Why You Need Business Loans .?
As a small business owner, even a whisper that you’re considering taking out an L O A N can spur opinions of sudden know-it-alls. There’s the general naysayers, those who heed caution, success stories and those that say it’s a ‘must’ for growth. Everyone will have something to say, but the truth is, without the necessary funding, your business will stay at a stand-still, or worse, collapse.
There are many reasons to get a business loan but of course, not any old reason is an excuse to potentially get into business debt, but that doesn’t mean that there aren’t intelligent reasons either. If your business is ready to take the next step the age-old adage ‘you have to spend money to make money’ rings very true. If you want to successfully grow your business, you’re going to have to step out of your comfort zone – slightly.
1. SIDBI Loans
SIDBI or Small Industries Development Bank of India was set up in 1990 to cater to the financing needs of industries in the MSME sector. SIDBI provides loans directly to MSMEs and offers indirect loan schemes to NBFCs (Non-Banking Financial Companies) and SFBs (Small Finance Banks). The loan amount can be between ₹10 Lakhs and ₹25 Crores, while the loan tenure can go up to 10 years. Loans up to ₹1 Crore can be availed without any collateral.
MSMEs can avail loans from SIDBI under various loan schemes by the bank, including SIDBI-Loan for Purchase of Equipment for Enterprise’s Development (SPEED), SIDBI Make in India Soft Loan Fund for MSME (SMILE), Smile Equipment Finance (SEF), and others. The loan tenure, loan amount and eligibility criteria are different for every loan scheme.
As MSMEs are consistently growing in India, various lending institutions now offer exclusive loan products for MSMEs. At Finserv MARKETS, you can apply for an SME loan for your business at attractive interest rates. The Finserv MARKETS app allows you to apply for SME loans easily, and you might also get pre-approved offers on the app.
2. MUDRA Loan
The Micro Units Development and Refinance Agency (MUDRA) has a funding scheme where small businesses and start-ups can get financial support in low-cost credit. MUDRA loan is typically for micro or small businesses that operate in the manufacturing, trading, and services sectors. MUDRA Loans can be applied for through public and private sector banks, cooperative societies, small banks, scheduled commercial banks, and rural areas. A business firm can apply for the MUDRA loan scheme in three categories.
- Shishu Loan: up to ₹50,000
- Kishor Loan: up to ₹5,00,000
- Tarun Loan: up to ₹10,00,000
3. National Small Industries Corporation Subsidy
The NSIC offers MSMEs two types of funding benefits:
- Raw material assistance
- Marketing assistance
Any business that qualifies as a micro and small enterprise with an EM Part-II (Optional)/ Udyog Aadhaar Memorandum (UAM) is eligible to apply for the NSIC subsidy under the Single Point Registration Scheme (SPRS). Suppose you qualify for this business loan scheme. In that case, you can opt for raw material assistance that allows you to fund the cost of indigenous and imported raw material required for your business.
As far as marketing assistance is concerned, you can use the funds to enhance your competitiveness and the market value of your offerings. The NSIC subsidy scheme also overlooks the functioning of an MSME and supports it in its endeavour to enrich production and quality.