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Key Features of Standard Chartered Business Overdraft (OD) Facility

  • Purpose and Flexibility:
    • Ideal for financing day-to-day cash flow requirements, such as paying suppliers, covering unexpected expenses, or managing short-term cash flow gaps.
    • Funds can be accessed as needed, with no obligation to use the full limit, providing a financial safety net.
    • Overdrafts are repayable on demand, and the bank may request repayment at any time, making them suitable for short-term needs rather than long-term financing.
  • Types of Overdrafts:
    • Property-Backed Overdraft:
      • Secured against residential or commercial properties.
      • Offers up to 90% of the property value for overdraft and 130% loan-to-value (LTV) across all fund-based and non-fund-based facilities.
      • Facility limit up to INR 20 Crore.
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  • Credit Limit: Up to INR 20 Crore for property-backed overdraft facilities in India.
  • Hong Kong: Up to HKD 1,400,000 for unsecured overdrafts.
  • Kenya: Up to KES 400,000 for salary-linked overdrafts, with or without collateral.
  • Nigeria: Up to 50% of net monthly salary (max NGN 1.8 million) for personal overdrafts linked to salary accounts. Limits are subject to annual review and renewal based on satisfactory performance.
  • Interest: Charged only on the utilized amount, calculated daily—cost-effective for short-term borrowing. Rates vary by region and collateral type (e.g., 6.5% example in Singapore). Unsecured overdrafts typically have higher rates (~20% or more) than term loans.
  • Fees:
  • Arrangement Fee: Typically 1% of the facility (minimum INR 50 for some regions).
  • Renewal Fee: Charged annually for renewing the facility.
  • Unarranged Overdraft Fee: Penalty for exceeding the limit; higher interest on excess.
  • Change Fee: Charged for increasing the overdraft limit. No processing fees for certain salary overdrafts (e.g., in Kenya).
  • Penal Charges: Non-compliance with terms results in penal charges as per facility documents.
  • Repayment and Tenure: No fixed repayment schedule; repay as per your cash flow. Overdrafts reviewed annually; limits renewed based on account performance. In salary overdrafts (e.g., Nigeria), the balance is repaid monthly upon salary credit, reactivating the full limit. Repayable on demand—emphasizing short-term nature of the facility.
  • Eligibility and Requirements: Business must hold a current account with Standard Chartered.
  • For property-backed overdrafts: Positive net worth and acceptable residential/commercial property.
  • For unsecured overdrafts: Strong credit history; may require personal guarantees.
    • Salary overdrafts (e.g., Kenya, Nigeria) require a salary account and possibly an employer introduction letter.
  • Access and Convenience: Immediate access via linked current account through cheques, online banking, or Straight2Bank.
  • Straight2Bank: Web-based platform for payments, trade, and forex transactions 24/7. Overdraft limits cannot be altered by the customer—bank approval is required for changes.
  • Additional Features:
  • Business Essential Account: Includes cheque pick-up, debit card, and Straight2Bank access.
  • International Business Debit Card: Access to 1M+ ATMs globally with Visa Infinite benefits.
  • Dynamic Pricing: Preferential pricing as account usage increases. In regions like Botswana and Ghana, overdrafts are tailored to local market working capital needs.
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    Benefits of Standard Chartered Business Overdraft (OD)

