What is the Repayment Process for GST business loan?

The key aspects of the repayment process for a GST business loan typically include:

• Repayment mode: Equated Monthly Instalments (EMIs) are the most commonly used repayment mode.
• Repayment period: GST loans are typically offered for a few months or several years. Longer tenure loans have higher interest outgo.
• Repayment dates: EMIs are usually due on a fixed date every month, based on the loan disbursal date. Timely repayments are required.
• Penalty for delays: Late payment penalties can apply per month on overdue instalments. This significantly increases the repayment burden. Typically, penalties may range from 2% to 5% per month on the overdue amount.
• Payment modes: EMIs can be paid via standing instructions for auto-debits from the bank account, post-dated cheques, payment gateways, ECS (Electronic Clearing Service (ECS), Unified Payments Interface (UPI), online transfers, etc.
• Part-prepayments: Most loan providers allow part prepayment of the loan after a few initial EMIs have been paid. However, extra charges may apply, typically around 2% of the prepaid amount plus GST.
• Foreclosure: Many financial institutions allow foreclosure of the GST loan after a minimum period. Here as well, foreclosure charges may apply, often ranging from 2% to 4% of the outstanding principal, depending on the timing of the foreclosure.