No matter its size, a business requires funding at different stages of its operation, especially during the growth phase. Whether you need money to invest in marketing, increase your product line, upgrade equipment, expand the workplace, buy inventory, or build working capital, a small business loan is the best way to source your funds and repay in easy EMIs.
An SME loan goes a long way to keep your business running smoothly. You may enjoy numerous tangible benefits from taking an SME Loan. Here is a list of some most crucial ones.
Advantages of Availing SME Loan for Business:
- Generous Loan Amount
Depending on your eligibility, credit score, and other factors, lenders offer generous amounts of up to ₹ 50 lakhs as business loans. Whether you want to buy inventory, build working capital, hire employees, market your business, or upgrade machinery, these loans are sufficient to cover most expenses according to your plan.
- Competitive Interest Rates
MSME loan interest rate is usually on the lower side, especially if you avail it under a government-backed scheme like Stand-Up India, CGFMSE, or Udyogini. However, the interest rate applicable to your loan depends on various factors, including your business model, credit score, balance sheet, business vintage, loan tenure, and others. Maintain a high credit score and fulfill your lender’s eligibility conditions to avail lowest interest rate on your business loan.
- No Collateral Requirement
Many Indian business owners put their property at stake to fund their business. However, if they fail to repay the borrowed amount, they end up ruining their business and subsequently losing their property. SME loans are unsecured loans that you may avail of without any collateral, guarantor, or security. This means your property will remain safe even if your business fails or you default on your loan. So, being collateral-free is one of the most significant benefits of availing of SME loans.
- Easy Eligibility
You don’t need to fulfill cumbersome eligibility conditions to apply for an SME loan. Most NBFCs have simple eligibility conditions that most applicants can fulfill with ease.
If you are a partnership firm, private limited company, proprietor, or self-employed individual working in the trading, services, or manufacturing sector, you may qualify for a business loan provided that you fulfill the lender’s other eligibility conditions. Ideally, you should be a minimum of 22 years of age at the time of loan application and a maximum of 65 years at loan term-end. Besides that, you must be running your business for a few years with minimum turnover, annual income, and profits set by the lender.
- Minimal Documentation
Most business owners dread the extensive paperwork involved in business loan applications. However, NBFCs these days have minimal documentation requirements that significantly save your time and effort. To apply for a business loan from a reputed NBFC, you simply need to provide your identity proof, address proof, income proof, GST, ITR, bank statement, and proof of business existence. If you furnish these documents, you may get your approval almost instantly. So, keep these documents ready to accelerate the loan process.
- Easy Online Application
NBFCs support 100% online loan applications these days. You don’t need to leave your home or office to get the funds you require. Select the business loan you require, enter the necessary information, and scan and upload the required documents. Enter your loan amount and select your preferred repayment tenure. If you qualify, you will get instant approval along with a reference number, which you must use for further communication. After verifying your loan application and the details provided, you will get a loan offer with the loan amount and MSME loan interest rate. If you agree, you will get your loan amount directly into your bank account.
- Flexible Repayment
One of the most significant benefits of availing of an SME loan is that it comes with a flexible repayment tenure. If you qualify for a loan, you are not forced to repay it within a fixed period. Most NBFCs now give an adjustable time frame within which you are free to choose your loan term. Use a business loan EMI calculator to calculate your EMI amount for different loan terms. Smaller loan terms have bigger EMIs, while longer loan terms have smaller EMIs. However, the interest outgo increases with the loan term. Choose a loan term with EMI suitable to your budget and repay your loan without stressing your finances.
These days, business loans have become prevailing affairs for small businesses. Along with all the benefits offered, they give you a chance to improve your credit rating with regular EMI payments. If you are a small business owner, count on an SME loan to cover your business expenses and let it grow when the opportunity comes.