Uttar Bihar Gramin Bank Business Loan for Existing Business

Growing fast but short on working capital? Need a machine upgrade, a bigger warehouse, or funds to stock up ahead of the season? Uttar Bihar Gramin Bank (UBGB) Udyog Loan is built precisely for existing, revenue-running units that want to scale without drowning in jargon or red tape. Here’s a clean, practical guide to what’s on offer and how to make it work for your business.

What this loan is for (Purpose)

The Udyog Loan finances ongoing businesses across trading, manufacturing (including agri-linked manufacturing), and processing (including food/fruit). Use it to:

• Buy machinery, tools, equipment, or small capex essentials
• Replenish working capital for inventory, raw materials, packaging, utilities
• Bridge receivables and manage seasonality without disrupting operations

You can take it as Cash Credit (CC) for day-to-day working capital, as a Term Loan (TL) for assets and upgrades, or as a combo if your needs span both.

Who can apply (Eligibility)

UBGB keeps it broad—perfect for India’s MSME backbone:

• Individuals, Proprietorships, Partnership firms, and LLPs (partnerships with HUF as a partner are excluded)
• Your unit should be registered under the MSMED Act (Udyam).
• GST registration is required (unless your business is formally exempt).

If you’re already in business and compliant, you’ve cleared the biggest hurdles.

How much you can borrow (Loan Amount)

• ₹10 lakh to ₹5 crore
• Structures available: Cash Credit, Term Loan, or both
• Sanction size depends on turnover, profitability, projected cash flows, banking history, and security norms.

Rule of thumb: Use CC for revolving needs (stock/debtors) and TL for clearly identifiable assets (plant, equipment, fit-outs).

Your contribution (Margin Requirement)

• Term Loans: 25% margin (you bring 25%; bank finances up to 75%).
• For CC, margin is typically embedded via drawing-power norms (stock/debtor statements)—your branch will size it based on working-capital assessment.

A sensible margin keeps leverage healthy and improves approval odds.

Tenure & repayment (Repayment Terms)

• Term Loan: up to 120 months (10 years), generally with monthly EMIs.
• CC: subject to annual review/renewal; operate within the sanctioned limit and drawing-power.

You can prepay anytime—no prepayment penalty. Use windfalls or an extra-good season to reduce your interest burden early.

Pricing that respects your margins (Interest Rate)

• Indicative rate: 9.50% p.a.
• Final pricing depends on internal risk assessment, profile, tenure, and policy at sanction.

Quick EMI sense-check (illustration only)

At 9.50% over 120 months, the EMI is roughly ₹1,294 per ₹1 lakh.

• ₹10 lakh TL → ~₹12,940/month
• ₹50 lakh TL → ~₹64,700/month
  (Your actual EMI will be confirmed in your sanction letter.)

Why take CC + TL together?

Many growing MSMEs need both:

• TL funds the one-time asset that improves productivity (e.g., a packing line).
• CC keeps the wheel of working capital spinning (buy more, sell more, repeat).
  The combo structure avoids starved operations after you’ve invested in capacity.

Documents you’ll likely need (at a glance)

Exact list varies by profile; your branch will give the final checklist.

• KYC of owners/partners/directors; photographs
• Udyam (MSME) registration; GST registration/returns (if applicable)
• Financials & ITRs (typically last 2–3 years), bank statements (last 6–12 months)
• Projected statements (for TL/expansion), quotations/invoices for assets
• Constitution & ownership proofs (Partnership Deed/LLP Agreement, licenses)
• Existing loan details (sanctions, repayment track), if any

Neat, consistent paperwork = faster credit decisions.

How the process works (Step-by-step)

1. Discuss your need with the branch: CC, TL, or combo; amount, purpose, timeline.
2. Share basic numbers: turnover, margins, debtor/creditor cycle, inventory norms.
3. Submit documents for appraisal; respond quickly to clarifications.
4. Sanction & documentation: review terms (limit, rate, tenure, security).
5. Disbursal:
   • TL → generally to vendor(s) against assets.
   • CC → limit activated; operate via cheques/online as per norms.
6. Operate & update: submit stock/debtor statements on time (for CC), keep EMIs punctual (for TL).

Security & practical safeguards

Security requirements vary by ticket size and profile; UBGB will inform you during appraisal. As a best practice:

• Maintain clean books; reconcile debtors and creditors monthly.
• Keep stock records current; it directly supports your drawing power in CC.
• For TL, insure assets and keep invoices handy; it eases inspections and renewals.

Smart ways to lower your cost of credit

• Right-size the limit: Don’t over-borrow; big unused limits still carry commitment/renewal expectations.
• Shorten your cash cycle: Faster collections reduce CC utilization and interest outgo.
• Part-prepay TL when you have surplus; aim to cut tenure (saves more interest than reducing EMI).
• Consolidate high-cost informal debt into structured bank credit where appropriate.
• Stay compliant (GST, returns, statutory dues): clean compliance often improves pricing over time.

Who this loan suits best

• Traders scaling inventory ahead of seasonal spikes
• Manufacturers adding a line, die, or machine to increase throughput
• Processors (food/fruit, agri-linked) smoothing the supply chain and receivables
• MSMEs that are past the startup stage and want steady, bankable growth

Quick FAQs (straight answers)

Is there a prepayment penalty?
No. Zero prepayment charges—close early or part-prepay when you can.

How long can I take to repay a Term Loan?
Up to 120 months (10 years).

What’s the minimum and maximum loan size?
From ₹10 lakh up to ₹5 crore, subject to appraisal.

Do I need to be MSME-registered?
Yes—MSMED (Udyam) registration is required. GST is mandatory unless you are legally exempt.

Can I combine CC and TL?
Yes. UBGB can structure a mix based on your needs and cash-flow profile.

What margin do I bring for TL?
25% (bank finances up to 75% of project/asset cost).

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Bottom line: UBGB’s Business Loan for Existing Businesses gives you the right credit shape—CC for working capital, TL for assets, or both—with a competitive 9.50% rate, 10-year TL tenure, 25% TL margin, and no prepayment penalty. If you’re formalized (MSME + GST), have a clear use of funds, and want a bank partner that understands cash cycles—not just balance sheets—walk into your nearest UBGB branch and map your growth plan today.