Wondering if the Oriental Traders Loan Scheme is right for your business needs? Our article covers eligibility, types of loans, interest rates, documentation, and customer reviews for your consideration.
The Oriental Traders Loan Scheme (OTLS) is a loan scheme offered by the Oriental Bank of Commerce (OBC) to traders.
The scheme aims to provide hassle-free credit to traders to manage working capital requirements or augment long-term margin or financing of fixed assets associated with the business activity of the borrower or for the expansion of the business of the borrower.
This loan scheme aims to provide financial support to individuals who require capital for their business operations.
Eligibility Criteria
Eligible entities for the Oriental Traders Loan Scheme (OTLS) include:
- Proprietorship
- Partnership firms
- Private Limited Company
- One Person Company
- The businesses must be engaged in the trading of any commodity or goods.
- The business should have been operational for a minimum of one year.
- All businesses sanctioned a loan under the scheme must comply with relevant statutory requirements, such as:
- State or Central Sales Tax Registration Certificate
- License under Shops and Commercial Establishment Act
- Registration with Excise Department, etc.
Types of Loans Offered by the Oriental Traders Loan Scheme (OTLS)
Here are the types of loans offered by this Scheme (OTLS):
Fund-Based Working Capital Loan
This type of loan is used to meet a business’s short-term working capital requirements, such as the purchase of raw materials, inventory, and accounts payable. The loan is typically repaid within a period of 1-3 years.
Non-Fund Working Capital Loan
This type of loan is used to meet a business’s long-term working capital requirements, such as the purchase of fixed assets, such as machinery and equipment. The loan is typically repaid within a period of 5-10 years.
Term Loan for the Development of Shop
This type of loan is used to finance the development of a shop, such as the purchase of land and building, renovation, and interior decoration. The loan is typically repaid within a period of 10-15 years.
Loan Amount and Interest Rates of Oriental Traders Loan Scheme
The loan amount available under the this Scheme is determined by various factors, including the location of the branch (rural, semi-urban, urban, or metro) and the maximum lending powers granted by the permitting authority.
The loan amount will be subject to the discretion of the lending authority or as per the discretionary power chart, whichever is lower. Additionally, the total amount of working capital and term loan combined should not exceed the limits set by the sanctioning authority.
Documents Required for Oriental Traders Loan Scheme
To apply for this Scheme, the applicant needs to submit the following documents:
- Proof of identity
- Proof of address
- Proof of business ownership
- Bank statements for the last 6 months
- Income tax returns for the last 2 years
- Business financial statements, such as profit and loss statements and balance sheets.
Application Process for Oriental Traders Loan Scheme
Here is the application process for the this Scheme (OTLS):
- Visit an OBC branch: The first step is to visit an OBC branch and meet with a loan officer. The loan officer will explain the OTLS to you and help you determine if you are eligible.
- Complete an application form: Once you have decided to apply for the OTLS, you will need to complete an application form. The application form can be downloaded from the OBC website or obtained from the bank branch.
- Provide supporting documents: You will need to provide supporting documents to the bank, such as:
- Identity proof (such as PAN card, Aadhaar card)
- Address proof (such as electricity bill, water bill)
- Proof of income (such as tax returns, salary slips)
- Business registration certificate
- Property documents (if the loan is secured against property)
- Wait for the bank’s decision: The bank will review your application and documents. If your application is approved, the bank will contact you to discuss the terms of the loan.
- Sign the loan agreement: Once you have agreed to the terms of the loan, you will need to sign a loan agreement. The loan agreement will outline the terms of the loan, such as the interest rate, repayment period, and any other fees.
- Receive the loan funds: Once you have signed the loan agreement, the bank will disburse the loan funds to you.
