FAQ
Section 1 : Lending Policy
1. What is the main purpose of AFC’s Lending Policy?
Answer:The policy outlines the guiding principles for AFC’s lending operations to ensure transparency, fairness, and systematic decision-making in extending financial assistance.
2. Under which law does Assam Financial Corporation operate?
Answer:AFC operates under the State Financial Corporations Act, 1951 (SFC Act).
3. What types of financial assistance does AFC provide?
Answer:AFC provides:
- General Term Loan Scheme
- Scheme For Working Capital Loan
- Scheme For Working Capital Revolving Fund Loan
- Scheme For Medical Professionals
- Equipment Finance Scheme
- Transport Loan Scheme
- Micro Finance Scheme
4. Who are the primary beneficiaries of AFC’s financial assistance?
Answer: The policy is primarily targeted at Micro, Small, and Medium Enterprises (MSMEs) and other eligible industrial units operating in Assam.
5. Does the Lending Policy apply to all types of AFC loans?
Answer: Yes, the policy is applicable to all lending operations and products offered by AFC.
6. Can the Lending Policy be changed or updated?
Answer: Yes, AFC may amend the policy from time to time, but only with the approval of its Board of Directors.
7. What is the overall role of AFC in Assam’s economy?
Answer: AFC aims to promote industrial and economic development in Assam by supporting enterprises through accessible and structured financing.
8. Is there a focus on specific regions or sectors?
Answer: Yes, the policy emphasizes support for:
- Economically backward regions
- First-generation entrepreneurs
- Sectors that create employment and contribute to regional equity
9. Does the policy align with government schemes?
Answer: Yes, AFC aligns its lending operations with various Central and State Government schemes, especially those promoting MSMEs and infrastructure.
10. Are infrastructure projects eligible for financing?
Answer: Yes. AFC can fund infrastructure and allied sectors, including small and medium infrastructure projects, based on project viability and risk analysis.
11. What would be the overdue charges for a business loan?
Answer: Overdue Charges are fees paid by customers who fail to pay their business loans on time. AFC charges as Defaulted period Interest (DPI)@ normal interest of loan and Liquidated Default Charge(LDC) @ penal 2%*p.a. of the defaulted amount in the defaulted period of the loan outstanding.
12. How Much Time Does a Business Loan Take for Approval?
Answer: The approval time for a business loan varies based on the type of funding and may take minimum 2 months to process. Generally, post Approval, the loan is expected to be sanction/disbursed in 60 minimum working days.
13. What is the maximum repayment tenure that one can opt for?
Answer: The maximum repayment tenure for a business loan is 36 months for Unsecured Loans and 108 months for Secured Loans.
14. Are there any cheque bounce charges applicable?
Answer: Yes, if a cheque bounces, the applicant would have to pay (2-4) %the defaulted amount in defaulted time as a penalty.
15. Is it possible to close my business loan before the tenure ends?
Answer: Yes, if a cheque bounces, the applicant would have to pay (2-4) %the defaulted amount in defaulted time as a penalty.
16. What are the minimum and maximum limits for a business loan?
Answer: AFC offers business loans starting from 2 lakh*. The maximum loan amount depends on your business’s needs and eligibility.
Section 2 : Eligibility Criteria
1. Who is eligible to apply for financial assistance from AFC?
Answer: The following entities are eligible:
- Proprietorships
- Partnership Firms
- Limited Liability Partnerships (LLPs)
- Private Limited and Public Limited Companies
- Co-operative Societies and other legal entities involved in manufacturing, services, infrastructure, or allied sectors.
2. What is the minimum promoter’s contribution required?
Answer: Promoters are generally required to contribute a minimum of:
- 15% to 25% of the project cost, depending on the project type, size, and risk profile
3. Are there specific requirements related to the promoter’s background or experience?
Answer: Yes. Promoters must:
- Have a sound background, good track record, and reputation.
- Possess adequate experience and/or qualifications relevant to the project.
- Be capable of managing the proposed project successfully.
4. Are CIBIL scores or credit history considered during eligibility assessment?
Answer: Yes. AFC takes into account:
- CIBIL scores, credit bureau reports, and past loan behavior.
- Entities/ promoters with a negative credit profile or willful default history may be disqualified.
5. Can an existing borrower of another institution apply for AFC assistance?
Answer:Yes, but:
- The borrower must be in good standing with the existing lender.
- AFC generally does not refinance existing debts, except under special restructuring or takeover policies.
6. Are there sector-specific eligibility norms?
Answer:Yes. Some industries may have priority status, while others may be excluded or restricted based on AFC policy, risk appetite, or government guidelines.
7. Is collateral or security mandatory for all applicants?
Answer:In most cases, yes. AFC typically requires collateral security, such as:
- Land and building
- Plant and machinery
- Personal and corporate guarantees
- In the Microfinance and Equipment Finance schemes , it is relieved in eligible cases, if found viable.
