How to Find the Best Private School Loan for Your Needs?

In India, 70% of private school students are enrolled across 200,000-400,000 budget private schools (BPSs). This growing demand among parents highlights the significant potential for growth in this sector. Parents who are looking for affordable education options for their children often turn to these schools.

Unfortunately, the pandemic has greatly impacted the affordability of education, with many BPSs reporting losses in revenue from closures and unpaid fees. These schools typically charge less than INR 15,000 per year in fees and provide English language instruction, which many parents believe is lacking in government schools. 

Additionally, owners of budget private schools often face challenges when trying to obtain credit through banks and non-banking financial companies (NBFCs). This is often due to a lack of knowledge and trust in the banking system, as well as the complicated processes and high collateral requirements that are often required. These factors can discourage BPS owners from accessing the credit they need to grow and improve their schools.

As a result, many BPSs, partnered with school finance companies, are beginning to see the benefits of loans for private schools. These loans not only provide financial support for the schools but also offer increased transparency and alleviate financial constraints, resulting in better education for students.

School finance lenders or NBFCs in India provide loans for private schools to upgrade their infrastructure and facilities. This includes building new structures or classrooms, renovating existing buildings, acquiring land, purchasing furniture, computers, lab equipment, or upgrading sports facilities. With these improvements, schools can provide a modern and conducive learning environment for their students. These lenders make the process of obtaining loans for private schools simpler and more accessible for educational institutions.

What are the features of loans for private schools?

Secured loans

By mortgaging a property, you can expedite the loan processing and disbursement for private school loans.

Unsecured loans

You do not need to pledge any assets as collateral to get approved for loans for private schools. Simply meet the eligibility criteria and provide the required documentation, and the loan process can be completed within 5-7 business days.

Flexi benefits

Loans for private schools will be repaid to the lender in monthly installments (EMIs) over the loan term. Repayment can be done through electronic National Automated Clearing House (e-NACH) or post-dated checks (PDCs).

Best rates

The interest rate for the loans for private schools is based on various factors such as the amount of the loan requested, the type of loan, the collateral offered, the loan term selected, the school’s projected cash flow, the borrower’s repayment history and more.

Faster Loan

Obtaining loans for private schools can be a quick and easy process with minimal hassle. The loan application process is streamlined and efficient, with a focus on fast approvals. 

What are the benefits of loans for private schools?

Loans for private schools can provide a number of benefits. These can include:

1. Flexibility in school improvement:

Loans for private schools can be used to finance infrastructure upgrades and the creation of top class educational environments. This makes it possible for families to provide their children with a quality education at an affordable price

2. Better access to quality education:

Families can send their kids to BPS even if they don’t have the money to pay the high tuition costs at other private schools but think it would be a better fit for their kids’ needs

3. Long term benefits:

A high-quality education may provide students with long-term benefits like better employment opportunities and higher earning potential

4. Preparing students for college:

By taking out loans for private schools, BPSs can provide resources and programs in addition to traditional curriculums that can help students get ready for college and the future

5. Improved extracurricular activities:

Loans for private schools would undoubtedly help BPSs in expanding their selection of extracurricular programs, such as music, art, and sports

6. Build credit:

Loans for private schools can also help BPSs in building a solid credit score that will facilitate future loan borrowing

It’s crucial to weigh the long-term financial impact of taking out loans for private schools and consider the benefits against the costs. To avoid the loan becoming a financial burden in the future, it is always best to have a repayment strategy in place.

How to apply for loans for private schools

There are several ways of applying for loans for private schools:

Online

Step 1: This is the simplest and most practical method of applying. Either fill out an online application form, attach any required documents and submit.

Step 2: Or, you can apply by providing all of the requested documents, and the lender will contact you to discuss the loan terms before moving forward with the application.

Offline

Step 1: Visit a Branch: You can apply for a loan by going to your nearest branch with the required documents, discussing the loan terms with a representative, filling out the application, and submitting it in person.

Step 2: Call the Lender: You have the option of calling the lender directly or requesting a callback by expressing your interest. After that, you can talk about the loan terms and apply.

Virtual Assistant

Banks and other financial institutions are turning to digital methods to better serve their customers. One way is to use a Virtual Assistant to clarify your doubts and request assistance with the application process.

Note that you cannot get loans for private schools to open a new school. A minimum of 3 years of existence is required to avail any loans from nonbank financial companies (NBFCs). However, you can use a loan for construction of a new school building or new classrooms.

Following the devastating effects of the pandemic, affordable private school owners must make significant investments to meet the growing demands of parents and students preparing for 21st-century learning. Philanthropic funding, venture capitalist, and social investor investments, as well as bank and financier loans, are all options for funding. However, philanthropic support is limited to a few schools, and an unfavorable regulatory environment discourages banks and investors from investing. Varthana, one of the best private school loan companies in India, works with low-income private schools and caters to their growth needs through access to credit. Apply now