The ease of doing business in India has improved drastically in this decade. You don’t have to be a multi-national company or a high net worth entrepreneur anymore to avail of a business loan. An SME loan is given to various small and medium businesses today so that they can meet all financial requirements in their business operations.

SME loan is no different from any other loan. Business owners gain access to the amount they require based on completion of the approval process and a period and interest of payback are agreed upon. Entrepreneurs usually take an SME loan for a new project, expansion, or an acquisition.

These loans, along with a steadfast vision help in growing the business. The SME sector has been recognised as the fastest-growing sector in the Indian economy, and hence, your business can be up and running with an SME loan in just 5 easy steps.

Apply for SME Loan

Check the SME Loan Eligibility

Certain criteria need to be in place for an entrepreneur to be eligible to apply for an SME loan. Firstly, the business must be a sole proprietary, partnership firm, private limited company, public limited company, or a manufacturing, trading, and service unit.

Along with being one of these enterprises, the business should have made a profit in the past two years. It is also important but not mandatory that the firm is defined under the MSMED Act and by the Reserve Bank of India (RBI).

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Read More: What is An MSME Loan and Who Gets It?

Apply Online with the Correct Paperwork

Banks, financial institutions, and other loan agencies are the external sources of support to the SMEs. For a hassle-free process, all companies must submit a few basic documents. The process, verification period, and a number of documents required may be different for different loan agencies depending on the guidelines they have put in place to ensure efficient operation.

However, generally, this list includes:

  • The certificate of incorporation or certificate of commencement or a certified copy of the memorandum and articles of association.
  • Financial statement of the past 3 years that has been audited.
  • The current list of shareholders
  • Details of the directors or partners
  • IT returns or wealth tax assessment order of the past 3 years
  • Sales tax returns and assessment order of the last 3 years
  • A certified true copy of ration card or passport or voter ID of the directors or partners
  • Passport size photographs of the partners or directors or guarantors, resume and net worth statement of the directors or partners,
  • Documents of the premises on which the business is operating
  • A government order to use the premises for commercial use
  • Site map of the land, blueprint and the building plan and architect’s estimate of the building
  • Estimated budgets submitted by the suppliers for plant and machinery in case of a manufacturing unit
  • Marketing plan
  • Copy of the sanction letter in case of any current credit facilities
  • The SSI registration certificate
  • A NOC that has been received by the pollution department
  • Proof that power has been installed and sanctioned
  • A project report
  • Employee list including key managers and technical personnel
  • Flow chart of the manufacturing process if any
  • Collateral securities lease or sales deed
  • And, detailed list of assets and finally if there is any kind of collaboration agreement.
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Having said that, several loan lenders are operating in the market, such as ZipLoan that offer fast business loans at minimal business loan documentation, making it easy for the small business owners to get access to business loans.

Sign Agreement after Tenure & Interest is Agreed upon

Small businesses usually take loans of 1 lakh rupees to 7.5 lakh rupees which can be paid back within 12-36 months. Interest rates of SME loans are typically very competitive.

The business owner needs to be clear on the interest rates and tenure of the loan so that he can plan well and avoid any default. The company must be sure to understand the fine print so that there are no unusual surprises later.

Another thing to keep in mind while taking a small business loan is to not borrow more than what can be repaid. A business owner must take calculated risks and not go overboard with profit estimations.

This will lead to defaulting of the loan and a poor credit score. The reason for the loan must be concrete and well defined and not for fringe expenses that can be kept for the future.

Receive Loan Amount in 3 Days*

In business, time is money. The faster the capital is received, the sooner business operations get rolling, and the company is a step closer to growth and its vision.

There are various SME loan agencies today that are extremely efficient with the paperwork collection, document verification, and disbursement of the loan.

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If the business owner has showcased an ethical history of doing business, is quick with adhering to the set guidelines, and is transparent with the agency on all required aspects, he/she can sit back, relax, and expect the loan amount to be disbursed in a very quick timeframe.

Start Operating Business with Ease

Now the business owner can resume business operations and put the new plan in motion. Companies must make a conscious effort to invest the loan money in the right places, be it machinery, acquisition, expansion, or a new project.

All members of the management, as well as the employees, must be on the same page when it comes to the vision and mission of the company. This way, the entire team will be working in sync towards the set company goals.

Slowly and steadily, the business will grow, and it will be easy for the company to keep a prestigious name in the market among competitors and customers.

Furthermore, when the company grows and needs more capital for expansion and more significant projects, these loan agencies and other financial institutions will be there to support the company again and partake in its development process.

In earlier times, a loan was always looked upon as a liability and something that needed to be avoided if possible. However, today is a different time.

SMEs can avail of quite a few benefits like zero collateral, quicker disbursal, short tenure, and fairly low-interest rates, all of which prove to be assisting the company on the way to success.

Apply for MSME Loan