1. Legal Permissibility

• The Companies Act, 2013 permits private limited companies to borrow money, including loans from banks
  
• No specific prior approval is needed unless specified in the Articles of Association (AoA) or exceeds borrowing limits
  
• The board of directors must pass a resolution approving the loan

2. Types of Bank Loans Available

• Term loans for capital expenditure or asset purchase
  
• Working capital loans like overdrafts, cash credit, or short-term finance
  
• Project finance for large-scale expansion
  
• Loan against property or receivables
  
• Business loans without collateral, based on financial strength and creditworthiness

3. Documentation and Requirements

• Submission of financial statements, project reports, and KYC documents
  
• Bank may require security or collateral, depending on the loan type
  
• Personal guarantees by directors or shareholders are often requested for assurance

4. Creation of Charge and ROC Filing

• If the loan is secured by company assets, the company must register the charge with the Registrar of Companies (ROC)
  
• File Form CHG-1 within 30 days of loan sanction to record the charge
  
• Ensures transparency and legal recognition of the lender’s interest

5. Repayment and Interest Compliance

• The company must repay the loan as per agreed repayment schedule and interest terms
  
• Defaults can affect the company’s credit rating and future funding options
  
• Interest paid is usually allowed as a business expense for tax purposes