SME Loan - Purpose of the loan
Definition: SME loan is basically funding of small and medium-sized business enterprises.
Purpose of the loan
The SME Loan provides a single line of credit for meeting the borrowing needs of SME. It can be used as a working capital as well as for long-term requirements. It is approved after considering the nature of business, cyclical trends, cash flow projections, and peak time requirements.
All Small and Medium Enterprises, including Micro Enterprises other entities as defined under the MSMED Act, 2006, with a stipulated sales turnover are eligible for this loan. The turnover requirements differ from lender to lender.
Security/collateral is usually insisted upon, including hypothecation of assets of the enterprise. Personal Guarantees of all promoters / Directors / Partners might be required depending on the amount of the loan. Third party guarantee might be insisted upon if the loan amount exceeds a certain amount.
If you apply through Non-Banking Financial Institutions like Bajaj Finserv or Magma Fincorp, then you do not need to pledge any collateral as a form of security.
Other features of SME Loans
• Easy repayment options through Post Dated Cheques or ECS
• Lenders offer flexible tenure, ranging from 12 months to 48 months
• Attractive rates of interest, as applicable to the creditworthiness of the borrower
• Flexible documentation
• Quick processing
SME Loan interest rate
It depends on a host of eligibility criteria which might include but is not limited to – your credit history, your company's credit history, current outstanding loans / EMIs, and other factors that reflect your financial capability and behavior. It is best to contact the lender directly for the most up to date interest rates.
SME Loan – How to apply
If you are looking for an SME Loan and are unsure about how to apply, then CreditMantri can guide you. You can typically apply for a business loan which can be utilized as working capital and long-term capital for your business.
You can check your eligibility and apply for a business loan by signing up with CreditMantri. It is quick, simple and above all, free.
CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender's credit criteria. Hence, the chances of your business loan application getting approved are higher.
Click here to sign up and apply for loans, the CreditMantri way!