An SME loan is of great use for SMEs who are looking for an additional source of business funding. This blog talks about what an SME loan is and its features. You will also get an insight on how to apply for a business loan.
What is the meaning of SME Loan?
SME loan, in simple words, can be explained as finance offered to Small and Medium Enterprises by banks, NBFCs, and other lending institutions. These finances allow the SMEs to focus on their core business without worrying much about the funds. SME finances are tailored to meet the needs of SMEs.
There are types of SME loans that you can avail, whether a machinery loan for SME or aworking capital loan for SME. The other types of business loans that an SME can avail include flexi business loans, term loan, and capital loan. The SMEs can expand their business, increase their working capital, or increase inventory with the help of an SME loan.
Which Bank gives lowest Interest Rate for Business Loan?
The SME loan interest rates differ from one bank/lender to another. Many SMEs search on internet about the best and lowest business loan interest rate. However, there are times when the lender might be offering the lowest interest rate on the SME loan but may have levied other charges, such as high processing fee.
So, the while availing an SME loan, what actually the borrower must look for is the APR instead of the interest rate. The interest rate is a single charge whereas the APR includes interest rate, lender fees, and broker fees.
How can I get a Business Loan without Security?
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Now comes another important question, if you can avail SME loans without collateral. You can learn the difference between the secured business loan and unsecured business loan, here. Well, the answer to the question is yes. There are many NBFCs and online lending companies that offer a loan for business without security. These lenders offer loans for small business without security on easy terms and conditions and the best interest rates in the market.
How do I apply for an SME Loan?
Businessmen who are looking for an SME loan often search for how to apply for a business loan or how to get a business loan in India. With the advent of technology, now you can apply for a business loan conveniently by following just a few steps:
Online Loan: With online loans, there is no need for you to visit the office of the lender but you can just apply a business loan online. Visit the website of the lender, duly fill the business loan application form with the correct information, and submit. You can also download the mobile application of the lender, if offered. Learn how an instant business loan App will help you get an instant business loan.
Business Loan Documents: You can upload the PDFs of the documents required for business loan on the website or mobile App. Ensure that you meet the business loan eligibility criteria set by the lender.
Online Business Loan Approval: Usually, business loan disbursement process includes checking the eligibility of the borrower. If you are eligible for the SME loan and your SME loan application is approved, you will get funds straight into your account. Most lenders these days offer quick business loan disbursal.
What are the Documents required for an SME Loan?
The following are the documents required for the business loan:
- PAN Card
- Residence address Proof
- Business place address proof
- Last 12 months bank statement
- Last 2-3 year ITR
Features of an Unsecured Business Loan for SMEs
Although the features of SME loan products would differ from one lender to another, let us talks about some common features.
Flexible Repayment Tenure: Online lenders and NBFCs offer flexible repayment tenure of up to 24 months. The borrower can choose the plan that would not affect their usual cash flow cycle.
Prepayment Charges: Most NBFCs do not charge a penalty on the foreclosure of the SME loan account. Learn about the benefits of early closure of SME loan, here.
Online Loan Application: You can apply for an SME loan online through the lender’s website or mobile App.
Referral Policy: There are lenders who also offer refer and earn policy on the SME loans. You can refer the lender to your business friends and earn on every successful SME loan disbursement.
ZipLoan offers unsecured business loan to Small and Medium Enterprises to help them in their growth. We require minimal documentation and offer online business loan application. All our business loan products are designed to serve the SMEs in the best possible way.