Growth of any business, it doesn’t matter that it is big or small, depends on various factors, among which the lifeline of any business is the smooth flow of liquid funds. But, in today’s competitive world, it is not easy to give wings to the business or to bring it to next level such as marketing cost, production cost, and so on.
For this, you need enough working capital for fulfilling the requirements of a business. The deficiency of the inflow of sources can seriously interrupt the day-to-day operations of any business. In such circumstances, business loans can come handy as they provide much needed financial support to the borrower so that they can grow and face the competition in the chosen markets.
An unsecured business loan is the safest and the best funding option. In the market a host of the banks and Non-Banking financial institutes are present which offer business loan to salaried and self-employed individuals, professionals, firms. Hence it’s become more important to research the best lender which suits your requirement and which one is pocket friendly to you.
Capital is a must for every business, be it small or large. Without having enough monetary sources, it seems really tough to take the business to new heights and expand its marketing network. Thus, getting the right financial management is a must for any organization to grow and sustain in a market of neck-to-neck competition, where rivals lay in wait for retaining the customers.
However, it’s not as easy task as it sounds, especially if the market is flooded with several business loan schemes. Getting the right finance scheme is important as it moulds the organization accordingly, but before starting, it is also important to have a brief understanding of the term.
As the name suggests, the loan or credit given to the small or medium/large scale organizations for various purposes such as raising working capital, purchase of assets, infrastructure expansion, and technology upgradation is known as business loan. The finance scheme is basically designed to meet monetary needs of a venture who cannot afford to meet organizational financial needs.
Lesser Risk Involve: In an unsecured business loan the risk profile is very low for the borrowers. As, unsecured business loan is a collateral free loan, which means the borrower do not need to put any of his assets or security for availing the loan. Hence, it gives you the feeling of being secured as your assets are out of any kind of risk.
Flexible Repayment Option: Unsecured business loans come with flexible repayment option. The loan tenure of a business loan ranges from 6 months to 3 years. One can opt for any tenure according to his or her convenience like on a daily, weekly, or monthly basis. The flexibility of repayment gives the borrower a better opportunity to repay the whenever it is convenient for him.
Unrestricted Financing: Unsecured business loan is a multipurpose loan such as personal loan, which can be used for any purpose associated with the business. The borrowers need not to specify the reason of availing loan to the lender he or she can use the loan for various purpose like for fueling the working capital, purchasing assets, paying employees, paying utility bills, expanding business, marketing and promotion and other things which are related to the business. .
Short-Term Option: Business loan is a short term loan, with this one can easily meets his or her business requirements to fill a short-term financial gaps. In addition, there are flexible loan options depending on the size of the business like 100% disbursement, 70% payout etc. with business loan one can expand his or her business and make position in the business world.
Affordable Interest Rates: The interest rate on business loans depends on various factors such as the loan tenure, market dynamics, business plan, the financial condition of the business and more. The rate on loan varies from lender to lender.
With the increase in the number of business loan, there is also a variation in the eligibility criteria of the lenders. But the basic criteria remain the same which is given below-
Type of Business Loan
Unsecured Business Loan
1. Unsecured business loan
2. No collateral required to apply for a business loan
3. Bajaj Finserv offers business loan at attractive and affordable interest rates
One can avail Business Loan up to Rs 30 Lakh
Unsecured Business Loan
1. Benefit of business loan balance transfer
2. HDFC Offers overdraft facility along with flexible tenure options
3. HDFC Business Loan also offers premium loan cover
Rs 40 Lakh (can go up to Rs 50 Lakh in selected locations)
Unsecured Business Loan
1. No collateral or security is required
2. Business Loan Balance Transfer option is available
3. Axis Bank offers simplified access and minimal documentation
Axis Bank offers Business Loan up to Rs 50 Lakh
State Bank of India
1. Asset Backed Loan
2. Fleet Finance
3. Open Term Loan
4. SME eBiz Loan
5. PM Mudra yojana
6. Stand Up India
7. SME Credit Score
8. E dealer finance scheme
9. E vendor finance scheme
10. Warehouse Receipt Funding
11. Simplified Small Business Loan
12. Asset Backed Loan Commercial Real Estate
1. Business Loan offered for the purpose of manufacturing, services, whole sale retail etc
2. No security or collateral is required for business loan
3. SBI Business Loan is also offered for path labs, diagnostic centres, nursing homes etc.
The Loan Amount varies from product to product.
