Schools are extremely important in every human life. There is no denying of the fact that it plays a significant role in shaping up a student’s personality and holistic learning process. They provide an enriching environment To every student where they acquire knowledge and skills to grow as a responsible individual. Hence, parents are always inclined to send their children to the best schools. To be the choice of parents, schools need to provide quality education along with proper facilities where students can experience a holistic academic development. Thus, school owners should make sure that they provide all the essential amenities. Education institution loan is the best solution to help schools establish a robust atmosphere for a student’s overall progress in life.

Now, before a school owner applies for a loan, he/she needs to know few things to reap the benefits of such a facility.

Collateralised credit

This refers to the loan scheme offered by financial institutions with tangible security backing the loan amount. Opting for a collateralised credit tend to be cost-effective as companies can offer better interest rates as collaterals reduce credit risks. If you provide collaterals, you can opt for a larger loan amount as well. But if you do not prefer to submit collaterals, you need not worry. Financial institutions also have the facility of providing unsecured loans. The major differences will be the total working capital that you get and the interest rates.

Judiciously choose the loan tenure

Secured loans can be availed for a longer duration. But it is always advisable to plan your repayment time period. You should remember that interest payment is higher when you opt for a longer timeframe. You need to properly check the tenure and discuss it with the lender. Customer-centric organizations will always communicate with you transparently so that you can make informed decisions.

List of documents required

General documents:

•Student data and fee structure details
• Duly filled application form (with photograph and signature across the photo)
• KYC documents – ID proof and address proof
• Trust deed/MOA/AOA/Bye-Laws/Partnership deed
• Registration/Incorporation Certificate
• AICTE/DTE/ICSE/CBSE or any other relevant authority approved
• Collateral Security related documents

Financial Documents:

• Latest 3 years financial along with audit report
• Latest 3 years Income Tax returns
• Latest 12 months bank statement of main operating account
• Existing loan sanction letter and loan statements since inception

Procedure followed by financial institutions to process an education institution loan

• Step 1: You need to submit the login documents and initial processing fee.
• Step 2: The lender will assess your eligibility and will inform you accordingly. If you are eligible for the loan, you then need to
provide the rest of documents.
• Step 3: The lender then completes the technical, legal and financial due diligence.
• Step 4: The lender will finalize the sanction terms post which you need to clear the balance processing fee. The lender then will
issue the final sanction letter.
• Step 5: You need to execute the necessary resolutions, execution of loan documents and finally the disbursement of loan by the lender.

Repayment options

You should check for all the necessary details related to your loan including the repayment options available. For most of the financial institutions, Equated Monthly Instalment (EMI) is usually the only way to pay off your loan. Nonetheless, it is always better to get all information of better knowledge and understanding.

Hope this article clarifies some of your doubts regarding an education infrastructure loan. Avanse Financial Services provides customized education institution loan options for renovations and campus development as the organization is focused on building quality education infrastructure in India. Please reach out to us for any query or assistance.


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