    • Immediate Access to Funds: Overdrafts provide a revolving credit line linked to a business current account, allowing instant access to funds for urgent expenses, supplier payments, or cash flow gaps. Businesses can withdraw funds as needed via cheques, online banking, or Straight2Bank, ensuring convenience.
    • Pay Interest Only on Utilized Amount: Interest is charged only on the amount used, calculated daily, making overdrafts cost-effective for short-term borrowing. No obligation to use the full limit, providing a financial safety net without unnecessary costs.
    • Flexible Repayment: No fixed repayment schedule allows businesses to repay based on cash flow availability, ideal for industries with seasonal or unpredictable income. In cases like salary overdrafts (e.g., Nigeria), the balance is cleared monthly upon salary credit, resetting the full limit for reuse.
    • High Credit Limits: Property-backed overdrafts offer limits up to INR 20 Crore or 90% of the property value, providing substantial liquidity. Unsecured overdrafts cater to businesses without collateral against financial assets.
    • Multi-Currency Borrowing: In regions like Kenya, overdrafts secured against financial assets support borrowing in multiple currencies (e.g., USD, GBP, EUR, KES), facilitating international transactions or forex needs.
    • Customizable Solutions: Overdrafts can be tailored to specific needs, such as working capital or emergency funding, with options for secured (property or wealth-backed) or unsecured facilities.
    • Integration with Digital Banking: Straight2Bank provides a fully integrated platform for managing overdraft transactions, including payments, trade, and forex, available 24/7.
    • Collateral Flexibility: Property-backed overdrafts accept residential or commercial properties, while wealth-backed overdrafts (e.g., Kenya) allow fixed deposits, securities, or mutual funds as collateral.
    • Dynamic Pricing Benefits: Businesses routing higher transaction volumes through their Standard Chartered account (linked to the overdraft) benefit from preferential pricing on banking services, reducing overall costs.
    • Support for Cash Flow Management: Overdrafts act as a buffer for unexpected expenses or delayed receivables, ensuring smooth operations without disrupting cash flow. Ideal for businesses with fluctuating income.
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    How to Apply for Standard Chartered Business Overdraft (OD)

    • 1. Check Eligibility
      • Eligible Entities: Sole Proprietorships, Partnerships, Private Limited Companies, or other registered business structures.
      • Business Requirements:
        • A Standard Chartered current account (e.g., Business Essential Account) is mandatory for OD linkage.
        • For Property-Backed OD: Positive net worth and eligible property as collateral (no plots or under-construction).
        • For Unsecured OD: May require personal guarantees from shareholders (e.g., in Hong Kong).
    • 2. Choose the Application Channel
      • Online:
        • Visit apply.standardchartered.co.in or go to the Business Banking section.
        • Select the desired overdraft type and fill the online form with business details, credit limit, and collateral info.
        • Upload required documents or schedule submission.
      • In-Person:
        • Visit a nearby Standard Chartered branch.
        • Consult a Relationship Manager for product explanation and personalized assistance.
      • Straight2Bank (For Existing Customers):
        • Login to explore overdraft options and initiate application digitally (availability depends on region/account type).
    • 3. Prepare Required Documents
      • Business Documents:
        • Business registration (e.g., Certificate of Incorporation, Partnership Deed)
        • GST registration certificate and recent returns (for India)
        • PAN card of business and promoters
        • Financials: Last 2–3 years' financial statements and 6–12 months' bank statements
        • Proof of business inflows for OD linkage eligibility
      • KYC Documents:
        • ID and address proof (e.g., Aadhaar, passport, utility bill) for proprietors/directors
        • Passport-size photos
      • Collateral Documents (for Secured ODs):
        • For Property-Backed OD: Title deed, sale agreement, valuation report, NOC
        • For Wealth Lending OD: Proof of fixed deposits, mutual funds, or securities
      • Guarantee Documents (for Unsecured OD):
        • Personal guarantee letters from shareholders (e.g., Hong Kong)
    • 4. Submit the Application
      • Online: Submit documents via website/Straight2Bank and receive a tracking reference number.
      • In-Person: Submit physical documents at branch to the Relationship Manager.