2. Term Loans
3. GST Business Loan
4. Collateral Free Loans
5. Loans without Financials
6. Working Capital Finance
7. Loans for new Entities
8. Finance for Importers and Exporters
9. Secured Loan for Merchant Establishment against Credit Card swipes
1. ICICI Bank offers flexible repayment tenure
2. The tenure of business loan is up to 7 years
3. Collateral free term loan is also offered under the CGTMSE scheme.
The Loan Amount varies from product to product.
Though every business has different products and services to offer, their needs differ too. There various credit schemes available in the financial market for specific financial requirements. So, before moving ahead, it is significant to analyze the business needs and then opt for a business loan accordingly.
Let’s have a dig at types of business finance schemes in India:
Term loans – These loans are especially designed to meet financial needs of a business such as raising capital, purchase of equipments, etc. Term loan is mostly recommended for businesses looking to expand their network. The borrowers get a lump sum of cash which they repay in easy monthly instalments along with applicable interest rate over a predetermined tenure.
|Lender||Interest Rate||Loan Amount||Loan Tenure|
|Fullerton India||13% p.a. to 16% p.a. (floating)||Up to Rs.50 lakh||12 months to 48 months|
|Bajaj Finserv||18% p.a. onwards||Up to Rs.30 lakh||As per the lender’s terms and conditions|
|India Infoline Finance Limited (IIFL)||18% p.a. to 25% p.a.||Rs.1 lakh to Rs.50 lakh||12 months to 48 months|
|HDFC Bank||15.65% p.a. to 21.20% p.a. (Rack interest rate)||Rs.50,000 to Rs.50 lakh||12 months to 48 months|
|Dewan Housing Finance Ltd. (DHFL)||As per the lender’s terms and conditions||Up to Rs.20 crore||Up to 5 years|
|Magma Fincorp||As per the lender’s terms and conditions||Rs.2 lakh to Rs.2 crore (will vary based on the scheme type)||12 months to 60 months (will vary based on the scheme type)|
|Kotak Mahindra Bank||13% p.a. onwards||Rs.3 lakh to Rs.2 crore||12 months to 60 months|
|Karnataka Bank||10.3% p.a. onwards||Up to Rs.500 lakh (will vary based on the type of scheme)||Up to 120 months (will vary based on the type of scheme)|
|Tata Capital||19% p.a. onwards||Rs.5 lakh to Rs.50 lakh||12 months to 36 months|
|Mahindra Finance (Unsecured Business Loans for SME)||17% to 19% p.a. onwards||Rs.1 lakh to Rs.5 lakh||Up to 12 months|
|Federal Bank (Asset Power Scheme – Business Loans for Professionals)||12.3% p.a. to 15.35% p.a.||Up to Rs.2 crore||Up to 84 months|
|State Bank of India (Simplified Small Business Loan)||8.25% p.a. onwards||Rs.10 lakh to Rs.25 lakh||Up to 60 months|
|Standard Chartered Bank (Business Installment Loan)||17.25% p.a. onwards||Rs.10 lakh to Rs.75 lakh||Up to 60 months|
Business loan is definitely a great help when it comes to funding an already existing or a start up business, but this comes with a huge financial responsibility as well. Opting for a business loan can help you get access to the required funds, but there are certain things to be kept in mind before making the huge step. So, here are some fundamental parts you need to take care of at your end for prepping a strategic business plan with a business loan application.