8. Does AFC fund 100% of the project cost?
Answer:No, AFC typically funds up to 70–80% of the project cost, depending on:
- Project type and risk
- Promoter’s creditworthiness
- Sectoral norms
Promoters are expected to bring in the balance as equity or margin money.
Section 3 : General Loan queries answered
1. What is an unsecured business loan?
Answer:An unsecured business loan is a type of loan that does not require the borrower to provide any collateral or security against the loan. Instead, the loan is granted based on the borrower's creditworthiness, financial history, and ability to repay the loan. As there is no collateral involved, unsecured business loans typically have higher interest rates than secured loans. However, they are a popular option for small business owners who may not have assets to offer as collateral or do not want to risk losing their assets in case of default
2. How will I get a business loan without collateral from AFC?
Answer:AFC offers secured and unsecured business loans. A collateral is required to obtain a secured business loan from AFC.
To be eligible for an unsecured business loan from AFC, your business should have been operational for at least three years and you must provide all the required documentation in the Equipment Finance Scheme and the Microfinance Schemes only.
3. Why you should choose AFC for a business loan?
Answer:Services of AFC are transparent, accessible and are met timely.
AFC provides secured and unsecured business loans with affordable interest rates starting from 10%* p.a. We are a reputed and trustworthy financial institution with a legacy of 75 years in the market. AFC is an ideal choice for all your business loan needs.
4. Is it possible to get a business loan online?
Answer:Presently, you cannot get a business loan online.
5. What are the factors that affect business loan calculation?
Answer:The following elements determine the calculation of business loan EMI amounts:
Loan Amount: This is the most important aspect and the foundation for calculating monthly loan payments. The EMI amount tends to change according to the loan amount.
Rate of Interest: This is a critical component that is established by your income, credit score, business financial statements, and payback capability.
Loan Tenure: The loan tenure has the greatest influence on the EMI amount because it is the period required to repay the total loan amount plus interest. An increase in tenure results in a lower EMI amount.
6. How is business loan interest calculated?
Answer:The monthly EMI calculation formula is as follows:
[P*R*(1+R) (n*12)]
Where P is the principal amount borrowed, R is the annual interest rate, and N is the number of years. You can use our EMI calculator to rapidly determine your EMI amount for a given loan amount, period, and interest rate.
7. What are the advantages of an unsecured loan?
Answer:The key benefits of an unsecured loan are that you need not pledge any of your assets to get financing.
8. How is an unsecured loan granted?
Answer:An unsecured business loan is offered to business owners based on the fulfilment of eligibility criteria.
9. What makes unsecured business loans beneficial?
Answer:Unsecured business loans are beneficial due to various reasons
No collateral required.
Quicker and easier approval process
Better credit terms
10. What are some tips for start-ups?
Answer:If you have a business idea and want to start a small business, you first need courage and willingness to take up calculated risks. Then draw up a business plan and study the market related to the business you wish to start. Consider taking a business loan for financial assistance and working capital needs. Some of the best business loan options are loan against property which offers you the convenience of a longer repayment period, continued use of the hypothecated property, low interest rates, and higher loan amount.
11. What's an SME?
Answer:Small and Medium Enterprises are known as SMEs. A business is considered a small business when its investment amount ranges from Rs. 1 crore to Rs. 10 crores. Its turnover is between Rs. 5 crores to Rs.50 crore. Moreover, a business is considered a medium enterprise when its investment exceeds Rs. 50 crore and it has a turnover of not more than Rs. 250 crores.
12. What's the difference between startup and a small business?
Answer:A startup starts in a small way with dreams of changing or introducing a new market altogether. The founders may alter existing business models or create new ones. On the other hand, small businesses or SMEs are businesses that follow an already established business model and may trade in products and services already in the market. Small and medium enterprise owners look to gain profit by providing quality products and services and eventually setting up their brand and space in the market.
13. What are the advantages of a small business and medium entrepreneur?
Answer:Being a small business or MSME has many advantages. First, with the increasing opportunities and advancing technology, small and medium businesses have a new scope for market expansion. Internet and digital marketing have enabled small businesses to create a brand presence nationwide and worldwide. Secondly, having a small business offers flexibility and adaptability to change. If a small business notices a change in demand, it can adapt to change faster by reducing the supply. Lastly, small businesses have fewer employees working, making communication easier and faster.
14. What's an MSME?
Answer:MSME stands for Micro, Small, and Medium Enterprises and refers to businesses classified by their investment in plant and machinery (or equipment) and annual turnover. These enterprises are divided into three categories: micro, small, and medium, and the specific thresholds for each are defined under the MSMED Act of 2006, as amended. MSME classification
The classification of businesses is based on both investment and turnover as of a 2020 amendment to the MSMED Act:-
Micro Enterprise: Investment in plant and machinery or equipment does not exceed (1) crore and annual turnover does not exceed (5) crore.
Small Enterprise: Investment does not exceed (10) crore and annual turnover does not exceed (50) crore.
Medium Enterprise: Investment does not exceed 50) crore and annual turnover does not exceed (250) crore.