    Eligibility Criteria for Standard Chartered Bank Business Loan Overdraft (OD)

    • Business Type: Proprietors, partnership firms, private limited companies, or self-employed professionals engaged in manufacturing, trading, services, or retail. Includes MSMEs, small businesses, and professionals like doctors, chartered accountants.
    • Business Vintage: Minimum 3 years of continuous business operation. For some products, 2 years may be acceptable with strong financials.
    • Annual Turnover: Business must show an upward trend in turnover. Specific thresholds may apply based on the product and business scale.
    • Age of Applicant: Applicant must be between 21 and 65 years of age at the time of loan maturity.
    • Credit Score: A credit score of 650 or above is preferred for better approval chances and competitive rates.
    • Financial Performance: Business must have been profitable for the last three financial years with audited balance sheets.
    • Scheme-Specific Eligibility Criteria:
      • Working Capital Overdraft: For businesses with consistent cash flow needs. Minimum 3 years in operation with audited financials.
      • Dropline Overdraft: For businesses wanting reducing credit limit. Strong repayment capacity required.
      • MSME/SME Overdraft: For registered MSMEs with valid Udyam certificate. Relaxed criteria for smaller businesses.
      • Business Loan for Women: Women entrepreneurs may have relaxed eligibility criteria and preferential rates.
      • Repayment Capacity: The business must demonstrate ability to pay interest on the utilized OD amount through stable cash flow.
      • Documentation Readiness: Applicants must have up-to-date financial statements, KYC documents, and business registration proof.
      • No Major Defaults: Businesses should not have any recent loan defaults or write-offs reported in CIBIL or other credit bureaus.
      • Industry Type: Businesses in certain industries (e.g., agriculture, healthcare) may have special eligibility criteria or relaxed terms.
      • Debt-to-Income Ratio: A manageable debt-to-income ratio is required to ensure the business can handle additional debt responsibly.
      • Business Continuity Plan: A well-documented business continuity plan showing how the business will sustain in case of financial setbacks is advantageous.
      • Geographical Restrictions: Certain geographical regions may have special criteria or restrictions for applying, especially for rural or remote areas.
      • Business Licensing: Valid and up-to-date business licenses and other regulatory approvals may be required for specific industries.
      • Ownership of Assets: Applicants who own valuable assets, such as property or machinery, may have a better chance of approval and may secure more favorable terms.
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    Documents Required for Business Loans Overdraft (OD)

    • Entity Establishment Documents:
      • Sole Proprietorship: Sole Proprietorship Declaration or proof of business continuity (e.g., GST Registration, Shop and Establishment Certificate).
      • Partnership Firms: Certified copy of Partnership Deed.
      • Private Limited Companies: Certified true copy of Memorandum & Articles of Association (MOA/AOA), Board Resolution for loan application.
      • Proof of Business Continuity: Trade License, GST Registration, VAT/Service Tax Registration, or Sales Tax Certificate.
    • Identity Proof:
      • PAN Card, Aadhaar Card, Passport, Voter ID, Driving License, or any government-issued ID for the business owner(s), partners, or directors.
    • Address Proof:
      • Utility bills (electricity, telephone), Lease Agreement, Passport, Trade License, or any government-issued document verifying the business address.
    • Financial Documents:
      • Income Tax Returns (ITR): Latest 2 years’ ITR with computation of income, audited by a Chartered Accountant.
      • Profit & Loss (P&L) Statement and Balance Sheet: For the last 2 years, certified/audited by a CA.
      • Bank Statements: Business Bank Statements for the last 6–12 months (covering at least 75% of banking turnover for multiple accounts).
      • Tax Audit Report: Latest Tax Audit Report (if applicable).
    • Business Profile:
      • Details of the business, including company history, nature of operations, and purpose of the loan.
      • Proof of minimum 3 years of business operation (business vintage).
    • KYC Documents:
      • KYC for all proprietors, partners, directors, or beneficial owners (identity and address proofs).
      • If the applicant is a professional (e.g., doctor, architect, CA), proof of professional degree may be required.
    • Loan-Specific Documents (for Overdraft Against Property or Secured OD):
      • Property documents (title deeds, sale agreement, or lease agreement for residential/commercial properties).
      • Property valuation report or appraisal (if required by the bank).
      • Latest property tax receipts or maintenance bills.
      • For Lease Rental Discounting (if applicable): Lease agreements and rental income proof.
    • Additional Documents (if applicable):
      • GST statements for credit assessment (simplified rule-based assessment).
      • Order copies for Bank Guarantees (BGs) or invoices for Letters of Credit (LCs) if tied to trade facilities.
      • Proof of minimum annual turnover of INR 100 lakhs (for eligibility).
      • For professionals (doctors, architects, CAs, etc.), proof of qualifications and practice.
    • Application Form:
      • Duly filled and signed loan application form.