Benefits of Oriental Traders Loan Scheme for Traders and Small Business Owners
It offers various benefits to traders and small business owners, including:
| Features | Description |
| Flexible Repayment Options | The loan offers the flexibility to repay in monthly, quarterly, or half-yearly installments, based on the borrower’s convenience. |
| Competitive Interest Rates | The scheme provides competitive interest rates that are lower than those offered by other loan schemes available in the market. |
| Quick Disbursal of Loan Amount | Once the loan is approved, the loan amount is disbursed promptly, allowing the borrower to fulfill their business requirements promptly. |
| Easy Application Process | The application process is straightforward and uncomplicated, requiring minimal documentation. |
| Customised Loan Solutions | The bank offers tailored loan solutions that are designed to meet the specific needs of the borrower. |
Customer Reviews and Feedback
The Scheme has received positive reviews and feedback from customers who have availed the loan. Customers have appreciated the simple and easy application process, quick disbursal of loan amount, and competitive interest rates offered by the scheme. Customers have also appreciated the customised loan solutions offered by the bank to cater to their specific business needs.
Collateral:
Collateral refers to an asset or property that a borrower pledges as security for a loan. It provides lenders with a form of assurance in case the borrower defaults on their loan payments.
- Loan assets are used as collateral for the bank.
- If you borrow more than ₹1 crore, you need to pledge immovable property (except for agricultural land or plots) owned by you or your close relatives as a guarantee for the loan.
- The property must be inspected annually if it is over 25 years old, ensuring it is in good condition.
- The building’s remaining life must be at least 5 years longer than the loan repayment period for term or demand loans.
- If any defects are found during property inspection or in the architect’s report, the bank must substitute the security with equivalent value or liquidate the loan within 12 months.
Assessment of Limit:
Assessment of limit refers to the evaluation conducted by lenders to determine the maximum amount of credit or loan that a borrower is eligible to receive based on factors such as income, credit history, and collateral value.
Interest Rate:
Interest rate is the percentage of the loan amount that the borrower needs to pay in addition to the principal amount. It is the cost of borrowing money and is determined by various factors, including market conditions and the borrower’s creditworthiness.
Conclusion:
If you are a trader or a small business owner looking for financial support to meet your business needs, The Scheme can be a good option for you. The scheme offers various types of loans with flexible repayment options and competitive interest rates.
The application process is simple and easy, with minimal documentation requirements. However, assessing your eligibility and repayment capacity before applying for the loan is important. It is also advisable to compare Oriental Traders Loan Scheme with other loan schemes in the market to choose the best option for your business needs.
Vakilsearch can assist you with availing of the this Scheme. Vakilsearch can help you with the documentation and application process, ensuring you fulfil all the eligibility criteria and submit the necessary documents. Vakilsearch’s legal experts can advise you on the best loan option for your business needs based on their expertise and experience. Contact us today.
FAQ:
What is Oriental Traders Loan Scheme?
Oriental Traders Loan Scheme is a loan scheme designed for traders and small business owners in India.
What is the maximum amount of loan that can be availed under the Oriental Traders Loan Scheme?
In terms of working capital finance, the approved amount will be either 50% of the property's distress sale value or 25% of the estimated annual sales, whichever is lower. Regarding term loans, up to 75% of the cost for purchasing furniture and fixtures can be sanctioned, with a maximum limit of 25% based on the branch's designated area.
What are the eligibility criteria for availing Oriental Traders Loan Scheme?
The eligibility criteria for availing Oriental Traders Loan Scheme include being a self-employed individual, having a minimum age of 21 years, and having a business vintage of at least 3 years.
What is the repayment period for Oriental Traders Loan Scheme?
The repayment period for the Oriental Traders Loan Scheme (OTLS) is up to 10 years. The repayment can be made in monthly, quarterly or half-yearly installments. The exact repayment period will be decided based on the borrower's financial needs and the bank's assessment of the borrower's creditworthiness.
What are the documents required for availing Oriental Traders Loan Scheme?
The documents required for availing Oriental Traders Loan Scheme include KYC documents, business proof, financial documents, and property documents (if applicable).
Do banks give loans to traders?
Yes, banks provide loans to traders, subject to meeting certain criteria such as creditworthiness, business viability, and collateral requirements.
What is a loan from traders?
A loan from traders refers to the financing provided to individuals or businesses involved in trading activities. It helps traders meet their working capital needs, purchase inventory, or expand their operations.
Is MSME loan available for traders?
Yes, small businesses like traders can get loans called MSME loans. These loans are meant to help small businesses grow, and they are available to traders who meet the eligibility requirements set by banks or government programs that offer such loans
Read More:-
