What is an SME Loan?

An MSME/SME has limited resources as compared to established businesses, but the need for funds can arise at any time. For instance, a small chemist shop might have seen an increased demand for products during the Covid-19 pandemic. To meet this demand, they can take a small business loan to purchase their inventory without relying on the cash flow. If your business has been running successfully, you can take a loan to shift to a better workplace or open another branch.
For that, you will need money to pay for property, staff, establishment, and other necessities that you can fund with an SME loan. A small business may need funds for a variety of purposes, like to handle everyday operations or to expand. The best thing is that SME loans are easy to apply for. They also have easy eligibility conditions and minimal documentation requirements, thus making them small-business friendly in many aspects.

Features of SME Loans

• Minimal Documentation:
  One of the benefits of SME loans is their low reporting requirements. A conventional business loan can demand documents such as land deeds, financial statements, and a list of sellers, partners, or shareholders. SME loans do not have these requirements. Simple records such as financial accounts, GST information, and income tax returns that are readily available are the only requirements. Small companies need no travel from pillar to post to obtain these documents.
• Collateral-free:
  Small business loans are mostly unsecured. That makes it collateral free. As an SME owner, you do not have to generate property documents or mortgage company facilities to obtain financing. Basic documentation and evidence of company transactions will suffice.
• Affordable:
  Since SME business loans are primarily to assist small enterprises, their interest rates are also reasonable. Lenders can determine interest rates for SME loans by reviewing the company's past performance and loan repayment history.
• Adaptable tenure:
  The tenure of these loans is set according to the convenience of the enterprises. For example, many SME loans are short-term and may have a duration of 6 months. Many loans can have a longer duration of about 36 months or more. It depends on the borrower’s needs.
• There are no prepayment penalties:
  Additionally, most SME business loan providers waive prepayment penalties for early loan closures. Therefore, if you are willing to pay off the mortgage before the scheduled time, you can save money while incurring no further fees for early termination.

Documents Required for a MSME / SME Loans

We accept any of the following as a Business registration proof

1)Business Registration Certificate 2) GST filing 3) Gumastadhara 4)Trade License 5)Drug License 6)TIN7)VAT registration

3 simple steps to your MSME / SME Loans

• Submit Application
  Simply enter your personal, business and financial info to receive a MSME / SME Loans offer.
• Upload Documents
  Upload digital copies of your documents in a single step process for verification.
• Get Sanctioned
  Receive your MSME / SME Loans approval and disbursal within 3 working days.

Benefits Of MSME loans

Business loans for MSMEs have become an ideal financial product chosen by entrepreneurs to raise immediate capital for their businesses and invest effectively in all the included business factors. Here are some of its benefits:

1. Capital Requirements
The primary reason for taking a business loan for MSME is the usage of the loan amount. Most MSME owners apply for a loan to fund business expenses such as paying rent, buying machinery, hiring employees, buying hardware or software etc. Taking a business loan instead of using your finances is advisable since such purchases can be expensive.

2. Interest Rates
Lenders attach the most attractive and affordable interest rates to business loans for MSMEs as they are critical to the economy’s growth. Compared to other loan types, MSME business loans come with lower interest rates, mitigating the possibility of a financial burden on the borrower. It ensures that the highest possible amount is available for business needs and the slightest portion is spent on interest payments.

3. Business Control
Every business goes through ups and downs to changing customer interests and the ever-changing external market. As a small business owner, you might face financial crunch and cash shortages from time to time. You might have to give up a company stake if you try to raise cash using funding from investors or venture capitalists. In such a case, an MSME loan can ensure that your business remains in your control by infusing positive cash flow.

4. Collateral-Free Loans
One vital benefit of a business loan for MSMEs is providing the loan amount without the need for pledging any asset as collateral. MSME business loans are entirely collateral free to assist companies that do not have high-value assets to keep as collateral with the lender to raise adequate capital and fund business activities.

5. Short-Term Commitment
Repayment of a loan creates a financial obligation for the borrowers who have to pay regular interest over the loan tenure. However, MSME loans can fulfil the short-term capital requirement for a business without creating any long-term financial commitment for the borrower. It also ensures effective cash flow management as there are no long-term debt obligations.

6. Tax Benefits
Small business loans allow you to save some tax benefit as well. This is because there are sections of the Income Tax Act that state the percentage of profit utilised for repaying the loan amount is exempt from the tax.

YOU CAN ALSO APPROACH PROFESSIONAL EXEMPLAR FINANCIAL PLANNER WHO CAN PROVIDE YOU UNBIASED ADVICE  ACROSS ALL LEADING LOANS PROVIDERS WHILE TAKING ANY MSME LOAN.