Union Bank of India supports micro, small and medium enterprises (MSMEs) through its wide array of business loan schemes. Union bank business loan interest rate depends on the loan scheme, credit profile of the applicant and other such factors. Let us delve into various types of business loans that the bank offers its customers.
Why Union Bank Business Loans are needed?
Below are some of the common reasons for which Union Bank Business Loans are needed:
- To upgrade or expand business: One needs extra funds to maintain and expand their business. Purchase of new land for expansion or renovating an existing space might be a reason to apply for business loan.
- To increase working capital: At times, small scale industries do not have sufficient working capital to carry out daily operational activities. In such cases, availing short term business loans can be helpful.
- To purchase raw materials and equipment: Often small businesses need to collect raw-materials or purchase new equipment to meet up the rising demand in the market. In such cases, loans from banks prove worthwhile for the company when they do not have enough capital at hand.
- To improve credit history: Before applying for a loan, a company or an individual must maintain a good credit history. Paying loan EMIs and other credit instalments on time lead to a good credit score.
Types of Union Bank Business Loans
Union Bank of India offers a variety of business loans as per client’s needs. Some of the popular loan schemes are discussed below:
- 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 Crores.
- 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.
Union Liqui Property
- 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 lakhs to Rs. 10 crores. The amount can be used in purchase of equipments, 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.
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 crores.
- 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
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.
- Loan amount can be as low as Rs. 2 lakhs and go as high as Rs. 1 crore.
- No collateral security needed up to loan amount of Rs. 10 lakhs.
- The maximum repayment period is 7 years.
- 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 crores and maximum term loan amount possible is Rs. 5 crores. 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.
Documents Required for Union Bank Business Loan
Following set of documents must be submitted while applying for business loan:
- Duly filled in Application form
- 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.