Purpose of loan – First and foremost, stay clear with the purpose for opting the loan. Every business is different and thus, the needs may vary as well. The reason behind can be recruitment, launching new product or service, purchase of inventory, infrastructure improvement, technology upgradation, or so on. Also, having an approximate clear idea about the purpose gives an insight of the required funds. Hence, knowing your exact loan purpose is one of the key factors to determine the amount of funds required.
Business plan – A lender always ask for a business plan to be submitted by the borrower. Thus, one should include following factors in the business plan while filling a loan application form.
Business documents – While filling up any loan application, it is mandatory to attach a copy of required documents as well. Therefore, keep your business-related documents ready to be submitted along with the filled application form. These documents will act as a proof of business registration and reliability.
Required loan amount – It is necessary to mention the required loan amount for a specified reason. For instance, you are planning to buy inventory, then you should be aware of the market prices of the required inventory. It becomes essentially easy to process the loan application if found reliable and relevant.
Repayment tenure and penalty charges – Though most borrowers often overlook these factors, it is meanwhile significant to be aware of repayment tenure and applicable penalty charges related to business loan. The lender provides the basic information about the terms and applicable charges, but it’s your responsibility as well to thoroughly know and understand all the terms and conditions before signing on the dotted lines. Understanding these terms helps borrower to avoid any conflict or confusion in near future.
|Bank/NBFC||Institution Type||Minimum Loan Amount||Maximum Loan Amount||Minimum Tenure||Maximum Tenure||Interest Rates||Fees & Charges|
|Aditya Birla Finance Ltd.||NBFC||₹50,000||₹15,00,000||1 Year||3 Years||16.85% - 17.85%||Up to 2% + GST as applicable|
|Arohan Financial Services Ltd.||NBFC||₹5,00,000||₹75,00,000||9 Months||2 Years||20.70% - 26.99%||1% + GST as applicable|
|Axis Bank||Bank||₹50,000||₹50,00,000||1 Year||15 Years||Custom||Up to 2% + GST as applicable||Bajaj Finserv||NBFC||₹1,00,000||₹30,00,000||1 Month||8 Years||18% - 40%||Up to 3% + GST as applicable|
|Clix Capital Services Pvt. Ltd.||NBFC||₹10,00,000||₹50,00,000||1 Year||3 Years||12% - 15%||Up to 2% + GST as applicable|
|Capital First||NBFC||₹10,00,000||₹75,00,000||1 Year||5 Years||16.00% - 24.00%||Up to 2% + GST as applicable|
|Deutsche Bank||Bank||₹ 10,00,000||₹50,00,000||2 Year||4 Years||24%||Up to 3% + GST as applicable|
|Equitas Small Finance Bank||Bank||₹5,00,000||₹75,00,000||1 Year||5 Years||18%||2% + GST as applicable|
|Edelweiss Financial Services Ltd.||NBFC||₹3,50,000||₹25,00,00,000||4 Years||10 Years||20.50%||2% - 3.5% + GST as applicable|
|Fortune Financial Services - Kapital Tech||NBFC||₹2,00,000||₹150,00,000||3 Months||2 Years||15% - 24%||1.5% - 2% + GST as applicable|
|Fullerton||NBFC||₹10,00,000||₹50,00,000||1 Year||4 Years||13% - 16%||Up to 6.5% + GST as applicable|
|HDFC Bank||Bank||₹50,000||₹50,00,000||1 Year||4 Years||15.65% to 21.20%||Up to 2.50% + GST as applicable|
|HDB Financial Services Ltd.||Bank||₹ 1,00,000||₹30,00,000||1 Year||5 Years||12% - 36%||2% + GST as applicable|
|ICICI Bank||Bank||₹1,00,000||₹10,00,00,000||1 Year||5 Years||12.9% - 16.65%||Up to 2% + GST as applicable|
|IndusInd Bank||Bank||₹1,00,000||₹15,00,000||1 Year||5 Years||10.6% -18%||0.5% + GST as applicable|
|IDFC Bank||Bank||₹1,00,000||₹40,00,000||1 Year||5 Years||11.69% - 15%||1.5% + GST as applicable|
|India Infoline||NBFC||₹1,00,000||₹50,00,000||1 Year||5 Years||18% - 25%||Upto 3% + GST as applicable|
