SME Loan & MSME Loan
If you are planning to start a new business or struggling to manage an existing one due to lack of finances, you can easily avail a small business loan. With such a loan, you can receive financial aid at the need of hour. These loans are offered to fund small and medium sized enterprises while improving credit flow to MSME (Micro, Small and Medium Enterprises) sector allowing small business owners access to immediate finances to tide through in any economy.
Factors for MSME Loan Approval
To approve your small business loan application, lenders consider a variety of factor such as:
- Credit score - All lenders have different policies for approving loans but the most deciding factor is credit score. You are likely to get approved by every lender, but with a bad score you will have to pay higher interest rates.
- Business existence - Another deciding factor is the number of years your business has existed and the longer, the better. Any lender will be more assured of lending to your business if you have a long track record.
- Monthly revenue - All lenders will look into your monthly revenue to make sure that you can pay off the loan with monthly EMIs.
Other important factors considered by lenders are Income Tax Returns, your history of timely paying creditors and your business plan to use the loaned amount for.
MSME Loans for Women
In India, most of the business women work in the small scale units and specific loan products are offered to them by various lenders to help them expand business, meet their working capital needs, acquiring machinery and renovation of facilities. SME loans for women are also provided for establishing new units for tiffin and catering purpose, beauty salons, day care centers, etc.
Choosing a Lender
When choosing a lender for your small business funding, you must look into the business loan interest rates, processing fees and policies of different lenders and then compare them. Make sure that the lender offers affordable small business interest rates so that you can pay off the loan with ease while avoiding hefty charges.
How to Apply
When applying for a small business loan, you have to share all of your financial details including ITR, bank account statements (last 6 months), KYC for co-applicant, P&L Account statement along with future growth plans. The documents required for application vary from lender to lender.
Every business is different, hence it is imperative to evaluate your business requirements prior to choosing a small business lending option.
Have more questions about business loans? Read our FAQ here