Technology has reached every nook and corner and it has made a prominent impact on every business. Over 80 million people in India are employed in Small and Medium Enterprises contributing a major portion in country’s GDP.
However, SMEs face a lot of hurdles in terms of credit availability to sustain in the market. Finance is the lifeline of any business especially for SME industries as the profit can be seasonal in some cases. Revitalising the small businesses from the profit acquired could be scarce at some time in managing the operation and expansion.
Banks impose strict rules and are usually wary of extending credit to SMEs due to the reasons like poor record keeping, cost ineffectiveness and risks involved. Hence, SMEs look for alternate lenders who evaluate the creditworthiness using alternative sources of information. Lets us explore more in detail how SMEs can get access to funds in the current scenario.
NBFCs: A Go-to Place for SMEs
The underlying problem with the SMEs to get access to funds from traditional banks is inadequate knowledge on what type of financing needed, failure to improve the odds in the business, poor record of the business operation.
Thanks to the alternative lending platforms such as NBFCs for making borrowing easier for SMEs. Unlike the traditional banks, these channels have adopted newer methods in identifying worthy borrowers.
Not just stopping with giving out funds, these lenders offer guidance to take right decisions to improve the business. With customised loans, the SMEs can take business loans from these lenders for specific purposes which could reduce the borrowings and interest rate.
Online platforms have simplified the application processes, offering convenience and efficiency. The borrowers can enter their personal and business details online, upload the documents and get the results instantly.
Secured Business Loans
Based on the growth of your SME, banks do offer secured business loans for individuals aged between 24 to 65 years. Business experience is considered the main criterion in this category as the lenders want a proof of the successful growth of your business. With a good business credit, you can secure a loan to extend your business operation at better terms.
Peer to Peer (P2P) lenders are on the rise as a lot of individuals get their loans approved successfully. By giving instant results, online lenders could become a game changer for SMEs in India. Whether you need a short, immediate or long-term loan, these lenders customise the funding based on your requirement. Digital lenders offer collateral free loans, line of credit and pre-approved loans to finance the SMEs.
Getting access to funds is simplified for SME industry and the business persons have the freedom to choose the type of financing needed as the lenders offer tailor-made SME loans.