PURPOSE OF LOAN
To provide financial assistance to units for setting up projects of eligible industrial activities for acquiring fixed assets like land, building, plant & machinery and other miscellaneous assets.
General Term Loan Scheme
ELIGIBILITY
AREA OF OPERATION
In the State of Goa.
QUANTUM OF LOAN
The maximum amount of loan shall be subject to the following limits:
Proprietary concerns Rs.400.00 lakh
Partnership firms Rs.700.00 lakh
Corporate bodies/ Limited liability Partnership Rs.1500.00 lakh
The loan assistance shall be considered subject to the unit providing adequate security with the project being technically feasible and financially viable as per the norms and guidelines of the Corporation. The actual amount of loan sanctioned shall be decided by the Corporation.
If the requirement of the loan for a project is in excess of the above limits, the Corporation may consider enhanced amount (with additional immovable security) for such projects or the same could be met in consortium with other Financial Institutions/Banks.
MAXIMUM DEBT-EQUITY
For loans upto Rs.50.00 lakhs 3:1
For loans above Rs.50.00 lakhs 2:1
MARGIN ON SECURITY
The minimum margin on the primary security shall be 25%. However, higher margin would be stipulated based on project viability and security provided.
SECURITY FOR LOAN
The loan shall be secured as per the norms (not less than 100% immovable security cover) of the Corporation by first charge of the Corporation on the following security with clear marketable title:
Primary: The assets financed i.e. land, building & machinery, etc.
Additional/Collateral: Commercial or residential on-agricultural immoveable properties or any other security acceptable to the Corporation on case-to-case basis, if required.
Personal Guarantee of the promoters/directors/a suitable person of sound financial means, etc. could be insisted in addition to the above wherever felt necessary by the Corporation. All term loans wherein movable fixed assets are financed up to 50.00 lakhs shall be secured by hypothecation of the movable fixed assets financed as the primary security and by Personal Guarantees & one or more third party Guarantors with adequate financial capacity.
PROCESSING FEES
1% of the loan amount subject to maximum of Rs.2.00 lakh (plus GST as applicable).
The processing fees to be paid shall be as follows:
Preliminary application: Rs.10,000.00 (plus GST as applicable)
(For loans between Rs.5.00 –Rs.10.00 lakh, the fees payable shall be Rs.5000.00 plus GST as applicable)
Final application: Total processing fees payable less fees paid earlier.
All the processing fees are non-refundable.
INTEREST RATE (w.e.f. 01/01/2024)
Term Loan Interest Rate
Loans up to Rs.50.00 L and Professional Loans 9.50% p.a. *
Loans above Rs.50.00 L 10.50% p.a. to 13.50% p.a. *
Interest rates shall be floating basis and would be rest on 1st Jan & 1st July yearly *
*The interest rate shall be decided based on the Credit Rating of the applicant, as per the Corporation’s guidelines.
LOAN REPAYMENT
The loan is repayable within 8 years including a moratorium period upto 2 years, depending on repayment capacity of the project. The repayment will be in monthly/quarterly installments.
GENERAL
GENERAL FAQ’S FOR AVAILING EDC’s TERM LOAN SCHEMES
Does EDC provide home loans?
No. EDC provides only business loans for entrepreneurs and personal loans for Government Employees.
Does EDC give Working Capital / Cash Credit?
EDC provides only Term Loans.
What is the maximum amount of term loan available?
Term Loans upto Rs.2500.00 Lakhs is available subject to fulfillment of eligibility criteria and other norms of the Corporation.
What preliminary information does EDC need to accept my loan proposal?
EDC needs to know your project cost, means of finance and security available for mortgage.
- Project Cost: This is a list of all items that you will need for completing your project and running it profitably.
- Means of finance: This lets us know about your contribution towards the above mentioned project costing.
- Security: This is a list of all assets (immovable and movable) which you are ready to mortgage / hypothecate for availing our term loan.
What are the various requirements where Land forms a part of the project cost?
The various requirements are as follows:
- Land should be owned by the applicant. EDC does not provide finance for purchase of land. EDC considers land as a part of the project cost and provides disbursement against land which is already purchased, ie: reimbursement of land purchase price (sale deed value) subject to the norms of the Corporation.
- Land should be categorized as commercial or Industrial as per SANAD. Business activities should be done on Commercial / Industrial land and not Residential / Agricultural lands. Applicant can apply for conversion of land use in Town and Country Planning Department.
- Entire Survey number of the land will be mortgaged. As land forms a part of the immovable security, the entire land will have to be mortgaged to EDC for sanction of the term loan. Title Investigation will be done and accordingly properties will be subject to Equitable / English mortgage.
What are the various requirements where Building forms a part of the project cost?
The various requirements are as follows:
- Approval: Building plans need to be approved by VP / Municipality / TCP / PDA, etc. as the case may be and should mention the end use of the structure (factory/hotel/hospital, etc) and the term loan applicant’s name.
- Construction licence should remain valid throughout the construction tenure.
- Mortgage: The building is mortgaged to EDC.
Does EDC take machinery as security for my loan?
While EDC mortgages immovable property and hypothecates movable assets, EDC sanctions a term loan based on the valuation of the immovable security alone. However, EDC does sanction machinery loans (See Sr. No.8).
I do not have immovable security. I want a small machinery loan. Can EDC help me?
All term loans wherein movable fixed assets are financed up to Rs.50.00 lakhs, shall be secured by hypothecation of the moveable fixed assets financed as the primary security and by Personal Guarantees & one or more third party Guarantors with adequate financial capacity.
How long will it take for me to get a loan from EDC ?
The loan appraisal process is a 2 stage process:
- Preliminary Appraisal: 1 week.
- Final Appraisal: 3 – 4 weeks. (Private properties require title investigation which is done by an external advocate).
Post final sanction of the loan, legal agreements have to be signed which will take about 1-2 weeks depending upon complexities involved. Disbursement of loan amount can be done once legal agreements are signed.
Are there any processing fees? Can they be waived off?
Loan processing fees are 1% of the loan amount subject to a maximum of Rs.2.00 lakhs plus GST. The processing fees cannot be waived off and is non refundable.
What is my margin?
The applicant’s contribution is 1/3rd of the project cost. EDC contributes the rest subject to security valuation and fulfillment of eligibility criteria and other norms of the Corporation.
I have heard that EDC gives loans at very low interest. Is this true?
EDC gives term loans in an interest rate band of 9.50% to 12.50% p.a. The final interest rate gets fixed based on our credit rating system and is unique to each borrower. However, EDC also operates an interest rebate scheme wherein standard loan accounts are eligible for an interest rebate upto 9% p.a. This rebate amount is provided by the Government of Goa to EDC for encouraging commercial activities in backward talukas by Goan and women entrepreneurs.
What is the repayment tenure? Are there any prepayment charges?
The maximum loan repayment tenure is 8 years. Prepayment charges are 1% of the premature paid amount.
I have a loan in a bank. Can EDC takeover my loan?
EDC can takeover only term loans utilized for the creation of fixed assets subject to the loan account being standard in the bank.
Why should I come to EDC?
Since inception, EDC has always strived to assist in the industrial development of the State in association with the Government of Goa, EDC provides term loans to prospective entrepreneurs who could be eligible for an interest rebate from the State Government.