Starting a new business or expanding an existing one requires money. Be it a micro enterprise, small firm or a multinational corporation, extra capital is needed at some point or the other. This is where business loans from banks come to help. To avail loans, one may have to provide collateral like property, inventory, etc. This will help them in getting loans of a good amount at lower interest rates.
Punjab National Bank (PNB), one of India’s oldest public sector banks, provides business loans to entrepreneurs as well as self-employed individuals with an aim to support their businesses’ capital requirements or to expand operations.
PNB Business Loan Eligibility Criteria
PNB Business Loan can be availed by self-employed individuals, proprietors, partnership firms or private companies who are trading or manufacturing goods and services. The bank offers a wide range of business loan schemes to its customers; therefore, the eligibility criteria applicable vary from one scheme to another. Important factors on which the eligibility of the PNB Business Loan of an applicant depends are:
- Ability to duly repay loan on time: The bank will check that the businessperson must have a legitimate source of income and can repay the dues on time.
- Credit score of the company or owner in case of a new venture: The bank will check company’s repayment history for all prior loans taken. A good credit history will help in getting the loan easily.
- Track record of the existing business: Bank will evaluate the past transactions and company’s growth to understand if the company needs extra funding and can repay the same in due time.
- Business stability: PNB requires the financial track record of businesses to assess their stability. It will evaluate the growth in sales over the past few years. If the sale is not up to their standards, the loan will not be sanctioned.
- Profitability and turnover: Bank will require profit details of past 2 years. An organization’s profitability and revenue play an important role in determining if a company can be given a loan or not.
- ITR and Banking details: PNB will require income tax returns and banking details for an already existing company, prior to sanctioning the loan.
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PNB Business Loan Documents Required
PNB offers a wide array of Business Loan Schemes to its customers. Each scheme has different eligibility criteria and documents requirement. The following set of documents are commonly required under the business loan schemes:
- PAN card of a company or an individual
- Identity proof like Aadhaar Card, Voters Identity Card, Passport and Driving License
- Address proof like Aadhaar Card, Voters Identity Card, Passport and Driving License
- Bank Account details along with Bank Statements for the last 6 months
- The Balance Sheet, the P&L i.e. the Profit and Loss statement for past 2 years along with latest ITR filings which is duly audited by a certified Chartered Accountant.
- A proof of continued business operations like Income Tax Return of last 3 years, a valid Trade License, Sales Tax Certificate, Shops and Establishments Act Certification, etc.
- Other obligatory documents like the declaration of sole proprietary, a certified copy of the deed of partnership, a certified true copy of the Articles of Association and the Memorandum of Association as well as the Board Resolution in original.
Note: As per the scheme’s eligibility criteria or for further information, the bank might ask for more supporting documents.
Also Check – Business Loan Interest Rate of Top Banks
PNB Business Loan Products/Schemes
PNB offers an extensive range of products to various self-employed professionals and entrepreneurs of MSME and corporates as per their needs and business profiles to fulfil their loan requirements. Some of the well-known products are discussed below:
PNB Green Ride
- The scheme aims to financially support the transport operators of e-rickshaws and to create employment opportunities for the micro borrowers.
- An individual, transport operator, sole proprietor, partnership firms, private and public ltd. companies, companies that plans to own transport vehicle(s) for transporting passengers or goods on hire can apply for this loan scheme.
- The borrower must provide valid license for operating the vehicles and plying it for transporting passengers or goods.
- The bank offers lucrative and affordable interest rates.
- As far as the loan amount is concerned, for new E-Rickshaw, a maximum of 85% of the invoice cost of the vehicle or 80% of on road price, whichever is less will be sanctioned.
- The advance with interest will be repaid in maximum 33 instalments.
- For loans above Rs. 10 Lakhs, the vehicle purchased with the amount of the loan will remain hypothecated to the bank as security of the advance.
- No collateral or third party guarantee is required for Green Ride loan of up to Rs.10 lakhs as these loans are to be covered under the CGTMSE (Credit Guarantee Scheme).
- This loan is applicable for certified and registered doctors and medical practitioners having minimum qualification of MBBS/ BAMS/ BDS/ BHMS/ BUMS.
- Individuals, Partnership, LLP, Private Limited, Limited Company, Trust can also take this loan.
- The loan can be used to purchase medical equipment or to purchase, renovate, alter or furnish clinics, hospitals, nursing homes and medical centres.
- Minimum Rs.1 lakh to maximum of Rs.5 crores can be sanctioned under this scheme.
- Under this loan scheme, the term loan and overdraft facility is provided. The overdraft facility is for a maximum amount of Rs.1 crore.
- For online application of loan, a discount of 20% in processing fee is given.
- For loans above Rs.10 lakhs, collateral or third party guarantee is not required.
- Women involved in the business of manufacturing or trading or service can easily apply for this loan.
- The bank will provide funds up to Rs.25,000.
- No collateral or guarantor is needed as the loan will be covered under CGTMSE for eligible activities.
- Women belonging to BPL, SC or ST category will be given more preference.
PNB Professional Schemes
- This loan scheme is given to qualified professionals to start new ventures or expand an existing one. Medical professionals and traders are excluded from benefiting from this scheme.
- Individuals, partnerships, LLPs, associations and private and public limited companies are also eligible.
- In case of term loan, the repayment period can go as high as 7 years including a maximum moratorium period of 6 months. The moratorium period might even extend to 18 months in specific cases.
- The overdraft/CC facilities shall be sanctioned for the tenure of 1 year and shall be renewed annually.
- This loan is provided to finance stock and book debts of not more than 4 months old.
- All MSME entrepreneurs with satisfactory experience in trading activities of materials, goods or equipment can apply for this loan.
- The borrower will have to submit financial records of at least 2 preceding financial years.
- The bank will accept the hypothecation of stocks and assignment of book debts as the primary security. As far as collateral security is concerned, minimum 150% (Realizable Value) of the loan amount in the form of mortgage of immovable property and/ or other liquid security duly charged to the bank.
- Maximum loan amount is Rs.5 crores.
- Pradhan Mantri MUDRA Yojna (PMMY) or MUDRA loans fund the non-farm business units to increase their income in trading, manufacturing, processing and service activities.
- Any individual, LLP, Partnership firm, Company, Association of Persons can apply for this loan.
- The borrower must not be a defaulter in any of the banks or financial institution.
- Loan amount offered under this loan scheme can go as high as Rs. 10 lakhs.
In PNB, most business loan schemes can be prepaid by serving the prepayment charges of 1% of the loan amount plus GST (Goods and Services Tax). Customers can repay their dues in easy instalments every month via netbanking, ECS or PDC. Being one of the primeval banks of India, PNB has a great brand value and available throughout the nation. Simple documentation and fast processing of loans makes it an ideal choice for business loan.