|Kotak Mahindra Bank||Bank||₹3,00,000||₹2,00,00,000||1 Year||3 Years||16.00 % to 19.99%||Up to 3% + GST as applicable|
|Lendingkart Finance Ltd.||NBFC||₹50,000||₹100,00,000||1 Month||1 Year||18% - 27%*||2% + GST as applicable|
|Magma FinCorp Ltd.||NBFC||₹3,00,000||₹2,00,00,000||1 Year||4 Years||17% - 21%||2% + GST as applicable|
|Neo Growth||NBFC||₹2,00,000||₹75,00,000||6 Months||2 Years||12% - 36%||2% + GST as applicable|
|RBL Bank Ltd.||Bank||₹10,00,000||₹35,00,000||1 Year||3 Years||16.00% - 27.00%||2% + GST as applicable|
|Standard Chartered Bank||Bank||₹10,00,000||₹75,00,000||1 Year||5 Years||13.5% - 20%||Up to 2% + GST as applicable|
|Tribe Tech Private Limited||NBFC||₹1,00,000||₹20,00,000||1 Year||3 Years||12% - 36%||2% + GST as applicable|
|Yes Bank||Bank||₹20,00,000||₹400,00,000||1 Year||5 Years||13.25% - 19.99%||Up to 2.5% + GST as applicable|
If survey reports to be believed, India has the third largest startup base after the US and the UK. This is evident that why several banks and financial institutions are coming forward with best startup business loan schemes, and government remains no behind. The government of India has launched several business finance schemes to encourage number of startups in the country. As entrepreneurs don’t have enough capital at initial level, the government has taken the initiative to provide financial assistance to these small scale industries.
MUDRA loan -
Micro Units Development and Refinance Agency (MUDRA) is a government scheme which aims to provide adequate funds to micro units and the non-corporate business sector. As the small scale organizations lack substantial funds required for the establishment and development of the venture, the government aims to provide access to the capital. The scheme has been designed to take care of growth and finances at the initial level.
Several banks and financial institutions came forward to support the scheme and provide MUDRA loan as per customer’s requirement. Also, the scheme is structured in three categories based on the lending amount.
The Credit Guarantee Scheme (CGS) - The CGS scheme, launched by the Indian Government, is specifically designed for micro and small scale enterprises to avail collateral-free lending for non-corporate sector. The best part is that both new and already established enterprises are covered under the scheme. Though the scheme can help in managing finances for an enterprise at initial level, the loan amount is approved based on any individual’s eligibility and past credit record. Also, the rate of interest is kept reasonable so that one don’t feel financially burdened while keeping up with the business responsibilities.
Stand up India Scheme -
Stand-Up India Scheme provides business loan for the amount ranging between Rs.10 lakhs and Rs.1 Crore to Scheduled Caste (SC) or Scheduled Tribe (ST) community for setting up a Greenfield enterprise. The scheme particularly aims at encouraging woman entrepreneurship among the SC/ST community.
Basically, a Greenfield enterprise is one which is not constrained by prior work. It is constructing on unused land where there is no need to remodel or demolish an existing structure. The amount can be borrowed for starting trading, manufacturing, or service units. Also, it is mandated to grant loan to at least one SC/ST or one woman per bank branch.
Bank credit facilitation scheme - Bank credit facilitation scheme was initiated by National Small Industries Corporation (NSIC) to meet the credit needs of MSME units and thus, NSIC entered into MoU with various banks and financial institutions. In association with banks, NSIC aims at meeting financial requirements of MSME industry. The credit repayment terms depend on the income generated from the business. Also to be noted that these handholding support provided by NSIC is offered at no cost to the MSMEs.
