At present, India is an emerging market in the world with millions of small and medium-sized businesses. In this article we will discuss small business loan schemes available in India. As a major contributor to GDP growth and an important source of employment for large portions of India’s population, the small and medium industries are an important part of the country’s economy.
Several small business loan schemes have been launched by the government and RBI in recognition of the importance of SMEs.
A small business loan’s features
- 1 A small business loan’s features
- 2 In India, there are several loan options for small businesses
- 3 Criteria for eligibility
Funds are available at an affordable price
Approximately 80% of small businesses do not survive their first stage due to the lack of adequate funding, according to industry reports. It is the government and different banks’ aim to provide small businesses with financial support who are facing financial difficulties. Amounts of funding are determined by the business’s needs and potential. The best part of these loans is their affordable pricing.
A flexible loan facility is also available
Some banks offer flexible loans that give businesses great flexibility while providing business funding. Withdraw the funds as per your requirements and repay as per your cash flow with this loan. Business owners can also make only the initial payment of interest and repay the remaining principal at the end of the loan term with Flexi Loans.
Business loans provide unsecured funding for small businesses
The bank may not trust small businesses and start-ups to repay the loans, but in some cases the loans can still be unsecured. A conventional business loan cannot offer such funding to small businesses.
Accessed via the Internet
You can access many of the government’s business funding schemes online. The convenience of using this system eliminates the inconvenience of visiting banks and government offices previously.
In India, there are several loan options for small businesses
Loans from MUDRA
Small and micro-enterprises in the country that are not corporations and not owned by farms will be supported through the scheme. An approved private or public sector bank, a regional rural bank (RRB), a small finance bank, or a corporate bank can offer this loan. Mudra’s official website allows one to apply for a loan online.
The eligibility criteria
Small businesses of all types, including sole proprietorships and enterprises, can apply for Mudra loans. The following are included:
- Vegetable and fruit vendors
- Truck drivers
- Units that provide food service
- Operators of machine tools
- Small and medium-sized businesses
- Processors of food and others
Guaranteed business loans from the government credit guarantee fund
Government business loans for SMEs are available from the CGTMSE. It was launched 18 years ago and since then it has offered MSMEs collateral-free loans. Commercial banks and regional rural banks are authorized to provide the loan. Small and micro enterprises are approved for loans based on their eligibility.
For eligible enterprises, the scheme can provide a working capital loan of up to * 10 lakh. Nevertheless, business owners may be required to provide collateral as a guarantee, such as their assets.
Applicants are eligible for the scheme
- Commercial activities (Retail; Education; Self-help groups; Training).
- Exceptions to service activities
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.
Business owners must use this scheme as sole proprietors, partnerships, cooperatives or private/public limited companies to be eligible for it.
Incorporated in India, Fullerton Business Loan
In order to help business owners invest in their businesses, Fullerton India offers business loan products. In order to compete in the market, the business requires this loan to meet its urgent needs. Depending on the amount required, the profile and credibility of the business, unsecured or secured loans can be offered.
Criteria for eligibility
- Entrepreneurs, manufacturers, retailers, or traders are preferable.
- This loan requires that you be 21 years old in order to apply.
- A maximum age of 65 should be considered at the maturity of a loan.
- *10,00,000 should be the applicant’s minimum turnover in the past year.
- The applicant should have filled in an ITR of more than 2.5 lakhs in the past year.
- At least five years’ business experience is required of the applicant and the business should be established for at least three years.
Small business loans are available in India at an affordable interest rate and are eligible for a minimal eligibility requirement.
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