Working Capital loan to be renewed every two years and reviewed annually subject to satisfactory conduct of account. Security Primary: Hypothecation of stocks and assets financed by Bank Collateral: Extension of charge over current assets, fixed Assets and otherexisting collateral, Personal guarantees of the promoters/partners of the unit. Insurance The assets created out of Bank's finance are to be insured for the full value. Special Features A simplified loan application format Concessionary rate of interest Quick and hassle-free loan sanction process

3. SME Open Term Loan

The facilities covered under this type are: The product is a pre-approved term loan facility which can be disbursed over a period of 12 months depending upon requirement of the unit. The units get comfort of preapproved sanction to plan their capital expenditure and negotiate with suppliers of machinery to finalize the best possible terms and then get the loan disbursed. Target Group All units under manufacturing sector. Under Service sector: Educational Institution, Healthcare Industry (Hospital, Doctors, Pathological Labs, and Nursing Home), Hospitality Industry (Hotels, Restaurants, and Health Club etc), and Transport Operators .

Purpose Any genuine commercial purposes in line with regular business activity of the customer. These would include Expansion and modernization. Substitution of high cost debts/ high cost term debts of other banks/FIs. Design and introduction of new lay-outs in the factory to enhance productivity. Up gradation of technology & energy conservation schemes/ machinery. Acquisition of software, hardware, consumable tools, jigs, fixtures, vehicles, equipment , furniture upholstery etc. Acquisitions of ISO & other similar certifications. Visits abroad for acquiring technology, finalizing business deals, participating in exhibitions/ fairs for market promotion etc. R&D activities of the units in overall business development objective Quantum of Finance Upto Rs 2.50 crore for both manufacturing and services enterprises, subject to credit rating and purpose of the loan. Margin A minimum of 10% is expected in this type of loan. Repayment Period 3- 5 years. Interest Rate Floating rate linked to Base Rate. Security Primary Security: Hypothecation / pledge of the assets proposed to be purchased out of the term loan. Collateral Security: - Extension of charge over current assets, fixed assets, and other existing collateral if any. - Personal guarantees of proprietor/partners/promoters.

4. Traders Easy Loan

The target groups of this type of loan are the traders and persons engaged in service sector against mortgage of property. The special feature of this type of loan is that of its simplified Assessment and user friendliness

Eligibility Existing customers with a satisfactory track record. New connections including take-over. First generation entrepreneurs as well as promoters of existing units. Purpose Loan can be availed for normal day to day business requirements or for purchase of equipments/ fixed assets. Facility Cash Credit/ Term Loan/ Demand Loan Quantum of Finance Upto Rs 5.00 Cr Margin 35% of the property value Interest Rate Attractive rate of interest. Interest rate is linked to Base Rate Security Primary- Hypothecation of stocks and receivables, and /or assets acquired of bank finance. Collateral- Tangible security of minimum of 154% of loan amount in the form of Equitable Mortgage of land and building Insurance The assets created out of Banks finance are to be insured for the full value.

5. SME Credit Card

Eligibility Customers of the following segment with satisfactory track record for last 2 years Small industrial units Small retail traders Professionals & self employed Small business enterprises and transport operators Purpose To meet any kind of credit requirements including purchase of shops, equipments

Facility Cash Credit and/or Term Loan Quantum of Finance Upto - Rs. 10 lakhs with a margin of 20 % Interest Rate Floating and linked to Base Rate. Repayment Period Term loan repayable in maximum 5 years in suitable installments Working capital loan sanction valid for 3 years with annual review subject to satisfactory conduct of loan accounts Security Primary: Hypothecation of stock in trade, receivables, machinery, office equipment Collateral: Nil (Eligible activities may be covered under CGTMSE guarantee scheme) Insurance The assets created out of Banks finance are to be insured for the full value Special Features This product is for the units unable to provide elaborate financial data sought by banks for assessing credit needs. Stock statements for working capital loans are to be submitted once in a year only Working capital sanctioned is valid for 3 years subject to annual review. The Term Loan component should be repayable in a maximum of 5 years in suitable installments.