    Factors for Business Loans Overdraft (OD)

    • Business Profile and Vintage: Business Type: Sole Proprietorship, Partnership, Private Limited Company, or Professionals (e.g., doctors, CAs, architects). Business Vintage: Minimum 3 years of business operation is typically required to demonstrate stability and repayment capacity. Nature of Business: The industry, market position, and operational consistency affect risk assessment. Stable industries may get better terms.
    • Financial Health: Revenue and Profitability: Strong revenue streams and consistent profits, as shown in Profit & Loss statements and ITRs for the last 2 years, improve approval chances. Cash Flow: Healthy cash flow, reflected in bank statements (6–12 months), ensures the ability to service the OD. Debt-to-Income Ratio: Lower existing debt obligations increase the likelihood of approval and higher limits.
    • Creditworthiness: CIBIL Score: A strong credit score (typically 700+ for individuals/business owners) is critical. A low score may lead to rejection or higher interest rates. Business Credit History: No defaults on prior loans, overdrafts, or credit facilities. Clean repayment history is essential. Credit Utilization: Low utilization of existing credit lines signals better financial management.
    • Collateral (For Secured OD): Property Type: For overdrafts like Loan Against Property (LAP), residential or commercial properties are accepted as collateral. Property value impacts the OD limit (up to 50–70% of market value). Property Documentation: Clear title deeds, no legal disputes, and valid property papers are crucial. Valuation: Bank-approved property valuation determines the loan-to-value (LTV) ratio.
    • Purpose of the Loan: Usage: OD is typically used for working capital, inventory purchase, or short-term cash flow needs. The bank assesses if the purpose aligns with business operations. Trade Facilities: If linked to Letters of Credit (LCs) or Bank Guarantees (BGs), order copies or contracts strengthen the application.
    • Documentation Quality: Completeness: Submission of all required documents (ITRs, bank statements, KYC, business proofs, etc.) speeds up processing. Accuracy: Discrepancies in financials or legal documents can lead to delays or rejection. GST-Based Assessment: For simplified underwriting, consistent GST filings and turnover data are evaluated.
    • Banking Relationship: Existing Relationship: Businesses with a current/savings account or prior loans with Standard Chartered may get faster approvals or preferential terms. Transaction Volume: High banking turnover (75%+ of transactions through one account) reflects business activity and strengthens the application.
    • Loan Amount and Repayment Capacity: Loan Size: OD limits are based on turnover, cash flow, and collateral value (if secured). Standard Chartered offers ODs from INR 10 lakhs to INR 75 crores, depending on the facility. Repayment Ability: The bank assesses whether the business can manage interest payments and periodic principal reductions (if applicable). Overdraft Utilization: Regular use and repayment of OD balances demonstrate financial discipline.
    • Interest Rates and Fees: Credit Risk Profile: Higher credit scores and stronger financials lead to lower interest rates (typically 9–18% p.a. for secured/unsecured ODs). Collateral: Secured ODs (e.g., LAP) have lower rates than unsecured facilities. Market Conditions: Prevailing RBI repo rates and economic factors influence OD pricing. Processing Fees: Non-refundable fees (e.g., 1–2% of the loan amount) and foreclosure charges impact the overall cost.
    • External Factors: Industry Risk: High-risk industries (e.g., speculative ventures) may face stricter scrutiny or higher rates. Economic Conditions: Market stability, inflation, or policy changes (e.g., RBI guidelines) affect loan terms.

