Faqs - L&T Finance

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What are the common fees associated with a business loan?

Processing charges, late payment penalties, prepayment fees, foreclosure costs, administrative and documentation fees.

How is the processing fee for a business loan calculated?

It’s usually a percentage of the total loan amount—typically 1% to 3%—charged at the time of disbursal.

What is a prepayment or foreclosure charge on a business loan?

It’s a penalty for repaying the loan early. Foreclosure is full repayment; prepayment is partial. Charges are 2% to 5% of the balance.

Are GST and taxes applicable on business loan fees?

Yes, most service fees, such as processing and documentation fees, attract 18% GST, which increases your total payment.

Is there a penalty for early repayment of a business loan?

Yes, unless your lender has waived it. Most lenders charge business loan foreclosure charges if the loan is closed early.

Are there any fees for loan restructuring or refinancing?

Yes. Depending on the lender, these range from ₹1,000 to ₹5,000 or a small percentage of the remaining balance.

Do business loan fees differ between banks and NBFCs?

Yes. NBFCs may offer quicker processing and flexible approvals but sometimes charge higher admin or service fees.

What is the impact of business credit scores on loan fees?

A strong score reduces your risk in the lender’s eyes. You may get reduced fees or better terms with high credit ratings.

Are collateral evaluation fees applicable on secured business loans?

Yes. These cover the cost of legal checks, property valuation, and paperwork verification for collateral-based loans.

Do business loan fees change based on the repayment tenure?

Not directly, but longer tenures may increase the risk of early closure, which could trigger foreclosure fees.

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