SME Loan Processing Fee & Services Charges

Processing Fees and Charges for SME Loan

SME Loans are essential financial tools for businesses looking to grow, manage cash flow or invest in opportunities. However, understanding the associated fees and charges is crucial to avoid surprises that could strain your finances. From SME Loan processing fees to foreclosure charges for MSME, being informed helps you plan and manage costs effectively.

Fees and Charges for SME Loan

Fee/Charge Type	Details
Processing Fees	Up to 3% on sanctioned amount + applicable taxes
Facilitation Fee	For loans with Sanction up to Rs. 25 lakhs - Up to Rs.5,000/- + applicable taxes For loans with Sanction above Rs. 25 lakhs – Up to Rs.10,000/- + applicable taxes
EMI Dishonour/Bounce Charge* *A bounce charge is a charge for (i) dishonour of any repayment instrument; or (ii) non-payment of instalment(s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate	As shown in the table below
Loan sanction amount (in INR)	Charges in (in INR)
< 5 lacs	₹ 500
5 – 50 Lacs	₹ 1000
>50 Lacs – 2 Cr	₹ 1500
>2 Cr	₹ 2000
Penal Charge/Late Payment Charge (LPC)	Up to 2% per month (p.m.) on overdue EMI + applicable taxes
Part Prepayment Charges (For Term Loan)	Within 6 months of disbursement: Not allowed Post 6 months of disbursement: Up to 2% + applicable taxes on total part-prepayment amount
Part Prepayment Charges (for Dropline Overdraft / Hybrid Overdraft )	Nil, Part - prepayment of Loan will not amount to limit reduction.
Annual Maintenance Charges (AMC) (For Term Loan)	NIL
Annual Maintenance Charges (AMC) (for Dropline Overdraft)	0.5% + applicable taxes, on the Dropline limit starting on the 13th Instalment and every anniversary thereafter In the event the average utilization of the Dropline Limit Facility, calculated based on daily limit utilization of the Borrower, is less than 50% for the preceding 365 days, then the Lender shall charge the Borrower twice the Annual Maintenance Charges as stipulated in the Schedule
Annual Maintenance Charges (AMC) (for Hybrid Overdraft)	No upfront charges/Zero charges at the time of disbursement for the Hybrid Limit. 0.5% + applicable taxes, on the Hybrid Limit as on the 13th Instalment & every anniversary thereafter In the event the average utilization of the Dropline Limit Facility, calculated based on daily limit utilization of the Borrower, is less than 50% for the preceding 365 days, then the Lender shall charge the Borrower twice the Annual Maintenance Charges as stipulated in the Schedule.
Foreclosure Charges:	After 6 months of disbursement: Up to 5% + applicable taxes if applicable on outstanding amount for Term Loan/ on Dropline/Hybrid limit amount on the date of such foreclosure Prior to 6 months of disbursement: Up to 6% + applicable taxes if applicable on outstanding amount for Term Loan/on Dropline/Hybrid limit amount on the date of such foreclosure
Repayment instrument Swap Charges (per swap):	Up to Rs.500/- + applicable taxes (applicable only for branch walk-ins)
Document retrieval / Duplicate NOC charges	Nil for digital copy. Charge for paper copy is Up to Rs.1000/- + applicable taxes per statement/letter/certificate.
Legal fees and charges:	As per actuals or Up to Rs. 50,000/- whichever is lower + applicable taxes
Recovery charges:	As per actuals or Up to Rs. 15,000/- whichever is lower + applicable taxes
Field collection service charge:	Up to Rs.500/- per collection + applicable taxes

How to Minimise SME Loan Fees and Charges

Reducing the cost of SME Loan processing fees and other charges requires careful planning and proactive measures. Here are some tips:

1. Compare Offers from Multiple Lenders

Use online platforms to compare processing fees, foreclosure charges, and other costs across different lenders.

2. Negotiate Terms

Approach lenders with a strong credit score and business stability to negotiate reduced fees.

3. Choose Loans with Transparent Terms

Opt for lenders who clearly outline all costs, avoiding SME Loan hidden charges.

4. Repay On Time

Avoid late payment penalties by setting up automated EMI payments.

5. Leverage Collateral

Secured loans generally come with lower fees and charges compared to unsecured loans.

6. Avoid Unnecessary Services

Decline add-on services or insurance plans unless they’re essential for your business.

Taking these steps can help you save significantly on your SME Loan fees and manage your cash flow better.

FAQs & Support

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Are business loan fees refundable?

Most fees, such as processing charges, are non-refundable.

What is the average cost of processing fees for SME Loans?

Processing fees for SME Loans at L&T Finance 3% on sanctioned amount + applicable taxes.

How do SME Loan fees impact my business's cash flow?

High fees increase borrowing costs, affecting your cash flow and reducing funds available for operations.

Can I reduce my loan fees by choosing a secured loan over an unsecured loan?

Yes, secured loans generally have lower processing fees and interest rates than unsecured loans.

Can I negotiate the foreclosure charges for an SME Loan?

You can contact our customer care to know if you can negotiate foreclosure charges.

How are foreclosure charges calculated for SME Loans?

SME Loan foreclosure charges vary based on the loan tenure. For loans foreclosed within 6 months of disbursement, a 10% charge applies. After 6 months, the charge is 5%, both calculated on the outstanding loan amount, plus applicable taxes.