Coir Udyami Yojana -
The Coir Udyami Yojana is basically a credit linked subsidy scheme introduced for the growth and development of the coir sector. Though the scheme doesn’t provide skip up-gradation sessions, it aims at adoption of modern technology for the production and processing purposes. Adoption of modern technology encourages better productivity, efficiency, and quality, which ultimately enhances workers’ income associated to the job.
The pattern of financial assistance is in split where 40% of the project cost comes from Government of India Subsidy, 5% from Bank, and remaining 5% from beneficiary contribution. The Coir Udyami Yojana covers project costing up to Rs.10 lakhs plus working capital, which should not be more than 25% of the total estimated project cost.
Individuals, corporates, non-governmental organizations, self help groups, registered institutions under Societies Registration Act 1860, Joint Liability Group, Co-operative societies, and charitable trust can all take benefits of the scheme.
Micro Units Development and Refinance Agency Ltd., or simply MUDRA is a finance scheme designed to promote entrepreneurship and extend the financial support for the project implementation. The scheme was launched by the Prime Minister Narendra Modi in April 2015 to provide financial aid for up to Rs.10 lakhs to the non-corporate, non-farm small/micro scale enterprises. Under the Pradhan Mantri MUDRA Yojana (PMMY), the borrower can approach commercial banks, small finance banks, RRBs, MFIs, Cooperative Banks, and NBFCs.
In addition, to signify the level of growth and funding needs, the scheme is categorised as ‘Shishu’, ‘Kishor’, and ‘Tarun’, each having different loan quantum, interest rates, and tenure.
Shishu – Loan given under the ‘Shishu’ category approves the loan quantum up to Rs.50000 at 12% per annum interest rate. The tenure for the repayment is up to 5 years.
Kishor – A beneficiary micro unit or entrepreneur can borrow between Rs.50000 to Rs.5 lakh under this category. The rate of interest may vary from bank to bank as per the guidelines of the scheme.
Tarun – If the project demands a higher funding, the loan is sanctioned under the category of Tarun covering loan value between Rs.5 lakh to Rs.10 lakh.
‘Make in India’ is a Swadeshi Movement of the government of India launched in September 2014 with an aim to encourage growth and development of the Indian economy. The movement was designed to facilitate investment, enhance skill development, foster innovation, and build best-in-class manufacturing infrastructure. The campaign was coupled with several other schemes including MUDRA to promote micro enterprises growth and development.
As a result, India was soon listed in the top destination in 2015 for foreign direct investment (FDI), surpassing the United States and China. Along with the Make in India campaign, several states too launched their own domestic schemes to promote entrepreneurship such as ‘Make in Odisha’, ‘Vibrant Gujarat’, ‘Tamil Nadu Global Investors Meet’, ‘Magnetic Maharashtra’, and ‘Happening Haryana’.Roles and responsibilities of MUDRA loan:
Well, it is quite clear that the MUDRA loan scheme was designed primarily for boosting the growth and development of the micro enterprise sector by extending financial support to the beneficiaries. The scheme aims at dragging down the major constraints faced by the small/medium scale enterprises, including:
• Access to Finance
• Infrastructure Gaps
• Lack of growth orientation
• Skill Development Gaps
• Policy Advocacy Needs
• Lack of Market Development / Market Making
• Knowledge Gaps
• Information Asymmetry
• Entry Level Technologies
In order to bridge the gap, the government decided to set up the Micro Units Development and Refinance Agency Ltd. (MUDRA) as a wholly-owned subsidiary of Small Industries Development Bank of India (SIDBI). About Rs.1000 crores capital is authorized for the functioning of MUDRA, which is expected to increase in coming days.
Well, it’s a common question – what is covered under Mudra loan scheme? So, let’s clear the doubt and have a glimpse of the sectors covered under the Pradhan Mantri MUDRA Yojana.
Transport vehicle – Transportation and passenger vehicles such as auto rickshaws, three-wheelers, small good transport, vans, e-rickshaws, tractors, taxis, etc. are eligible for assistance under PMMY scheme.
