The Union Bank of India is one of the leading Government-owned banks in India. The Union Bank of India provides various types of MSME loans at an interest rate of 6.80% onwards. MSME loans are provided to the broad business categories like trading, manufacturing and service sector. With respect to the MSME sector, the Union Bank of India offers various MSME loans under beneficiary schemes, such as Union Mudra, Union Trade Plus, Union Start-up, Union Liqui Property and Union SME plus.
Below, we will look at five important MSME loan schemes offered by the Union Bank of India.
Union Bank of India – MSME Loan Schemes
|Name of Loan||Eligibility||Loan Quantum & Margin||Rate of Interest||Repayment|
|Union MUDRA – Composite Loan, Term-based Loan, Fund-based or Non-fund based Working Capital||Micro Business enterprises in manufacture, trade and for the service sector also including professionals such as CAs, ICWA, architects or doctors.||Shishu – Maximum loan up to INR 50,000|
Kishore – Loans from INR 50,000 to INR 5,00,000
Tarun – Loans between INR 5,00,000 to INR 10,00,000
Margin – For loans in ‘Shishu’ category, margin is 5%
For loans in ‘Kishore’ and ‘Tarun’ category, margin is 10%
|Depends on applicant’s profile and business requirements||For working capital, repayment period is 12 months.|
Term loans are to be paid within 84 months in monthly instalments across a moratorium period of 6 months.
|Union LIQUI Property – Term-based Loan, Overdraft Loan||1. All business enterprises.|
2. Units with statutory requirements.
3. Credit rating not below UBI-5 and UBI-4 (applicable to takeover advances)
4. New and old accounts.
5. Business in speculative activities.
|Loan amounts from a minimum of INR 10 lakh to INR 10 crore.|
Margin based on value of property – 50%
|From 9.05% onwards (Will depend on the credit ratings of the MSMEs)||While term loans can be re-paid within 120 months with a moratorium period of 6 months, overdraft facility is available till 1 year, subject to extension by competent authority.|
|Union Trade Plus – Working capital and term loan.||1. Units engaged in trade.|
2. Business units with good market standing engaged in business activity for at least 1 year with income tax returns filed.
|Loans of up to INR 10 crores.|
Margin – 20% for working capital or term loans.
|For amounts of up to INR 5 crores, more than 5 crores and rates of interest in all categories from CR-1 to CR-5|
|Repayments on working capital are to be done on demand, while repayments on term-based loans can be up to 7 years with the moratorium period of a maximum of 6 months.|
|Union Start-up||Unit needs to be certified as a start-up as per the Start-up India Scheme launched by the Government of India.|
Collaterals are not mandatory, but guarantee of promoter directors and partners of firm/company.
|Loans from a minimum of INR 10 lakh up to INR 5 crore.|
Margin – 20%
|6.80% onwards||For working capital, repayment period up to 12 months.|
For term loans, repayment period of 10 years inclusive of a moratorium period of not more than 36 months.
|Union SME Plus||1. MSME units in manufacturing and service activities.|
2. Credit rating between CR-1/UBI-1 to CR-4/UBI-4
3. 2 years minimum satisfactory dealing
4. No overdues on account.
5. All borrowers with a minimum of 0.25 existing working capital.
6. Borrowers should be exclusive UBI customers.
|For both Standby Ad-hoc and term loans, finance of up to 2.5 crores is available.|
Margin for working capital – 25%
Margin for term loan – 25%
|Rates of Interest on:|
Standby ad-hoc working capital FB– 1% above rate applicable with respect to credit rating
Standby ad-hoc working capital NFB- Rates as applicable
Standby term-based loans- Rates applicable as per the credit rating.
|Repayments on working capital should be adjusted up to 3 months.|
Repayments for term-based loans can be performed up to 60 months including the moratorium period that is not more than 6 months.
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
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Types of Union Bank Business Loans – 2021
Union Bank of India offers a variety of business loans as per client’s needs. Some of the popular loan schemes are discussed below:
1. Union Start-Up
- This scheme is for the “Start-up” units to support them in innovating, producing and commercializing new products or services driven by technology or intellectual property as per the Start-up India Scheme
- Loan amount varies between Rs. 10 Lakhs to Rs. 5 Crore
- Collateral is not necessary
- No processing charges will be levied
- Loan can be availed as working capital or term loan
- The repayment period of working capital is 12 months
2. Union Liqui Property
- The interest rate offered under this scheme is 9.50% onwards
- This loan is applicable for all business firms carrying out business operations for at least a period of 2 years. Individuals, HUF, and firms involved in Real Estate and other speculative activities cannot apply for the scheme
- Applicants must have the expected credit score.
