All You Need To Know About SME Loans In India
SMEs play an important role in economic and social growth of markets, particularly in developing countries. In India, lenders are offering new and innovative products under the umbrella of SME finance to help small businesses find their footing and reach new phases of growth.
Moving with the times, most businesses, especially SMEs (small and medium-sized enterprises), need to be more dynamic when it comes to evolving and adapting in order to cater to market requirements. Lenders of SME loans in India too are understanding the changing demands of these small and medium businesses, and are offering SME loans to meet their financial requirements, be it for infrastructure funding, working capital requirements, inventory purchases, equipment financing, expenses for expanding operations, and more.
No Need To Pledge Any Collateral As Security
The catch phrase in the lending market today is ‘easy funding’ to meet the growing need of SMEs. Further easing the process of taking a loan for an SME is the lack of collateral requirements, allowing you, the owner, to be able to use all the assets of the business to their full potential. This also helps to reduce the time of loan approval as no collateral needs to be appraised in the process. The strength of the repayment then comes from the income being generated by the SME rather than the collateral provided.
The Addition Of Innovative Financing Facilities Like Line Of Credit
Innovative funding products that benefit small and medium companies have also been introduced by lenders, and the ‘Line of Credit’ facility offered by Bajaj Finserv is one of the most significant. A Line of Credit or a Flexi Line allows the SME to get approved for a certain level of credit. The SME can use any part or all of the credit any time during the tenure of the loan and pay only the interest component on the portion of the credit used every month. The principal used needs to be repaid only at the end of the tenure of the loan. Flexibility and customisation form the cornerstone of this method of funding, allowing SMEs the freedom to use as much financing as they need without having to pay interest on the unused loan.
High Loan Amounts With Quick Approvals
Whether it is short term, medium term or long term loans, small and mid-sized companies can get loans up to Rs.30 lakh to fund their growth. With no restriction on the use of the loan, you can use the finance for working capital, expansion of your business, buying new machinery, acquiring or setting up infrastructure, hiring talented staff or anything else you need to grow your business. The quick online application process is an added advantage too, allowing business owners to focus on work rather than worrying about applying for financing.
It Is Easy To Qualify For SME Finance
The eligibility criteria for an SME loan are fairly broad, and include the following professionals and business entities:
- Professional practices run by self-employed professionals such as allopathic doctors, chartered accountants, company secretaries, architects, etc.
- Self-employed professionals such as service providers, retailers, traders, manufacturers etc.
- Private limited and closely held limited companies are covered for SME loans, as are partnerships and limited liability partnerships. Other SME profiles may also be eligible based on their business and the lender’s criteria.
The documentation for SME lending is simple and generally revolves around the following:
- KYC documents, which are similar to the ones needed when you open a bank account.
- A certificate of proof of business.
- Financial documents, which will help the lender establish the amount of loan that can be extended based on income generated.
- Bank statements for three to six months to prove repayment ability.
- A passport sized photograph of the owner of the business.
Other documents may be called for depending on the lender as well as to support the aforementioned documents.
Also Read : How Impactful Digital Technology Is On SME
An Overview Of SME Finance
SME lending in India has changed drastically over the years. Once upon a time, SMEs were seen as a burden on the lender and every lending institution preferred to extend loans only to large corporate entities. With the changing business landscape, where once-small online retailers are joining the billion-dollar club and investments are pouring into SMEs which show promise, lenders too are supporting SMEs to spread their wings.
In India, where lenders are fighting to offer their best financing for SMEs, consider taking a Business Loan from Bajaj Finserv, which offers innovative and low-cost funding for small and mid-sized companies. Bajaj Finserv offers competitive interest rates with no collateral requirements, minimal documentation, flexible repayment options, an online application process, and the transfer of money within 48 hours of approval.