Sbi Construction Equipment Loan

State Bank of India (SBI) offers construction equipment loan for contractors and builders. Construction industry is one of the largest in India generating massive employment and GDP. Hence, to ease the availability of finances to contractors and builders, SBI operates a specialised scheme for construction equipment loan. State Bank of India, a premier Indian Bank with over 200 years of history. It is the largest commercial bank in India in terms of assets, deposits, profits, branches, customers and employees. In this article, we look at the procedure for obtaining Sbi Construction Equipment Loan in detail.

Overview

Under the Sbi Construction Equipment Loan, funding is provided to contractors and builders for purchase of new construction equipments, construction activities like mining, material handling, earth moving, etc. Existing construction equipment owners, mine owners, contractors, builders, port operators and others operating construction machinery can obtain loan under this scheme.

Eligibility Criteria

Only applicants conforming to the following criteria are eligible for financing under the Sbi Construction Equipment Loan scheme:

Minimum 3 years experience in business.
Ownership of minimum 5 Construction Equipment (Not Applicable for captive users)
Minimum loan requirement amount Rs.25 lacs
Satisfactory track record with existing banks/FIs for the last one year
Income Tax Assesse (personal & Business)
Borrower has to get minimum eligible score under Pricing Matrix (40%) to be eligible for Sbi Construction Equipment Loan Scheme.
Minimum 25% collateral security must be provided.
Only new machinery can be purchased

Amount of Loan

The minimum loan provided for construction equipment under this scheme is Rs.25 lakhs with no cap on the maximum loan amount. The loan can also be sanctioned as a pre-approved line of credit for 12 months based on the projected purchase or deployment schedule of construction equipment and based on project or contract agreement disbursement . Further, the premium for general insurance of the equipment for the first year can be financed under the scheme and repaid over the tenor of the term loan.

Interest & Repayment

The interest rate is very attractive and competitive at base rate + 1 - 2%. SBI currently has a base rate of 9.30%, making the effective interest rate 10.30% to 11.30% per annum. The interest rate for the borrower would be based on the risk profile of the applicant. Also, to to reward financial discipline, in case of satisfactory repayment (payment of instalment within 3 day from due date), a .010% discount on interest rate will be provided after end of every year, until the closure of loan account. If repayment is not satisfactory during any year, no concession will be provided next year and same interest rate will continue to be charged for the entire tenor and no further concession will be provided until closure of the account. Further, a minimum processing fee of Rs.25000 per equipment, subject to maximum of Rs.3 lacs will be chargeable for each equipment. Also, in case of pre-approved line of credit, service fee would be charged based on disbursement made for purchasing equipment. The construction equipment loan would be sanctioned as a term loan facility or pre-approved line of credit for a period of 12 months. A maximum repayment of upto 4 years is possible and repayment can be on EMI or bullet payment basis. In case of prepayment of the loan, a 4% of the outstanding amount would be levied as penalty in case of upto 2 years of availing of loan. Beyond 2 years, a prepayment penalty of 2% of the outstanding amount would be applicable. For individual borrowers, there is no prepayment penalty.

Download Sbi Construction Equipment Loan Application

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Frequently Asked Questions

Common questions about SBI Construction Equipment Loan for Contractors and Builders.

The minimum loan amount provided under the SBI Construction Equipment Loan scheme is Rs.25 lakhs. There is no specified maximum cap on the loan amount that can be availed.

Contractors, builders, existing construction equipment owners, mine owners, port operators, and others operating construction machinery are eligible for the SBI Construction Equipment Loan. Applicants must have a minimum of 3 years of experience in the business and own at least 5 construction equipment units (except for captive users).

The interest rate on the SBI Construction Equipment Loan is very attractive and competitive, ranging from the base rate + 1% to 2%. Currently, with SBI's base rate at 9.30%, the effective interest rate would be between 10.30% and 11.30% per annum.

No, the SBI Construction Equipment Loan can only be used for the purchase of new construction equipment. The loan cannot be availed for purchasing used or second-hand machinery.

The maximum repayment period for the SBI Construction Equipment Loan is up to 4 years. The loan can be repaid through equated monthly installments (EMIs) or as a bullet payment.

Yes, there is a prepayment penalty for the SBI Construction Equipment Loan. If the loan is prepaid within 2 years of availing it, a penalty of 4% of the outstanding amount will be charged. Beyond 2 years, the prepayment penalty is 2% of the outstanding amount. However, there is no prepayment penalty for individual borrowers.

Yes, the SBI Construction Equipment Loan can be sanctioned as a pre-approved line of credit for a period of 12 months, based on the projected purchase or deployment schedule of construction equipment and project or contract agreement disbursement.

A minimum of 25% collateral security must be provided by the borrower to avail the SBI Construction Equipment Loan.

Yes, if the borrower maintains satisfactory repayment (payment of installment within 3 days from the due date), a 0.10% discount on the interest rate will be provided after the end of every year until the closure of the loan account.

A minimum processing fee of Rs.25,000 per equipment, subject to a maximum of Rs.3 lakhs, will be charged for each equipment financed under the SBI Construction Equipment Loan scheme.