Are you planning to start your cosmetic manufacturing business using a third-party fracturing site? Understanding the process to apply for loan license for cosmetics will be beneficial for you. For small-scale units and entrepreneurs who are interested in entering the cosmetic business, production in their factory may not always be feasible with regard to the huge investment and regulatory expenses involved. It is here that the option of purchasing a loan license to manufacture cosmetics is an economic and feasible alternative.
This article will tell you about what a loan license is, its benefits, eligibility, the step-by-step application process, and regulations after licensing. If you are a new company or an already existing company with expansion plans in the pipeline as far as your line of products goes, this article has all the information you need to start legally and in confidence.
What Is A Loan License For Cosmetic Manufacturing?
The loan license for cosmetics is a legal document that allows the manufacture of cosmetics at a third-party manufacturing site that has a proper license. The loan license for cosmetic manufacturing is released under the Drugs and Cosmetics Rules, 1945, by the State Licensing Authority of the relevant state of the manufacturer.
This license allows brand owners to utilize the manufacturer even if they do not own a manufacturing facility. Therefore, priority is given to those companies that are focused on marketing, branding, and distributing their product.
Who Needs A Loan License?
Any individuals or companies that want to launch or sell their line of cosmetic products but do not have their own manufacturing infrastructure need to apply for loan license for cosmetics. It is particularly useful for:
- Startups launching a new cosmetic brand
- Marketing companies using third-party manufacturers
- Entrepreneurs in the beauty industry are looking to scale quickly
- Private-label cosmetics businesses
By using an established manufacturer’s facility, you can legally produce and sell cosmetics under your brand name.
Step-By-Step Process To Apply For Loan License For Cosmetic
The following is a concise description of the procedure for obtaining a cosmetic manufacturing license:
Step 1: Choose A Licensed Manufacturer
Begin by finding a third-party manufacturer who is licensed to make cosmetics. Ensure that their facility complies with all the regulations and is state-approved.
Step 2: Enter Into A Manufacturing Agreement
Enter into a written agreement with the chosen manufacturer. The agreement should clearly define the role, responsibility, manufacturing terms, and quality tests.
Step 3: Prepare The List Of Products
Draw up a detailed list of products you wish to produce under the loan license. Provide product names, types, categories, and their formulae or ingredient lists.
Step 4: Fill And Submit Application (Form 31-A)
Fill out Form 31-A, the statutory loan license application form. Include all supporting documents and submit to the State Licensing Authority. Online submission via the CDSCO SUGAM portal may be permitted in a few states.
Step 5: Pay The Required Fee
Pay the inspection fee and application fee along with your application as directed. Fees are not uniform across states and are based on the number of products submitted.
Step 6: Facility Inspection
After the application is submitted, a drug inspector will visit the third-party manufacturing facility to verify if it satisfies every regulatory requirement, such as hygiene, quality control, and security.
Step 7: Review And Approval
Provided the inspection has gone well and all the paperwork is in order, the State Licensing Authority will issue the loan license in Form 32-A, enabling you to start production.
Step 8: Begin Manufacturing
After receiving your license, you can start producing your cosmetics under your brand name at the third-party facility.
Benefits Of A Loan License For Cosmetic Manufacturing
A loan license can provide several advantages for a business from both a strategic and fiscal perspective.
- Cost Saving: Ensure significantly lower costs without having to employ the cost of erecting and maintaining a manufacturing unit
- Market entry speed: Bring a product to market faster without having to wait to build, by purchasing new equipment and getting a facility up and running.
- Compliance: Remain compliant with Indian laws through a facility that has received the approval of the CDSCO and the state drug authority
- Focus on branding, sales, and business development: A loan license allows you to focus on branding a product, sales, marketing, or business development, instead of paying attention to manufacturing compliance and costs.
- Opportunity: A loan license is a great way of testing new products or using the facility to launch a niche market product without forming long-term obligations to own a debt or an asset.
Eligibility Criteria For Obtaining A Loan License
To be eligible for a loan license in cosmetics manufacturing, the applicant should fulfill the following eligibility criteria:
- Registration of business: You must be a legally registered business company in India.
- Contract Manufacturer: You will have to sign a contract with an authorized manufacturer who is in possession of a valid cosmetic manufacturing license.
- Trained Personnel: Hire technical personnel with relevant qualifications like B.Pharm or B.Sc in Chemistry.
- Product Specifications: Give the list of cosmetics to be produced under license.
Documents Required For A Loan License
To apply for loan license for cosmetic manufacturing, you need to submit several documents to the State Licensing Authority. These include:
- Application form (Form 31-A)
- A covering letter with company details and purpose
- Agreement between the applicant and the licensed manufacturer
- Copy of the manufacturer’s license and site plan
- List of products to be manufactured
- Details and qualification proof of technical staff
- Product composition and ingredient list
- Sample packaging and labeling details
- Identity and address proof of the applicant
- Declaration of compliance with applicable rules
All documents must be submitted in the prescribed format. The manufacturing unit must comply with Schedule M-II requirements concerning infrastructure, hygiene, and safety.
Timeline For Approval Of Loan License For Cosmetic Manufacturing
The time required to get a loan license may depend on the state and the completeness of your application. On average:
- Offline process: 30 to 60 working days
- Online application via SUGAM: 15 to 30 working days
Faster approval depends on proper documentation and a smooth inspection.
Why Choose A Loan License Over Setting Up A Manufacturing Unit?
Setting up a manufacturing facility involves huge capital, technical expertise, and time. A loan license offers the following comparative advantages:
- Saves initial investment
- Reduces time to launch products
- Ensures regulatory compliance from day one
- Allows focus on branding, marketing, and product innovation
Many leading cosmetic brands in India use contract manufacturing and license agreements to grow faster and minimize risk.
Why Choose ELT Corporate To Apply For Loan License for Cosmetics?
Choose ELT Corporate for applying for a loan licence for cosmetics because they have strong expertise in regulatory compliance, documentation, speeding up approvals, finding licensed manufacturers, and end-to-end support for the licensing process.
1. What Is A Loan License For Cosmetic Manufacturing?
A loan license is understood to be a valid license that allows a business to manufacture cosmetic products on the premises of another company, with the understanding that the applicant does not have a manufacturing site of their own.
2. Who Can Apply For Loan License For Cosmetic Product Manufacturing?
You can apply for a loan license if you are a natural person or legal person, duly incorporated, who has an identified Work Agreement or Work Arrangement with a licensed manufacturer of cosmetics.
3. What Do I Need To Submit With My Loan License Application?
There are numerous documents that are required to accompany the loan license application to complete the application. The required documents must include Form 31-A, a lending agreement with the manufacturer of cosmetics, a product list, a manufacturer license, and qualified person information.
4. How Long Does A Loan License Take To Get Approved?
If you are applying for a License in other states, it is estimated that the loan license will take 15 – 60 days from the time you undertake your application, depending on whether you are an individual or business entity, and depending on whether you lodge your application electronically or manually.
5. Am I Allowed To Manufacture More Than One Cosmetic Product Under One Loan License?
Yes, the applicant is allowed to manufacture more than one product under one loan licence.
