Fees and 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

Processing Fees:	Up to 3% on sanctioned amount + applicable taxes
Repayment/EMI Bounce Charges:	As shown in the table below
Loan sanction amount (in INR)	Charges in (in INR)
< ₹ 5 lakh	₹ 500
₹ 5 Lakh – ₹ 50 Lakh	₹ 1000
> ₹ 50 Lakh – ₹ 2 Crore	₹ 1500
> ₹ 2 Crore	₹ 2000
Penal Charge/Late Payment Charge (LPC):	2% per month (p.m.) on overdue EMI + applicable taxes
	*LPC revised from 3% to 2% per month on overdue EMI w.e.f. 4th Dec 2023
	*Taxes applicable on LPC w.e.f.1st Apr 2024
Part Prepayment Charges:	For Term Loan :
	Within 6 months of disbursement: Not allowed
	Post 6 months of disbursement:2% + applicable taxes on total part-prepayment amount
	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 / Hybrid Overdraft: 0.5% + GST (if applicable), on the Dropline limit starting on the 13th Instalment and every anniversary thereafter
Legal / Recovery Charges:	As per actuals
Foreclosure Charges:	After 6 months of disbursement: 5% + GST if applicable on outstanding amount for Term Loan on the date of such foreclosure
Foreclosure Charges:	Prior to 6 months of disbursement: 10% + GST if applicable on outstanding amount for Term Loan on the date of such foreclosure
Repayment Swap Charges (per swap):	₹ 500/- + applicable taxes
Charges for documents:	Nil for digital copy.

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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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.

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.