Objective :
The objective of Task 6 is to gain first hand knowledge about the process of applying for
business loans by collecting application forms from different financial institutions, including
at least one nationalized bank and one private or non-banking financial company (NBFC).
This task is designed to:
Help students and aspiring entrepreneurs understand the formal procedures involved in
obtaining financial support for a business.
Familiarize them with the required documents, eligibility conditions, and terms and conditions
set by banks and financial organizations.
Explore and compare government-backed loan schemes (like MUDRA or Stand-Up India) and
private financing options, enabling informed decisions about funding sources.
Build awareness of the importance of creditworthiness, project planning, and financial
documentation when approaching any financial institution.
Encourage proactive learning by directly engaging with bank officials or representatives from
financial institutions, thereby enhancing communication and professional interaction skills.
1. Institution Visited: State Bank of India (SBI)
1.Type: Nationalized Bank
2.Loan Scheme Chosen: MSME Business Loan (Pradhan Mantri MUDRA Yojana - PMMY)
3.Loan Amount Range: Up to ₹10 lakhs
4.Interest Rate: 8% to 11.50% (depending on the profile and scheme)
5.Repayment Period: Up to 5 years
Documents Required:
Loan Application Form (provided by the bank)
KYC documents (PAN, Aadhaar, Passport-sized photos)
Business proof (Udyam Registration / Shop Act / GST)
Address proof (business and personal)
Recent bank statements (last 6 months)
Balance Sheet / ITR (if applicable)
Project Report / Business Plan
Collateral (depending on the loan amount and type)
Process:
1. Submit application form with all required documents
2. Credit evaluation and background check
3. Field visit and verification
4. Loan sanction and disbursement
Special Features:
Offers loans under MUDRA, Stand-Up India, CGTMSE (credit guarantee)
Lower interest rates due to government schemes
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2. Institution Visited: Bajaj Finserv
1.Type: Private NBFC
2.Loan Scheme Chosen: Unsecured Business Loan
3.Loan Amount Range: ₹50,000 to ₹45 lakhs
4.Interest Rate: 14% to 28% (based on eligibility)
5.Repayment Period: 1 to 5 years
Documents Required:
1.PAN Card, Aadhaar Card
2.Business proof (GST registration / Shop Act)
3.Last 12 months’ bank statements
4.Income documents: ITR, Profit & Loss statements
5.Business continuity proof (at least 3 years)
6.Passport-sized photograph
Process:
1. Online application and upload of documents
2. Quick verification and eligibility check
3. Loan approval and amount disbursed within 48–72 hours
Special Features:
1.No collateral required
2.Minimal paperwork
3.Fast loan processing and disbursement
4.Online EMI calculator and tracking
Key Learnings:
1.Different institutions cater to different types of borrowers.
2.Banks offer support through government schemes, but require more documents and time.
3.NBFCs are faster and more flexible but come with higher interest rates.
4.A good business plan and clean financial record increase the chances of approval.
Observation:
During the collection of loan application forms from both a nationalized bank (State Bank of
India) and a private financial institution (Bajaj Finserv), several important observations were
made:
1. Variation in Process:
The loan application process differs significantly between banks and NBFCs. Nationalized
banks follow a more detailed and lengthy process, while NBFCs offer a quicker and more
simplified application system.
2. Documentation Requirements:
Both institutions require standard KYC documents, business proof, and financial statements.
However, banks often require more comprehensive documents such as income tax returns,
project reports, and in some cases, collateral security.
3. Loan Schemes and Support:
Government banks offer a variety of schemes for entrepreneurs under programs like MUDRA,
Stand-Up India, and CGTMSE. These schemes are designed to support small and medium
enterprises with lower interest rates and longer repayment terms.
4. Speed of Processing:
NBFCs like Bajaj Finserv focus on fast processing and minimal paperwork, making them more
accessible for urgent financial needs. However, this convenience comes with higher interest
rates.
5. Importance of a Business Plan:
A well-prepared business plan or project report is a key requirement for loan approval in banks,
highlighting the importance of planning and presentation skills for entrepreneurs.