Community, social, and personal services – Gymnasium, boutiques, beauty salons, tailoring shops, cycle and motorcycle repair shops, dry cleaning shops, photocopy shops, medical, courier agents, etc.
Food products sector – Achaar making, agricultural produce preservation at rural level, papad making, jam and jelly making, sweet shops, canteen services, food stalls, cold chain vehicles, ice making units, biscuit, bread and bun making units, etc.
Textile sector – Handloom, zardozi work, khadi activity, chikan work, traditional embroidery, traditional dyeing, hand work, apparel design, knitting, cotton ginning, stitching, computerised embroidery, and other non-garment products including bags, furnishing accessories, and vehicle accessories.
Traders and shopkeepers – Sole proprietors for running shops, trading, and business activities, non-farm income generating activities, and other service enterprises.
Activities linked to agriculture – Pisciculture, poultry, bee keeping, grading, livestock-rearing, aggregation agro industries, fishery, agri-clinics and agribusiness centres, agro processing units, etc. However, crop lands and land improvement such as irrigation and wells are excluded from the benefits under the scheme.
For better working capital flow, MUDRA debit card is issued against the MUDRA loan account. The borrower or beneficiary can use the card for making multiple withdrawals from the loan amount limit already approved by the lender. This way, it would be convenient to manage working capital in an efficient manner, while keeping the interest burden minimum.
The card can be used for cash withdrawal from any ATM and even for making payment at any PoS outlet. Therefore, it would not be wrong to say that MUDRA loan card is an innovative product designed to improvise cash credit management.
Now, a hundred dollar question is who can apply for the PMMY loan? To this, you need to check the eligibility criteria of the loan. The loan is generally offered to all the non-farm income generating businesses in trading, manufacturing, and services sector.
To get the loan, all you need to do is fill up the MUDRA loan application online along with the attached documents such as personal identity proof, enterprise’s registration proof, quote for the machinery or other goods to be purchased, supplier details, and category proof (if any).
After evaluating your business or project’s finance needs and application category, the lender sanctions online loan up to Rs.10 lakh.
Do you know where the cheese that you enjoy on pizza toppings and sandwiches come from? You might be quick to say, ‘from cow’s milk’. Though that’s right, but it may be noted that despite a good market demand, dairy farming is a large unorganized sector and a key income source to earn a living for many, especially in the rural areas. Thus, in order to boost the growth and improvisation of quality dairy products, the Department of Animal Husbandry, Dairying and Fisheries launched the dairy farm loan or venture capital scheme for dairy and poultry business back in 2005. The scheme was designed to sanction interest free loans for setting up dairy or poultry units.
Following the success rate of the scheme, the government of India later in 2010 launched another dairy farm loan scheme – the Dairy Entrepreneurship Development Scheme. Under the scheme, financial support was given to dairy farmers to conduct organized and quality assured dairy farming. With this, dairy farmers enjoyed the financial freedom as they don’t have to shell out their savings for business activities like purchase of raw materials, product processing, dairy product storage, packaging, and warehousing. Dairy farm loans also cover the cost associated with the shelting and day care of animal species that help in the production of dairy products.For what purpose the funds can be used for?
Purchase of machines for milk production – If you make investment up to Rs.20 lakh for the purchase of milking machines, chilling machines, and milk testers, then you can claim subsidy between Rs.5 lakh to Rs.6.67 lakh under the scheme.
Setting small dairy units – Of course, setting a business, be it small or large scale, demands a hefty sum of investment. Even for setting a small dairy unit of just 10 animals, you are required an investment of at least Rs. 6-7 lakhs. While applying for dairy farm loan for setting a dairy farm unit, you can enjoy subsidy up to Rs.1.98 lakhs.
Purchase of dairy processing equipments – Processing the dairy products require certain equipments for clarification, separations, homogenization, pasteurization and some other operations. Dairy farm loan funds can be utilized for the purchase of such machines.
