For every small business owner, a business loan happens to be an essential requirement. In any stage of the business life cycle, one has to face the procurement of funding. It is one of the most formidable challenges for entrepreneurs regarding securing the funds for a start-up.
But the SME funding can help various Indian entrepreneurs for different purposes. Each of these funding methodologies comes with advantages and disadvantages.
The micro-units development and refinance agency organisation sanctions the mudra loan. The Indian government establishes this loan to finance the units of micro business. The scheme was introduced with the theme to provide funds to the unfunded. Almost all the banks across India offer the mudra loan. Due to these loans, the concept of low-cost credits for every small and micro business got established. Moreover, the three categories of loans help the Indian citizen optimally.
Eligibility: All the business organisations can take up the mudra loan to support the finance for business. Business organisations, including public company businesses, private firms, partnership firms and every other legal entity, can take the mudra loan.
Stand up India
The government of India introduced the stand-up India loan scheme. It provides loans to businesses that scheduled tribes and scheduled castes operate. Even women entrepreneurs can take up this loan amount. This loan scheme gets governed by the Development Bank of India. The amount of this loan ranges from 10 lacs INR to 1 crore INR. According to the scheme, this loan’s findings are to cover up 75% of the cost involved in the total project.
Eligibility: Those business owners involved in manufacturing and trading units are eligible to take up this loan. If the business falls under the partnership of more than one individual, then 51% of the share should be owned by women or any partner who belongs to the scheduled caste or scheduled tribes.
The word means women empowerment. The government of India introduced the scheme to initiate the empowerment of Indian women. The funding offered under this scheme guarantees to support the women in meeting the capital requirements of their business. Women entrepreneurs or business owners can take up loans up to 1500000 INR. The woman must be between 18 years and 55 years to avail of this SME funding.
Moreover, this loan does not have any limitations as there happens to be no income limit for women to get this particular loan. However, this loan does not require any collateral or processing fee. To apply for this loan, women need to carry a passport size photograph, BPL card, birth certificate, income certificate, Aadhar card, caste certificate, ration card, and bank passbook.
Credit guarantee scheme
The credit guarantee fund scheme is another launch by the government of India. It helps the borrowers to get funding through the loan amount without any collateral. Only the business that falls under medium and small enterprises can take up this loan. Any existing enterprises and new enterprises can take up this loan. The ministry of small and medium enterprises has introduced this particular loan concept.
Eligibility: Borrowers involved in manufacturing activities like the retail trade, self-help groups, educational institutions and various training institutions can take up this loan amount. Businesses that are engaged in the service sectors can also take up this loan.
If you have a medium or small enterprise, you need to have business finance. You can also avail unsecured business loans that come with extended tenor. Also, the attractive interest rate with collateral-free funding allows the borrowers to take up loans without hesitation. Furthermore, you can enjoy hassle-free processing with quick disbursal. One should also use the business loan EMI calculator to know about the interest payable and EMI. It can help the borrowers to plan their future finances.
One of the leading NBFCs, Bajaj Finserv offers unsecured business loans that come with simple eligibility and minimal documents.