Here’s a fact. The number of registered and unregistered SMEs is close to a staggering 42.50 million, contributing more than 45% to the total industrial output in India. Since SMEs are the backbone of India’s economy, access to sufficient finance is critical to their survival.

Moreover, despite an 86% growth in lending to these small and medium businesses, business owners often find it cumbersome to secure finance quickly. But not anymore! SME smart score is an excellent loan scheme by the State Bank of India that has a simplified loan application process for SMEs for faster approvals. 

What is SME smart score?

If you’re a small business owner looking to fulfil your capital requirements, the State Bank of India’s SME smart score is a secured business loan designed for your unique business requirements. Meant for diverse businesses in the MSME sector, you can avail of financial assistance to purchase equipment, carry out research, meet your working capital, and so on.

SBI uses a straightforward scoring system to qualify the candidates to make the application process easier. The scores are based on the details provided in the SME smart score loan application form. Under this scheme, any small business unit in the SSI, C&I, or SBF segment can apply for a loan ranging from 5 lakhs to 50 lakhs, depending on their project cost.

SBI SME smart score loan

Here is an overview of the SME loan offered by the State Bank of India –

1. Purpose of the loan

Only MSME businesses can apply for this loan in the trade, manufacturing, and services sectors. The loan is offered to meet a diverse range of financial needs of your business – from working capital needs to the purchase of fixed assets. You can avail of this loan in the form of cash credit or a term loan.

2. Application process

A lengthy and strenuous application process can often discourage small business owners from applying for a loan. However, you can swiftly apply for the SME loan online under the SME smart score scheme. Download the SME smart score loan application form. The simple application format followed by a standardised scoring-based approval model allows for a quick and easy application process.

3. Quantum of finance

Businesses in the manufacturing sector can avail of a loan amount of up to Rs. 50 lakhs, which can be 20% of their annual turnover or 67% of their project cost. Whereas for enterprises in the trade and services sector, the maximum amount is Rs. 25 lakhs (15% of their annual turnover or 67% of the project cost).

4. Rate of interest

The interest rate offered on the SME smart score loan is applicable as per the bank’s MCLR (Marginal Cost of Fund Based Lending Rate). Nonetheless, you can enjoy a concessionary interest rate and avail an affordable loan to meet your business needs.

5. Repayment tenure

  • Working capital loan – If you apply for a working capital loan, you can enjoy a flexible repayment tenure of 12 months and an annual renewal facility.
  • Term loan – A term loan for SME comes with a repayment tenure of 5 years plus a moratorium period of 6 months.

6. Collateral

Since it is a secured loan, you need to offer collateral as per the lender’s norms against the loan. Moreover, the lender charges 25% of the loan amount as margin (down payment) towards the working capital loan and 33% down payment for the term loan.

Eligibility criteria

  • Sole proprietorship or partnership firm or,
  • Private limited or closely held public company in the SIB and C&I segment
  • The chief promoter or chief executive of the business should be below the age of 66 years
  • You must have 60% in the SME smart score loan application form – with at least 50% in the business and personal details section and 10% in collateral details.

Documents required

The documentation required varies for individuals, proprietorship/partnership businesses, and limited companies as follows –

  • SME loan application form duly signed
  • Identity proof (Aadhaar card, PAN card/Driving license
  • Residential proof
  • Income proof/Bank statements
  • Partnership deed and ID proof of the firm (in case of partnership businesses)
  • Company ID proof (in case of limited companies)
  • Office address proof
  • Valid documents for the collateral (as applicable)

In conclusion

As SMEs continue to grow consistently in the country, the availability of adequate finance will undoubtedly take your small business to new heights. And when you’re in the market for affordable business loans, turn to Tata Capital. We offer multipurpose business loans up to Rs. 75 lakhs at competitive interest rates.

Enjoy minimal paperwork, flexible EMI plans, and high eligibility, and watch your business soar! To know more, get in touch with us today.

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