The Collateral World of Mortgaging Property
January 21, 2022
January 10, 2022
With the presence of diverse financial services, you can start your business without any hindrance. To finance a brand-new business or expand the existing one, all you need is financial support. Banks and financial institutions are all set to flourish the business needs through their exclusive range of finance products. One such major banking product is a dairy farm loan. No matter if you already have a dairy farm business or are willing to set up a new one, a dairy farm business loan is the perfect fit for your financial obligations.
The growing demand for dairy products has resulted in an increased number of dairy farm loans. With this loan, you can easily cover an array of expenses including production machinery, packaging and transportation. Instead of munching up savings, this loan aims to support the growth of dairy production. If you have decided to obtain a dairy loan, here is a rundown of inescapable essentials you must be familiar with.
Before scooping out extensive information, let’s have a look at what is a dairy farm business loan.
As an individual who operates a dairy farm or is willing to set up an advanced farm, you will need access to a significant amount of financing. To cope with such needs, the finance sector has introduced a distinct type of loan, i.e. dairy farm business loan. The sole reason to put forward this type of loan is to expand and promote dairy production.
To run a dairy farm business in a seamless manner, you have to bear huge expenses. These expenses majorly include purchasing raw materials, production machinery, processing, storage, different types of packaging, together with warehousing.
The end use of borrowed funds, in this case, is not restricted. You can use a dairy farm loan for multiple purposes from purchase to transportation.
In general, the solitary purpose of a dairy loan is to establish a new farm or to expand the pre-existing one. Lenders make dairy farm business loans accessible to dairy societies for the creation of advanced infrastructure including transportation, dairy product collection, distribution and storage. You can avail a dairy farm loan as a term loan or as a cash credit.
You can obtain a dairy farm loan for the following purposes:
Now when you have a clear idea about the purposes for which you can use a dairy farm business loan, let’s explore the benefits that you unlock with a dairy loan.
Considering the ultimate growth in the dairy industry, numerous leading banks have started offering dairy farm loans. You can easily avail such loans as they are meant to boost the industry.
Here is the highlight of certain such benefits:
You must be all set to avail a dairy farm business loan after going through the above-mentioned benefits. But wait, do you think you are eligible for a dairy farm loan?
To get a dairy farm business loan, you need to meet its eligibility criteria. These loans are not available for everyone, thus it is essential to comprehend the categories that make one eligible for a dairy farm loan.
Lending banks have presented the following general criteria:
Lending banks have different criteria based upon the category you fall within. For example, if you fall within the Cooperative Society category, you must have a grade ‘A’ as per the last audit. Additionally, you must have a daily milk supply of 1000 litres.
Although, just being eligible for dairy farm business loans is not enough. In addition, you need to go through the associated fees and charges. These terms will help you to figure out your creditworthiness to obtain a dairy farm loan.
Taking fees and charges into account is highly important to secure the best dairy farm business loan. These factors help determine the worthiness of your loan application.
Furthermore, the applicable interest rate and repayment tenure are equally essential. Together, all these factors will make the monthly payment that you will be liable to pay.
Some essential details about dairy farm loans are:
Loan Repayment Tenure | 60 months – 84 months |
Loan Amount | At max, you can get 85 percent of the expenses or project cost |
Collateral | Vary from one bank to another, usually required if the loan amount is above INR 1 lakh |
Loan Instalments | Every month or once in a quarter |
Prepayment Charges | Not Applicable |
Margin | About 15 percent |
Processing Fees | At max 2 percent of the loan amount |
If you think that the applicable interest rate and other fees and charges are feasible for you then you can easily move further with the dairy farm loan procedure. All you have to do is keep the requisite documents ready beforehand as documents play a crucial role in quick loan approval.
To avail a dairy farm business loan in minimal time, you have to provide a set of documents to the lending bank. Based upon these documents your loan application is evaluated and the verification process takes place,
You have to provide the below-depicted documents to avail of a dairy farm loan:
Now you are all set to apply for a dairy farm business loan. From basic research to correlated documents you are prepared with everything. To offer the utmost customer convenience, lenders allow borrowers to submit their loan applications online. You can count on an offline procedure or online procedure, it thoroughly depends on you.
To get a dairy farm loan online, visit your closest lending bank. Look for the best option and compare all possibilities and pick the best one out. Get in touch with the bank representatives to get one-to-one advice for your dairy farm business loan. After getting thorough information, submit the loan application either through the official website or in-per person.
With the advent of technology in the finance sector, now you can submit your loan application online. Visit the official portal, submit requisite details and upload required documents.
Online loan applications are a faster medium for loan approval as they require minimum processing. The best part about dairy farm loan online is it is accessible 24/7. You can apply for it anytime from the comfort of your home.
For the dairy farm loan online application, you will require the following documents:
Wait for the approval, get your amount and meet your farming expenses in one go. Expand your dairy farming business and take every possible ethical step to touch new heights. Don’t forget to repay the borrowed amount on time, else it will add to your expenses.
Lending banks offer certain ways to repay the borrowed amount. You can either pay monthly installments or can count on the quarterly installments. We will suggest you rely on monthly instalments and keep on making partial prepayments to decrease the principal amount. EMIs are hassle-free and the foremost method for loan repayment.
With time, if your business generates huge profit, and you think that you have generated enough revenue to repay the loan, stick to foreclosure. Loan foreclosure allows you to pay the remaining amount outright. Just make sure that you don’t get charged with the foreclosure penalty and associated charges.
A dairy farm loan is the best choice to cope with the farming expenses. Being one of the largest dairy products producers, availing a dairy farm business loan in India is easy. You just have to consider certain factors such as eligibility, documents, your requirements as well as your core purpose. With all these essentials on track, you can apply for a dairy farm loan. The best part about these loans is you can easily avail a loan from home comfort through a quick and easy online procedure.
Yes, a grace period of 3 months to 6 months is provided when you avail a dairy farm loan. Moreover, all lenders might not offer this facility. You need to put forward a quick check to determine whether your chosen lender is offering a grace period or not.
The dairy sector has shown significant emergence in past years. Considering the constant growth, numerous financial institutions and banks have stepped forward to boost this growth. The top lenders who offer a dairy farm business loan are NABARD, IDBI Bank, SBI and Bank of India.
Yes, you can get a Mudra Loan under PMAY for dairy farming purposes. You can use a Mudra Loan to raise capital. Additionally, if you own or want to do poultry farming or honey bee farming, you can count on a Mudra Loan.
If you avail of a dairy farm loan of INR 1 lakh or less, then you don't have to provide any security. If this amount goes beyond INR 1 lakh, then you will have to provide collateral. It can be livestock, land deed, or a third-party guarantee. Moreover, this requirement varies from one lender to another.
Generally, there is no foreclosure charge for a dairy farm loan. Still, it is advised to look into the terms and conditions while signing the loan agreements.
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