Looking for Working Capital Loan from Canara Bank?

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Canara Bank Trade Loan for MSME Units

This loan helps businesses in the MSME sector meet their working capital needs. The maximum loan amount is Rs. 10 crore for this loan. It can be availed as a Term Loan or Secured Overdraft (OD). Let’s take a look at its features:

Features of Canara Bank Trade Loan Scheme

Why this Loan?

  • The loan is meant for businesses in the MSME sector to meet their Working Capital needs
  • The bank maintains that it offers a higher quantum of loan in the Working Capital loans segment as compared to other banks and financial institutions in the market

Loan Amount

  • The maximum loan amount is Rs. 10 crore for this loan

Interest

  • The interest rate for this loan is defined as 1-year Marginal Cost of Funds-based Lending Rate (MCLR) of Canara Bank + Strategic Premium of 2.55%

Repayment

  • Term Loans: These loans need to be repaid within 7 years after the moratorium ends
  • Working Capital Loans: These loans need to be repaid within 2 years subject to annual review
  • The repayment moratorium for this loan is not mentioned on the bank’s website. We suggest you ask the bank when you apply for the loan

Security Needed

  • Hypothecation of Stocks and/or Book Debts
  • Mortgage of immovable property equivalent to 100% of loan amount for loans up to Rs. 10 lakh, 133% of loan amount for loans above Rs. 10 lakh. For commission agents, the property must be equivalent of 200% of the loan amount
  • The bank may also ask for personal guarantees from partners, promoters, etc.

Eligibility

  • The borrower should be an existing client or a new client with a good track record
  • The loan must be availed only to cover Working Capital needs

Borrower Contribution to Total Cost (Margin Money)

  • 25% margin for term loans
  • 10% margin on stocks and book debts for Secured Overdraft (OD) of loan amount above Rs. 50 lakh
  • 40% margin for construction

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.

Processing Charges

  • As of February 2020, this information is not mentioned on the bank’s website for this loan scheme

Service Charges

  • Loans up to Rs. 5 lakh: The bank does not levy service charges on Working Capital loans or Term-loans for loan amount 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]