Grow Your Small Business Effectively with Loan Facilities

According to official data, the number of small enterprise units in India increased to 2.95 lakh units in 2020 from 2.41 lakh units in 2019. The SME full form stands for small and medium enterprises, and the growth of these firms are steadily on the rise, as is evident from the adjacent data.

A small business owner of a growing enterprise often requires funds to develop the business according to the plans and maintain cash flow. In addition to growth and maintaining cash flow, monetary support is necessary to carry out various business activities, including inventory storage, resource building, inventory purchase, purchasing equipment, paying salary to the staff, and successfully generating profit in the business. Acquiring an SME loan proves to be an effective and handy financial solution for such scenarios.

To better understand this, it is imperative to know more about these loans.

Features of an SME loan

Illustrated below are the features of an SME loan which you must know if you are a small business owner –

Collateral-free loans

SME loan is a collateral free business loan, for which borrowers need not pledge any assets to secure funds.

Rapid processing

These collateral-free loans come with a simple application process, and reputed lenders approve such loans as fast as within 24 hours.

Minimum documentation

SME loans demand minimum documentation from the borrowers. Representatives of some financial institutions visit the borrower’s residence to collect the documents for the process.

Flexible loan tenor

SME loans come with a tenor ranging up to 84 months to fit the borrowers’ budgetary limits.

Considering the budgetary limits, one must plan out efficiently to repay the loan punctually. This would add to one’s creditworthiness and also open doors to several offers from the NBFCs.

For instance, NBFCs like Bajaj Finserv provide pre-approved offers which help in simplifying and accelerating the lending process. These offers are provided on various financial products like home loans, loans against property, and more. One can check the pre-approved offer by providing a few details such as name and contact number.

Online fund management

Some reputed NBFCs offer their borrowers the facility to manage their loan account and access funds in a simple manner.

Flexi loan advantage

The Flexi loan facility offered by some reputed financial institutions allows borrowers to borrow and prepay funds according to their dynamic business requirements. Flexi business loans result in lower EMI amounts. Through this facility, while making multiple withdrawals on a loan, a borrower pays interest only on the amount used. This leads to lowering the EMIs by up to 45%*.

 Eligibility criteria of SME loan

A potential small business owner must meet the following eligibility criteria to avail of an SME loan:

  • Must be a residing Indian citizen
  • Age must be between 25 to 65 years
  • The business of the individual should be operational for a minimum of three years
  • Income tax returns for the business should be filed for at least one year

Documents required for an SME loan

If you are a small business owner who is looking to grow your business by acquiring this loan, you must produce the below-mentioned documents to the financial institution where you wish to acquire the advance from:

  • KYC documents
  • Proof of business ownership
  • Financial documents
  • Proof of address

Uses of an SME loan

You can use an SME loan for the following purposes:

  • Installation of new machinery or plant for your business
  • Making payments for overheads
  • Fulfilling working capital needs
  • Investing in the infrastructure of your firm

Opting for an SME loan is a highly effective way to grow your small business. The above- mentioned information would act as a perfect guide to make you aware of all the aspects of this loan.