Bank / NBFC Loan / Debt Financing

Fuelling Growth Through Structured Borrowing

Debt financing allows businesses to raise funds through loans and credit facilities while maintaining ownership. It includes loans from banks, financial institutions, NBFCs, and other credit facilities including working capital, term loans, project finance, and overdrafts. Law to Corporate assists in documentation, compliance, negotiation, and structuring of debt to align with business needs.

What It Means

·       Bank Loan: Lending by commercial banks, secured or unsecured, repayable with interest.

·       NBFC Loan: Credit facilities from Non-Banking Financial Companies — often quicker and more flexible.

·       Debt Financing: Broader term that includes all borrowings — loans, overdrafts, debentures, external commercial borrowings.

Governing Laws & Framework

·       Companies Act, 2013 (Section 180 for borrowing limits)

·       RBI Master Directions for Bank and NBFC lending

·       Income Tax Act (for interest deductions and TDS)

·       SARFAESI Act (for secured loans and enforcement)

·       FEMA (for ECBs and foreign borrowings)

Process

1.     Financial and project viability assessment

2.     Preparation of business plan, projections & CMA reports

3.     Loan application, appraisal, and sanction

4.     Execution of loan agreements, hypothecation deeds, guarantees

5.     ROC charge filing (Form CHG-1/CHG-9)

6.     Fund disbursement, repayment monitoring, and compliance

Key Benefits

·       Preserves equity and promoter control

·       Availability of structured and flexible products (OD, WC, term loan)

·       Interest payments are tax-deductible

·       Useful for fixed asset purchase, working capital, and expansion

Ideal For

·       SMEs, startups, and mid-sized businesses

·       Enterprises with asset-heavy growth models

·       Working capital-intensive operations

·       Creditworthy promoters with repayment capability

Basic Requirements

·       Business plan and audited financial statements

·       Security / collateral documentation (if applicable)

·       KYC, project report, and cash flow forecast

·       Board resolution authorizing borrowing

·       Duly executed loan and security documents

How LTC can help

·       Preparation of loan applications and CMA data

·       Structuring of secured/unsecured borrowing instruments

·       Drafting and vetting of loan agreements, hypothecation, guarantees

·       ROC charge filing and compliance monitoring

·       Advisory on lender negotiations, term sheet review, and debt plannin