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Tata Capital > Blog > Loan for Business > Benefits of the Udyog Aadhar Loan

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Benefits of the Udyog Aadhar Loan

Benefits of the Udyog Aadhar Loan

The Udyog Aadhaar is a registration certificate for Micro, Small, and Medium Enterprises (MSME). Not only does the Udyog Aadhar provide recognition and legitimacy to small and medium businesses, but it also offers a host of additional services and benefits that were previously difficult to secure.

The process of registering for Udyog Aadhar is simple and quick. Minimal documentation and a speedy online registration process ensure your business is up and running and ready to make the most of the benefits the government offers to fledgling businesses.

Capital for small businesses

The biggest pain point for small businesses is the availability of capital. They need critical financing without which start-ups cannot take off. The lack of business experience and assets make it difficult to source capital. And without capital, businesses cannot grow and build credibility. The vicious cycle thus continues. 

In a bid to provide impetus to the MSME industry that contributes to about 45% of India’s GDP, the Central and State governments, through various public and private agencies, have made it much easier to secure a business loan with the help of Udyog Aadhaar.

Here are some of the Udyog Aadhar benefits, with a particular focus on business loans:

Collateral-free loans

This is one of the biggest advantages of getting a Udyog Aadhaar loan. As mentioned before, new businesses have few assets to provide as collateral for a loan. Getting traditionally structured loans hence becomes difficult. 

With Udyog Aadhaar, based on the personal details of the promoter, his/her educational qualifications, the type of industry and business, the business loan eligibility is assessed for a collateral-free loan.

Additional Read: Detailed Guide for Udyog Aadhar Registration Process

Subsidized interest rates

Udyog Aadhar Loan Interest Rate

Udyog Aadhar loans aim at promoting MSME businesses. The government provides funds at discounted rates to financial institutions specifically earmarked for these businesses. In turn, the financing agency can pass on the benefit to the borrowers. The interest rate on most Udyog Aadhar loans is about 1.5% lower than interest on regular loans.

Vast network for loans

As businesses thrive in every nook and corner of the country, it is difficult to fulfil the financing needs through a central agency. Therefore, Udyog Aadhar loans have been made available through public and private banks, non-banking financial institutions, Micro Units Development and Refinance Agency (MUDRA), small scale industries, Small Industries Development Bank of India (SIDBI), and many more such financial partners.

By leveraging this wide network of service providers, the government can fulfil the needs of millions of small businesses across the country.

Funding specific to industry and scalability

The need of every business is different. Based on the sector and the size of the business, entrepreneurs can approach the relevant agency for financing. This improves the chances of securing a higher loan.

For example, a business operating in the textile sector can directly approach Khadi and Village Industries Commission (KVIC) and based on its business loan eligibility, secure funding up to Rs 25 lakh for a new manufacturing set-up.

Additional Read: When You Need to Opt for Business Loan

In closing

The availability of affordable, quick and adequate capital can fast track the success of a business. To further fuel the entrepreneurial zeal and participate in nation building, Tata Capital also offers collateral-free business loan at affordable rates to MSMEs of all sizes.

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