    Frequently Asked Questions (FAQs)

    What is a Business Overdraft (OD) loan?
    A Business Overdraft is a flexible credit facility that allows businesses to withdraw funds up to a pre-approved limit, even if the account balance is low. Interest is charged only on the amount utilized, not the entire limit, making it ideal for managing working capital or cash flow needs.
    What types of Business Overdraft does Standard Chartered offer?
    Standard Chartered offers:
    • Unsecured Business OD: For businesses/professionals with strong financials, no collateral required.
    • Secured OD (Loan Against Property): Backed by residential or commercial property, offering higher limits.
    • Trade Finance OD: Linked to Letters of Credit (LCs) or Bank Guarantees (BGs) for trade-related needs.
    Who is eligible for a Business OD from Standard Chartered?
    Eligibility includes:
    • Entity Type: Sole Proprietorships, Partnership Firms, Private Limited Companies, or Professionals (e.g., doctors, CAs, architects).
    • Business Vintage: Minimum 3 years of business operation.
    • Turnover: Minimum annual turnover of INR 100 lakhs.
    • Credit Score: Strong CIBIL score (typically 700+ for owners/directors).
    • Collateral: Required for secured OD (e.g., property); not needed for unsecured OD.
    What are the loan amounts and tenure for Business OD?
    • Loan Amount: Ranges from INR 10 lakhs to INR 75 crores, depending on turnover, financials, and collateral (if applicable).
    • Tenure: Typically renewable annually, with periodic reviews. Secured ODs may have longer repayment terms (e.g., 5–15 years for LAP-based OD).
    What is the interest rate for a Business OD?
    Interest rates vary based on credit profile, collateral, and market conditions, typically ranging from 9% to 18% p.a.:
    • Secured OD: Lower rates (e.g., 9–12% p.a.).
    • Unsecured OD: Higher rates (e.g., 12–18% p.a.).
    Interest is charged only on the utilized amount, calculated daily.
    What documents are required to apply for a Business OD?
    Required documents include:
    • Entity Proof: Partnership Deed, MOA/AOA, GST Registration, or Trade License.
    • KYC: PAN, Aadhaar, or other ID/address proofs for owners/partners/directors.
    • Financials: 2 years’ ITRs, P&L, Balance Sheet, and 6–12 months’ bank statements.
    • Collateral Documents: Property title deeds, valuation reports, tax receipts (for secured OD).
    • Others: Business profile, GST statements, or professional degree (for doctors, CAs, etc.).
    Do I need collateral for a Business OD?
    • Unsecured OD: No collateral required, but higher credit score, turnover, and financial stability are critical.
    • Secured OD: Collateral (e.g., residential/commercial property) is mandatory, with loan amounts up to 50–70% of the property’s market value.
    How long does it take to process a Business OD application?
    Processing typically takes 14–45 working days, depending on:
    • Loan amount and complexity.
    • Completeness of documentation.
    • Collateral valuation (for secured OD).
    • Simplified GST-based assessments may expedite smaller loans.
    What are the fees and charges associated with a Business OD?
    Fees and charges include:
    • Processing Fee: 1–2% of the loan amount (non-refundable).
    • Foreclosure Charges: Applicable if the OD is closed early (e.g., 2–4% of outstanding amount).
    • Renewal Fee: Charged annually for limit reviews.
    • Other Charges: Legal fees, valuation fees (for secured OD), or late payment penalties.
    Exact fees vary; check with the bank for details.
    Can professionals (e.g., doctors, CAs) apply for a Business OD?
    Yes, Standard Chartered offers OD facilities for professionals like doctors, architects, and CAs. Additional requirements include:
    • Proof of professional degree/qualification.
    • Practice vintage of at least 3 years.
    • Financial documents showing stable income.

    List of Standard Chartered Bank Business Loan OD

    • Unsecured Business Overdraft
    • Secured Overdraft (Loan Against Property)
    • Trade Finance Overdraft (Linked to LCs/BGs)
    • Working Capital Overdraft
    • Lease Rental Discounting Overdraft
    • CGTMSE-Backed Overdraft
    • Professional Overdraft (for Doctors, CAs, Architects)