6. Warehouse Receipt Financing

The purpose of warehouse receipt financing is to finance traders and owners of goods against warehouse receipts of warehouses managed by Central Warehousing Corporation or State Warehousing Corporation by way of Demand Loan or Cash Credit. Eligibility Any trader dealing in commodities is eligible for this type of loan Facility Demand Loan Cash Credit

Quantum of Finance Demand Loan: 75 % of the value of the warehouse receipt, valued at the market value or 80% of the minimum support price declared by State/Central Government, whichever is lower Cash Credit: 70 % of the value of the warehouse receipt, valued at the market value or 75% of the minimum support price declared by State/Central Government, whichever is lower Margin Demand Loan: Min 25% of the value of the warehouse receipt, valued at the market value or Min 20% of the minimum support price declared by State/Central Government, whichever is higher Cash Credit: 30% (minimum) of the value of the warehouse receipt, valued at the market value or 25% (minimum) of the minimum support price declared by State/Central Government, whichever is higher Interest Rate Interest is floating and linked to Base Rate. Security Primary- Charge over warehouse receipt (resulting in charge over underlying goods), with lien marked in favour of the bank. Collateral- Personal guarantee of partners or directors as the case maybe. Insurance Comprehensive Insurance Insurance cost to be borne by the warehouse receipt owner.

7. Doctor Plus
Target Group Medical practitioners of any discipline, promoters of hospitals, nursing homes, pathological clinics, polyclinics, X-ray labs, etc. Purpose To finance qualified medical practitioners For buying equipments (For dentists, the loan also covers dental implants besides equipments; for orthopaedists, the loan also covers various replacements/ implants for hip/ knee/ shoulder/ spine etc.) Setting up clinic, nursing home, pathology labs, drug store, ambulance, computers, vehicles, etc. Expansion/ renovation/ modernization of existing premises

Facility Term Loan Cash Credit Quantum of Finance Loan is upto Rs 10 Crores in metro or urban centers for corporate and partnerships only. For individuals and proprietors loan is upto Rs.5 Crores. Sub ceiling for working capital at - 10% of total loan amount for upto Rs.1 crore. - 5% of total loan amount for above Rs.1 crore For Non Allopathic doctors (Unani, Ayurvedic, Homeopathic): Maximum of Rs.10 lacs of which a sub ceiling for working capital limits at - 10% of total loan amount.

Margin Up to Rs. 10 lacs: 15% Above Rs.10 lacs upto Rs.5 crs: 20% Rs.5 crs. - Rs.10 crs: 25%. Interest Rate Interest is floating and linked to Base Rate. Repayment Period Maximum period is 5 to 7 years depending upon the purpose. Security Primary Security- Hypothecation of assets financed by the Bank. Collateral: - For loan up to Rs.25 lacs: No tangible collateral security. Loan to be coveredunder CGTMSE guarantee scheme. - For loans above Rs.25 lacs: tangible security for at least 25% of the loan amount.However, eligible loans above Rs.25 lacs and upto Rs.1 Crore may be coveredunder CGTMSE guarantee scheme Insurance The assets created out of Banks finance are to be insured for the full value.

8. School Plus
Target Group Primary and Higher secondary schools Graduation, Under-Graduation and Post Graduation colleges Eligibility Government aided schools and colleges Private schools and colleges Schools and colleges run by trusts of good standing Technical institutes recognized by AICTE / NBA / MCI Purpose Loan for purchase of land for building/ playground, construction of school building/ auditorium, purchase of computer, books, furniture, repair/ renovation of existing building etc. Facility Term Loan Quantum of Finance No cap Margin 15% of the project cost Interest Rate Interest is floating and linked to Base Rate. Repayment Period Loan amount up to Rs.2 lacs - Repayable in 36 equated monthly installments. Loan amount from Rs.2 lacs to Rs.5 lacs - Repayable in 60 equated monthly installments. Loan amount above Rs.5 lacs - Repayable in 84 equated monthly installments. Security Primary- Hypothecation of Assets purchased out of Bank finance. Collateral: - Personal guarantee of Promoters/ Trustees/ any other personsacceptable to Bank. - For loans upto Rs 10.00 lac, equitable mortgage of land and building,other immovable assets or guarantor for 20% of the loan amount. Forloan above this amount, equitable mortgage of other immovable assetsof the institute/ guarantor. Insurance The assets created out of Banks finance are to be insured for the full value.