ESOP Financing Features and Benefits

Read on to know why our ESOP financing is the best option for you.

Features and benefits of our ESOP financing

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Features and benefits of ESOP Financing

Bajaj Finance offers employees a loan based on the share value of their company and subscribe to Employee Stock Options (ESOPs)

  • Loan up to Rs. 175 crore

    Get loan from Rs. 1 Lakh to Rs. 175 crore, to exercise ESOP in your company which you can sell in the future to create wealth.

  • Interest rate at up to 20% p.a.

    Get loan up to 50% of the ESOP share value to buy the company equity at interest rate of up to 20% p.a.

  • Convenient tenures

    Manage your loan easily with flexible tenure ranging from 7 days up to 36 months.

  • No hidden charges

    All our fees and charges are mentioned clearly on our fees and charges section. We advise you to read them in detail before applying. 

  • Wide list of partnered corporates

    Choose from our wide list of approved companies and subscribe to your company ESOP. Get loan up to 50% of the share value.

  • Easy prepayments

    Flexible prepayment and foreclosure options let you prepay or foreclose your loan at no additional charges.
  • Minimal documentation

    With only 4 documents, and your photograph, get loan to buy ESOP in your company. 

  • Dedicated customer portal (My Account)

    Download your loan statement and manage your loan online with our customer portal – My Account.

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More details

Employees can obtain funding through ESOP Finance to use their ESOPs. If an employee lacks the money to exercise his ESOPs, he can use Bajaj Finance's loan facility. The Workout Price + Perquisite Tax is what the product is intended to pay for.
An ESOP's benefit is that it enables staff members to purchase shares or ownership in the business they support. You get stock in the business after joining as an employee.

How to apply for ESOP financing

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Step-by-step guide to apply for ESOP financing

Step 1: Click on ‘Apply’ to initiate your application.
Step 2: Enter your mobile number to Sign in and click ‘GET OTP’.
Step 3: Enter the OTP sent to your mobile number. On successful verification, you will be redirected to our online application form.
Step 4: Enter basic details like: Full name, Email ID, mobile number and city of residence.
Step 5: Under ‘Type of Security’ select ‘ESOP Financing’.
Step 6: Enter the total portfolio value of your security and click on ‘Submit’.

Once your application form is submitted, our representative will get in touch with your further proceedings. The final loan amount shall be calculated basis the valuation of the company and the price of the share.
Disbursement shall be done post successfully verification.

Frequently asked questions 

Which companies offer ESOP?

Multiple companies offer ESOP facility to incentivize and retain their employees, especially key employees who are crucial to the success of the business. ESOPs provide employees with the opportunity to buy company stock at a discounted price or to receive stock as part of their compensation package.
For ESOP financing Bajaj has identified a list of companies. All employees of the company eligible for ESOP can get loan to buy the ESOP.
Click here to see the list of companies.

What is ESOP funding?

ESOP stands for Employee Stock Option Plan that gives the employees a benefit of ownership interest in the company. A lender funds an employee to exercise his/ her vested shares under Employee Stock Option Plan by asking to pledge those receivable shares at the time of allotment.

What are the benefits of ESOP funding?

ESOPs provide employees with the opportunity to buy company stock at a discounted price or to receive stock as part of their compensation package. With the help of lender’s funding for exercising ESOPs, the employees need not worry about managing the finances to utilise this investment opportunity. For ESOP financing Bajaj has identified a list of companies. All employees of the company eligible for ESOP can get loan to buy the ESOP.

How does ESOP financing work?

ESOP financing involves the use of Employee Stock Ownership Plans (ESOPs) to acquire shares in a company, which can be used as a form of financing. Here's how it typically works:

  1. The company sets up an ESOP trust: The company establishes a trust and contributes cash, shares of its stock, or both to the trust.
  2. The ESOP trust buys shares: The ESOP trust uses the cash or stock contributions to purchase shares of the company's stock.
  3. ESOP trust distributes shares to employees: The ESOP trust distributes the purchased shares to employees who participate in the plan, either as a direct purchase or as part of their compensation package.
  4. Employees hold or sell shares: Employees can either hold onto the shares or sell them, depending on the terms of the plan.
  5. Company contributions and tax benefits: The company can make additional contributions to the ESOP trust to fund future purchases of company stock, which can be tax-deductible. Additionally, the company can deduct contributions to the ESOP trust from its taxable income.
  6. ESOP loan repayment: If the ESOP trust uses borrowed funds to purchase shares, the company will make contributions to the trust to repay the loan, which can also be tax-deductible.

Overall, ESOP financing allows companies to raise capital without incurring debt, while also providing a way for employees to participate in the company's success. Additionally, the tax benefits associated with ESOPs can make them an attractive financing option for companies.

How do you finance an ESOP?

An Employee Stock Ownership Plan (ESOP) is a type of employee benefit plan that allows employees to become owners of a portion of the company's stock. There are several ways to finance an ESOP, including:

  1. Leveraged ESOP: This is the most common way to finance an ESOP. In a leveraged ESOP, the company borrows money from a bank or other lender to buy shares of the company's stock. The ESOP then holds the shares on behalf of the employees. The company makes contributions to the ESOP each year, which are used to pay back the loan.
  2. Non-Leveraged ESOP: In a non-leveraged ESOP, the company contributes cash or shares of its stock directly to the ESOP. The ESOP then allocates the shares to the employees based on a predetermined formula.
  3. Combination ESOP: A combination ESOP is a mix of both leveraged and non-leveraged ESOPs. In this type of plan, the company contributes cash or stock directly to the ESOP, and the ESOP also borrows money to buy additional shares.
  4. Seller-financed ESOP: In this type of plan, the company's owner or owners sell some or all of their shares to the ESOP. The ESOP borrows money to buy the shares from the owner, and the owner provides financing to the ESOP.
  5. Hybrid ESOP: In a hybrid ESOP, the company contributes both cash and stock to the ESOP. The ESOP uses the cash to buy additional shares, and the stock is allocated to the employees based on a predetermined formula.

It's important to note that financing an ESOP can be a complex process that involves legal, tax, and financial considerations. It's recommended that companies seeking to establish an ESOP work with experienced professionals, such as lawyers, accountants, and financial advisors, to ensure the plan is structured correctly and complies with all relevant laws and regulations.