Small Business Loan for MSME Contractors from Canara Bank
Get all the information you need on the Canara Contractor Scheme from Canara Bank below.
Canara Bank Canara Contractor’s Scheme
This loan helps MSME contractors and sub-contractors meet their fund-based and non-fund based Working Capital requirements. Canara Bank offers Working Capital Loan, Inland Letter of Credit, Foreign Letter of Credit or Bank Guarantee or term loans for the purchase of new office, equipment, etc. The maximum loan amount is Rs. 10 crore for Working Capital Loan and Rs. 5 crore for Term Loan.
Features of Canara Contractor’s Loan Scheme
Why this Loan?
- The loan is meant for contractors and sub-contractors to meet their Working Capital needs
- All contractors and sub-contractors who are classified as MSME and work on Civil, Mining and Construction projects are eligible for this loan
Loan Amount
- Term Loan: The minimum loan amount is Rs. 10 lakh
- Working Capital Loan: The maximum loan amount is Rs. 10 crore. However, the maximum loan amount for a Term Loan is Rs.5 crore
Interest
- Working Capital Loans up to Rs. 2 lakh: Repo Rate Linked Lending Rate (RLLR) + 1.05%. As of February 2020, the RLLR of Canara Bank is 8.05% which brings the effective interest rate to 9.10%
- Term Loans up to Rs. 50,000: RLLR + 1.30%. This means the effective interest rate is 9.35%
- Term Loans from Rs. 50,000 up to Rs. 2 lakh: RLLR + 1.55%. This brings the effective interest rate to 9.60%
- All MSME Loans Above Rs. 2 lakh up to Rs 1 crore: Depends on the Credit Risk Rating
- All MSME Loans Above Rs. 1 crore up to Rs 5 crore: Depends on the value of Immovable Property mortgaged, value of Approved Securities and/or Internal Risk Rating/Grade
- All MSME Loans Above Rs. 5 crore: Depends on the External Risk Rating/Grade by External Assessment Institutes
Repayment
- These loans need to be repaid within 7 years
- The repayment moratorium for this loan is not mentioned on the bank’s website
Security Needed
- The bank asks for hypothecation of assets financed by the bank under this scheme as primary security for the Term Loan
- Collateral such as Land or Buildings situated in Metro, Urban or Semi-urban cities is required to avail the Secured Overdraft (OD) loan
Eligibility
- Contractors and sub-contractors in the MSME category belonging to the Civil, Mining and Construction sector are eligible for this loan
Borrower Contribution to Total Cost (Margin Money)
- As of February 2020, the margin money charged by the bank on this loan is not available on the bank’s website
Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.
Processing Charges
- The bank offers a concession of 25% on applicable processing charges
- As of February 2020, the actual processing charges on this loan is not available on the bank’s website
Service Charges
- Loans up to Rs. 5 lakh: The bank does not levy service charges on Working Capital Loans or Term Loans for amounts up to Rs. 5 lakh
- Loans above Rs. 5 lakh up to Rs. 1 crore: The borrower has to pay Rs. 100 per lakh of loan amount up to a maximum of Rs. 10,000 for Working Capital Loans and 0.75% of loan amount up to a maximum of Rs. 75,000 for Term Loans. The minimum service charge is Rs. 500 for Working Capital Loans and Rs. 3,750 for Term Loans
- Loans Above Rs. 1 crore: The borrower has to pay Rs. 150 per lakh up to a maximum of Rs. 7.5 lakh for Working Capital Loans and 1% of loan amount up to a maximum of Rs. 7.5 lakh for Term Loans. The minimum service charge is Rs. 15,000 for Working Capital Loans
Documents Needed for Individuals
- Loan Application Form duly filled and signed by the applicant and co-applicant, if any
- Two Passport Size Photographs of applicant and co-applicant
- Personal ID Proof: Aadhaar Card, PAN Card, Passport or Driving License. PAN Card/PAN Card Issuing Letter is must
- Signature Proof: PAN Card, Banker’s Verification, Driving License or Passport
- Residential Address Proof (Any One): Aadhaar Card, Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
- Income/Banking Proof: Last 6 months Bank Account Statement of applicant and co-applicant, Loan Statement of Running Loans, Latest Closed Loan NOC, Net Worth of the applicant and co-applicant
- Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
- A4 size copies of the aforementioned documents must be self-attested with blue ink
Documents Needed for Proprietorship and Partnership Firms
- Loan Application Form duly filled and signed
- Partnership Deed and Partnership Registration Certificate
- ID Proof of the Firm: Firm PAN Card or PAN Issuing Letter
- Office Address Proof: Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
- Income Proof: CMA Data and Project Report, Debtors and Creditors Certificate, GST Return, Last 3 years ITR of applicant and co-applicant, Audited or CA Certified Computation of Income/Trading Account/Profit and Loss Account/Balance Sheet, Annual Audit Report and Tax Audit Report if audited, Form 16A if applicable, Net Worth of applicants, co-applicants and guarantors
- Banking Proof: Last 1-year Statement of Company’s Major Account, Current Account, Cash Credit Account, Overdraft Account, Loan Statement of Running Loans, Latest Closed Loan NOC and Last 6-months Bank Statement of Applicant and Co-applicant’s Savings Account
- Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
- Other Relevant Documents: Partnership’s Business Profile, Promoter/Guarantor’s Profile, Corporate Brochure, Business Experience Supporting Documents, Business References
- All A4 size copies of the aforementioned documents must be self-attested with blue ink
Documents Needed for Private Limited and Public Limited Companies
- Application Form duly filled and signed
- Company ID Proof: Company’s PAN Card
- Office Address Proof: Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
- Business Proof: AOA and MOA, Company Incorporation Certificate, Business Commencement Certificate, Board Resolution, CA/CS verified Share Holding Pattern, ROC Annual Return, DIN Certificate, List of Directors on Company Letter Head, GST Number, Form 32 in case of Director Change
- Income Proof: CMA Data and Project Report, Last 3 Years ITR Acknowledgement copy of Company and all Directors, Last 3 Years Annual Credit Report or Tax Audit Report with Article 3CB, Article 2D, Article 3CD, TDS Certificate/Form 16A, Net Worth Certificate
- Banking Proof: Last 1-year Statement of Company’s Major Account, Current Account, Cash Credit Account, Overdraft Account, Loan Statement of Running Loans, Latest Closed Loan NOC and Last 6-months Bank Statement of Applicant and Co-applicant’s Savings Account
- Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
- Other Relevant Documents: Company’s Business Profile, Promoter/Guarantor’s Profile, Corporate Brochure, Business Experience Supporting Documents, Business References
- All A4 size copies of the aforementioned documents must be self-attested with blue ink
Reference Facts
- Canara Bank Website: www.canarabank.com, www.canaramsme.com (website for MSME) and www.canarabank.in (net banking)
- Headquarters: Bengaluru, Karnataka
- Call Centre Toll-Free Number: 1800 425 0018
- Email for MSME Loans: [email protected]