All About Small Business Loans in India
India is home to millions of small and medium-sized enterprises and is an emerging market in the world at the moment. These small and medium industries contribute to a major portion of GDP growth and also remain a critical source of employment for a major portion of India’s population.
Recognizing the importance of SMEs, the government and RBI have started several small business loan schemes to help boost these industries and businesses.
Features of Small Business Loans
Funds can be availed at an affordable price
As per the reports, more than 80% of small businesses fail to survive in their initial stage as they don’t have sufficient funds. Proving small business loans to SMEs and MSMEs is an effort by the government and different banks to provide financial support to small business who are facing financial issues. The funding provided is based on business potential and requirements. However, affordable pricing is one of the best parts of these loans.
Flexi loan facility is also available
Flexi loans are a great initiative by some banks that offer business funding along with great flexibility. The loan offers business owners to withdraw funds as per their requirements and repay as per their cash flow. With Flexi Loans, business owners can also pay only the interest component in the beginning and repay the principal at the end of the tenure period.
Small business loans offer unsecured funding
Though it is a bit difficult for banks to trust start-ups and small businesses for repayment, still with some banks it comes unsecured. This enables many of the small businesses to get funding which they were unable to get through a conventional business loan.
Online Assess
Many of the business loan and government business funding schemes can be accessed online. This saves business owners from the hassle which they had to face previously by visiting banks and government offices.
Small business loan options available in India
MUDRA Loan
The scheme has been formed to provide financial support to non-corporate, non-farm small/micro-enterprises of the country. The loan can be availed from authorized private and public sector banks, regional rural banks (RRBs), small finance banks, and corporate banks. One can apply online for a Mudra loan through the official website of MUDR.
Eligibility
Any non-corporate Small Business Segment comprising proprietorship/enterprise firms in rural and urban areas can apply for the Mudra loan. This includes:
- Small manufacturing units
- Shopkeepers
- Fruits / vegetable vendors
- Truck operators
- Food-service units
- Repair shops
- Machine operators
- Small industries and businesses
- Food processors and others
Credit guarantee fund government business loan scheme
CGTMSE is one of the best government business loan schemes available for MSMEs. The scheme was started 18 years ago and since its inception, it has been providing collateral-free loans for MSMEs. The loan can be availed from any authorized commercial bank and the regional rural bank. The loan is approved based on the eligibility of the Micro and Small Enterprises.
The scheme can provide a working capital loan of up to ₹ 10 lakh and has provisions for bigger sanctions as well for eligible enterprises. However, for that business owners are required to provide collateral in form of any of their assets as a guarantee.
The scheme is eligible for
1. Manufacturing activity (Retail trade; Educational institutions; Self-help groups; Training institutions.)
2. Service activity, except
- Flexi Loan by Bajaj
Baja provides Flexi loans of up to 45 lakhs to small businesses. The loan can be availed online and strengthen your business to survive. The loan can be availed for any of the business purposes ranging from business expansion, inventory purchase, paying staff, and many more. The best part about the Bajaj Flexi loan is – it gets approved and disbursed on the same day when you apply for it.
Eligibility Criteria
The applicants must be in age group between 25 to 65 years.
The applicant must own a business for a minimum of 3 years.
The applicant must have filed income tax returns for the business for a minimum of 1 year.
Credit Linked Capital Subsidy Scheme (CLCSS)
CLCSS is a credit scheme government business loan funds technological upgrades. The scheme is launched by the Ministry of MSMEs especially in rural and semi-urban areas. The scheme provides a 15% subsidy on investment in eligible machinery. However, the maximum cap on the subsidy restriction is up to ₹ 1 crore.
Eligibility Criteria
To be eligible for this scheme, a business owner needs to apply as a sole proprietorship business, partnership firm, and co-operative or private/public limited company.
Fullerton India Business Loan
Fullerton India business loan products have been designed especially for investment in the business. This loan helps fulfil the urgent needs of the business which helps them to exist in the competitive market. These loans can either be secured by collateral or be unsecured, based on the amount needed, profile and credibility of the business.
Eligibility Criteria
- The applicant should be a self-employed professional, manufacturer, retailer, or trader.
- The minimum age to apply for this loan is 21 years.
- The maximum age at the time of loan maturity should be 65 years.
- The applicant’s minimum turnover should be ₹ 10, 00,000 in the last year.
- The applicant should have filled in an ITR of more than 2.5 lakhs in the past year.
- The business should be existing for 3 years and the applicant should have at least 5 years of business experience.
These were some of the small business loans which can provide funding to your business at minimal eligibility requirement currently in India that too at an affordable interest rate.