Purchase of animals – Of course, to run a dairy farm, farmers need mulch animals such as calves, cows, buffaloes, camels, goats, sheeps, etc. As the cattles come at higher prices, farmers can opt for a dairy farm loan to avail finances. Funds can be also utilized for constructing or expanding the cattle sheds.
Dairy marketing outlets – Marketing is the life blood of any business, and to do so, you need a hefty sum of money in hand. Thus, you can apply for online farm loan to finance the marketing cost.
Cash or funds are life blood of any business, be it small or large scale enterprise. However, sometimes a company falls short of finances and don’t have enough capital to handle day-to-day business operations. Companies that are into seasonal or cyclical business often face such situations and mostly rely on working capital loan to sustain during the periods of reduced business activity. For instance, fruits and vegetable sellers, wall paint companies, fire cracker companies, etc.
Basically, working capital loan is a financial assistance given to companies that find it difficult to manage day-to-day business operations either due to off-season or some other reason. The funds sanctioned can be utilized for the purchase of assets, making investments, raising working capital and/or improving cash flow. Notably, short-term operational needs such as payroll, rent, stationary, and bill payments can poorly affect the business’ cash flow. Thus, working capital loans are angels for better corporate management and to fund its everyday operations.
Well, unlike any other loan or credit scheme, working capital loan, too, have its eligibility criteria. Let’s check what companies or firms are eligible for the loan:
• Any business unit registered as Limited, Private Limited, Partnership, or Proprietorship Company
• A company must have operational history of at least 1 year
• It should have minimum turnover of Rs.20 lakh annually
• It should have monthly sales of Rs.5 lakh
Collateral free loan – Set your worries aside to pledge any asset or property as collateral security against the loan. Such loans are generally collateral free.
Flexible tenure – Not every business is same and thus, going with this, the loan is offered at flexible tenure ranging from 6 months to 60 months.
Transparent process – One doesn’t have to worry about any hidden charges or terms involved as the entire process is done online.
Easy application process – Bid a goodbye to bank’s restricted visiting hours and long queues. Just log into online portal, fill the application and submit. The process is entirely convenient and hassle-free.
Quick disbursal – No waiting for days to get the funds credited into the bank accounts. Working capital loans are quickly disbursed as soon as the application is approved.
Minimum interest rates – Interest rates consumes a good portion of total repayment amount, but in case of working capital loans as the credit is offered at minimum rate of interest keeping up with your business budget.
Prime Minister Narendra Modi launched a quick business loan portal in November 2018 with an idea to promote business growth. The portal – PSB loans in 59 minutes – guarantees quick financial assistance to the entrepreneurs, so that nothing can come in between their path of growth and success. Under the scheme, entrepreneurs or MSMEs can get business loan for as low as Rs.1 lakh and as high as Rs.5 crore in just less than 59 minutes. The scheme is operational jointly in association with public and private sector banks and non-banking financial institutions as well.
PSB loans in 59 minutes is a user-friendly business finance platform that offers transparent, convenient, and hassle-free finance services to borrowers to help them achieve the heights of success. With quick funding facility, entrepreneurs can focus on other business activities while relaxing from working capital point of concern. The platform is designed under the leadership of Financial Services Secretary Rajiv Kumar. The portal has notably reduced the turnaround time to just 59 minutes from a week or more waiting period. Hence, PSB business loan makes up for a quirky financial instrument where borrowed funds can be utilized for meeting any end-needs of business.
Even though large scale enterprises make higher revenue than Micro, Small/Medium scale enterprises, MSMEs make up a higher contribution in the social and economic development of India. However, access to timely and adequate funds is still a challenge for MSMEs and thus, it is of paramount importance to bring funds accessible to this sector within no time. Thus, MSME loans are sanctioned to bridge the financial gaps for the growth and development of the enterprises.
As PSB loans in 59 minutes is working as an online platform to fulfil the financial requirements of MSMEs in an easy way, the business loan can be applied for meeting various end needs of a business such as business expansion, purchase of plant and machinery, raising working capital, infrastructure development, technology upgrade, purchase of raw materials, scaling operations, and product and services expansion.