6. Customer Service Experience:
Bank officials were helpful but strictly followed procedures, while NBFC representatives were
more marketing-oriented and focused on fast approvals and flexible offers.
Differences in Institutional Approach:
Nationalized banks such as State Bank of India (SBI) follow a structured and formal approach,
focusing heavily on documentation, eligibility verification, and compliance with government
regulations. In contrast, private institutions like Bajaj Finserv prioritize speed and customer
convenience, often providing online applications and quick approvals.
7. Documentation and Formalities:
SBI requires detailed documentation, including income tax returns, bank statements, a project
report, and in some cases, collateral or guarantor details.
Bajaj Finserv emphasizes minimal paperwork and often processes loans based on bank
statements and credit scores without collateral, especially for smaller amounts.
8. Processing Time and Complexity:
Banks usually take 7–15 days to process applications due to multiple verification steps and
field investigations.
NBFCs can approve and disburse loans within 2–3 working days, making them ideal for
businesses that require fast funding.
9. Loan Schemes and Support Programs:
Government banks offer subsidized loan schemes like MUDRA, Stand-Up India, and PMEGP,
which provide financial support to small businesses, especially for women and first-time
entrepreneurs. These schemes are not commonly available with private NBFCs.
10. Interest Rates and Repayment Flexibility:
Banks generally offer lower interest rates (ranging from 8% to 12%) due to government support
and subsidization.
NBFCs charge higher interest rates (14% to 28%) but offer more flexible repayment options,
such as customized EMIs and top-up loans.
11. Importance of Business Preparedness:
Officials emphasized the importance of submitting a detailed business plan, especially when
applying for higher loan amounts. A well-documented project report with cost analysis,
marketing strategy, and profit forecasts increases the chances of approval.
12. Customer Interaction:
Bank staff are professional and helpful, but cautious due to strict guidelines and verification
protocols.
NBFC staff are more proactive and marketing-focused, often providing multiple product
suggestions and personalized loan options.
1. Institution Visited: State Bank of India (SBI)
Type: Nationalized Bank
Loan Scheme Chosen: MSME Business Loan (Pradhan Mantri
MUDRA Yojana - PMMY)
Type: Nationalized Bank
Loan Scheme Chosen: MSME Business Loan (Pradhan Mantri MUDRA Yojana - PMMY)
Loan Amount Range: Up to ₹10 lakhs
Interest Rate: 8% to 11.50% (depending on the profile and scheme)
Repayment Period: Up to 5 years
Documents Required:
Loan Application Form (provided by the bank)
KYC documents (PAN, Aadhaar, Passport-sized photos)
Business proof (Udyam Registration / Shop Act / GST)
Address proof (business and personal)
Recent bank statements (last 6 months)
Balance Sheet / ITR (if applicable)
Project Report / Business Plan
Collateral (depending on the loan amount and type)
Process:
1. Submit application form with all required documents
2. Credit evaluation and background check
3. Field visit and verification
4. Loan sanction and disbursement
Special Features:
Offers loans under MUDRA, Stand-Up India, CGTMSE (credit guarantee)
Lower interest rates due to government schemes
2. Institution Visited: Bajaj Finserv
Type: Private NBFC
Loan Scheme Chosen: Unsecured Business Loan
Type: Private NBFC
Loan Scheme Chosen: Unsecured Business Loan
Loan Amount Range: ₹50,000 to ₹45 lakhs
Interest Rate: 14% to 28% (based on eligibility)
Repayment Period: 1 to 5 years
Documents Required:
PAN Card, Aadhaar Card
Business proof (GST registration / Shop Act)
Last 12 months’ bank statements
Income documents: ITR, Profit & Loss statements
Business continuity proof (at least 3 years)
Passport-sized photograph
Process:
1. Online application and upload of documents
2. Quick verification and eligibility check
3. Loan approval and amount disbursed within 48–72 hours
Special Features:
No collateral required
Minimal paperwork
Fast loan processing and disbursement
Online EMI calculator and track
Key Learnings:
Different institutions cater to different types of borrowers.
Banks offer support through government schemes, but require more documents and time.
NBFCs are faster and more flexible but come with higher interest rates.
A good business plan and clean financial record increase the chances of approval.