- Firms should have all the needful statutory approvals/NOCs from respective authorities
- Loan amount can range from Rs. 10 lakh to Rs. 10 crore. The amount can be used in purchase of equipment, machinery, or meeting up working capital for daily requirements or clearing high debts
- Maximum loan tenure is 10 years including moratorium period of up to 6 months. Moreover, the interest is to be paid as and when due
- Collateral and guarantee are mandatory
- The loan can be availed as term loan as well as overdraft facility
3. Union High Pride
- Other than trading units, this loan is available for all MSME units involved in manufacturing or service operations for at least 1 financial year and income tax returns should have been submitted thereof
- The credit rating of the account must be as per the guidelines
- Loan quantum ranges between Rs. 1 crore to Rs. 25 crore
- The loan repayment period is as per the extant norms prescribed in loan policy of the bank
- The rate of interest applicable:
- 1% less than the applicable rate for MSME subject to minimum applicable MCLR
- 25% less than the applicable rate for MSME subject to minimum applicable MCLR on compliance of any of the following conditions:
- External credit rating of BBB and above
- 100% and above collateral coverage
4. Union Nari Shakti
- This loan is specially designed for women entrepreneurs who own and manage small firms and micro enterprises. In the case of partnership concern or company, the majority partners should be women. In the case of company, the majority of directors must be women. Proprietorship, Limited Companies etc. can apply for this loan
- Interest rate offered under this scheme is 6.80% onwards
- Loan amount can be as low as Rs. 2 lakh and go as high as Rs. 1 crore
- No collateral security needed up to loan amount of Rs. 10 lakh
- The maximum repayment period is 7 years
5. Union Trade
- This loan is available for all retail and wholesale traders including departmental store dealers in groceries and consumer durables, malls and supermarkets
- New and existing proprietorship, partnership concerns (including LLPs), limited companies engaged in the trading activity are also eligible to apply for the scheme
- The company must be registered under sales tax / VAT / Shop & Establishment Act
- Maximum working capital that can be sanctioned is Rs. 2.5 crore and maximum term loan amount possible is Rs. 5 crore. The ceiling will be 75% of the cost of the project or asset
- Maximum repayment period is 7 years including moratorium period
Apart from the above schemes, Union Bank provides many more schemes to suit the business needs of firms of various categories.
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Documents Required for Loan Application
The following set of documents must be submitted while applying for a business loan:
- Duly filled in Application form
- Passport-sized photographs
- Business Plan
- ID proof like Voter ID card, Driving License, Aadhaar Card, PAN Card, etc.
- Address proof like Aadhaar Card, Passport, Driving License, etc.
The bank might ask for more information and proofs to support it. To avail business loan or get further knowledge about various loans available, one can visit nearby Union Bank branch or apply online at online lending websites from the comfort of your home.
How to apply for Business loan in United Bank of India?
Follow the below steps to apply for business loan with Paisabazaar.com:
- Visit Paisabazaar.com to check and compare loan options
- Pick the required scheme by filling and submit the loan application form
- Submit the documents along with the loan form for bank to verify them
- After verification, the bank shall approve the loan
- Within defined time the amount shall get disbursed in the applicant’s bank account
Union Bank of India – FAQs
Q. What is the repayment tenure of business loans in United Bank of India?
Ans. The repayment tenure offered is from 12 months to 10 years.
Q. How much business loan amount can I get from the United Bank of India?
Ans. The minimum loan amount offered is Rs. 2.5 lakh and maximum can exceed up to Rs. 25 crore.
Q. What are the processing fees for United Bank of India business loans?
Ans. The processing fee shall be defined at the time of loan processing, as it may vary from loan to loan.
Q. What is the EMI calculation of United Bank of India Business Loan?
Ans. The EMI calculation is the process of knowing the exact EMI for the availed loan by mentioning few basic details in the EMI calculator, such as loan amount, repayment tenure and interest rate.
Q. What is the procedure to get bank overdraft?
Ans. Applicants applying for a bank overdraft need to hold a current savings bank account with the bank for at least 6 months. Applicant needs to visit the bank branch to proceed with the overdraft formalities along with required documents and duly filled application form.
Q. What are the options for women to avail of a collateral-free loan for running a small business?
Ans. Union Bank of India offers Union Nari Shakti scheme for women entrepreneurs to start an MSME. This loan scheme is collateral-free and the minimum loan amount offered is Rs. 2 lakh and the maximum is up to Rs. 1 crore at an interest rate of as low as 8.75% onwards.