In the market of competitors and rivals, running a business successfully never comes easy, especially when an entrepreneur doesn’t have enough funds in-hand to advertise and market the products and services. Therefore, PSB loan portal understands the importance of cash flow in a business and thus, offers business loan without undergoing tedious, exhausting, and long application formalities.
The loan is offered through digital platform reducing the application and turnaround time from days to just 59 minutes. And this is what makes PSB loans in 59 minutes a handy tool to opt for.
A business, be it small or large scale, is always in need of sufficient cash flow. However, this is not possible all the time and thus, this is when getting a term loan from a bank comes as a determined solution. Many mainstream banks and financial institutions offer term loan at flexible terms and competitive interest rates. So, before proceeding with the loan application, let’s first have an understanding about the basics of the loan.
Basically, term loan is a financial assistance offered by banks for short and/or long term tenure. This helps the entrepreneurs to bridge the financial gap and improve the business cash flow. Sanctioned loan amount can be used for meeting various end-needs of a business such as raising working capital, plant and machinery purchase, business expansion, product launch, etc. However, the tenure and the rate of interest is subject to the fund utilization for the business.
Notably, term loans are classified as per facility, tenure, and security of the loan. Scroll down to grab more details.
Line-of-credit – This is generally preferred by the small scale enterprises. Such type of loan facility helps improving the cash flow as the borrower can access funds from the line of credit set as per the agreement.
Letter of credit – This facility is given to enterprises indulged in international transactions. With the letter-of-credit, borrowers can rest assure to make payments to the suppliers overseas.
Short term loan – Short-term loan generally refers to tenure of less than a year. Such loan type is usually preferred by the MSMEs, which have seasonal revenues or sales and the business period is confined to just limited months throughout a year. Unlike other loans, the loan payment is made in full at the end of agreed term, instead of paying on monthly basis.
Long term loan – A loan which is taken for a period of more than 1 year is long term loan. This loan type is best suited for the expansion of business, acquiring another business unit, etc.
Interim loan – Bank grants interim loan to the businesses that are out of cash and needs to make urgent payment. Firm’s assets are mortgaged against the loan to the bank.
Secured loans – Basically, interim loans are classified as secured loan due to the lower risk of repayment failure. If the borrower defaults the payment, bank can sell the mortgaged assets to recover the loan amount.
Unsecured loans – It is when no assets or security is pledged against the loan. Thus, the interest rate of unsecured term loans is generally higher than the secured ones.
The concept of entrepreneurship is not new to India and over the years, the country has witnessed a huge growth in the development of women entrepreneurs across wide sectors. It may be noted that Micro/Small and Medium Enterprise sector accounts for over 40% of the overall industrial growth and a good percent of stories are written by women entrepreneurs. However, it was never easy for a woman to set up their own business venture, but thanks business loan providers those have made it easier to avail business loans for women. With this, self-employment in rural and urban sectors has grown massively.
Perform market research – First of all, make sure to perform a thorough market research to know what’s in demand in the market. Now, as you are aware of the market demands and trends, it’s time to make sure that your business idea is viable.
Craft your business plan – Before you apply for business loans for women, remember to chalk down your business plan because this is what the lender would first ask about.
Fund your business – Now as you have a practicable business plan and the lender has approved the loan application, it’s time to fund your business as per your plan. Bear in mind to avoid fund utilization for any personal or unmentioned purpose.
Get it registered – Once you setup business entity, the next is to get it registered with the local authorities and acquire license for conducting proposed business activities.
Produce your goods – Since you’re done with all the formalities, now start producing, manufacturing, and delivering the products to your target customers.
Hence, this was all about the process of getting your business loans for women utilized, so that you can be your own boss.
Hence, as the business loan is designed to ease down the financial burden or help you get access to the required finances to take your business to new heights, there are certain responsibilities as well which you need to take care of at your end. So, before zeroing the final decision, analyze your needs, search for the types of business loans, go through the terms and applicable charges, and then seal the deal.