A stable business needs a dependable corpus of money.
Hence, what is most important is to choose an appropriate lender. Business Loans are in demand, but even after considering a particular bank as the most profitable option at that moment, it is always possible that you may later find another bank providing the same loan at a lower interest rate and giving more advantages. This brings us to the question-
What is bank loan transfer?
The meaning of Bank Loan Transfer highlights the advantage that the borrower enjoys, to transfer his Business Loan from one bank to another. It means that you can transfer either one or up to 3 of your loans to a single bank to reap the benefits of a better interest rate. The entire unpaid principal amount can be transferred from one bank to another.
Why should you transfer Business Loan from one bank to another?
There are several factors that you should keep in mind when transferring Business Loan from one bank to another
- The Application Process: it needs to be hassle-free. HDFC Bank, for instance, does not require a Guarantor for considering the application for a loan.
- Interest Rate: Several leading banks like HDFC Bank offers an interest rate as low as 15.75% on existing bank loan transfer.
- Longer loan tenure: keeping the cost-benefit analysis in mind, the loan repayment tenure becomes extremely important. It depends on the amount as well as the time left to repay the loan. If the amount is low or the time is short, then the transfer of a Business Loan may not be a very beneficial option
When is Business Loan balance transfer a beneficial option?
As already mentioned, the amount of money left to be repaid and the tenure of the repayment are the determining factors. The earlier the transfer of a Business Loan, the better it is.
Some of the important aspects that should be considered are:
- Processing fee: the processing fee is often made quite nominal. HDFC Bank charges only 0.99% as the processing fee along with other benefits like Life coverage, Tax benefits etc.
- Business Loan calculator: several leading banks, like HDFC Bank, offer an effective Business Loan EMI calculator. This helps to understand your borrowing capacity without creating any pressure towards loan repayment.
Factors to keep in mind in case of a Business Loan transfer:
1)Eligibility criteria of the bank: it is mostly established on the basis of the repayment of any other loan that may have been taken by you. With HDFC Bank, you can check your Business Growth Loan eligibility, either online or in any of its branch, in as little as just 60 seconds.
Some of the requirements are listed as follows:
- The bank offers loan to clients from 21 to 65 years of age; however, the business turnover should be at least 40 lakhs
- Self-employed individuals, Proprietors, Partnership firms are all eligible as prospective borrowers. The Business Loan is offered only to businesses that are at least 3–4-year-old and not to startups.
- The business should be profitable for at least the last 2 years and have a Minimal Annual Income (ITR) of 1.5 lakh per annum.
2) Documentation: it is more or less the same in most banks.
- PAN CARD- for individual/firm or company
- An identity and address proof like Aadhaar Card, passport, voter id etc
- Bank statement of the previous 6 months., as well as the latest ITR with computation of income.
- A CA Certified balance sheet stating the profit and loss account of the business.
So, if you are looking to apply for a Business Loan, Click here how to get a Business Loan.
What are the steps to a Business Loan Transfer? Click here to read more.
*Terms and conditions apply. Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.