Small business loans are loans given to small and medium businesses. These loans are specially catered to their business needs. The loan amounts for these small business loans go up to Rs. 50 lakhs and banks usually do not take any collateral for such loans. Banks also allow transfers of SME loans.
How to get small business loans?
1.Check eligibility criteria:
Each bank has its own eligibility criteria. But the most common ones relate to a minimum turnover, profitability of business, minimum years of operation, previous income tax returns. To ensure your business gets a loan, it is important to check if your business meets all the eligibility criteria’s set by the lender. This will ensure you get the best loan as per your business’s repayment capability.
2.Ensure the business has proper books of accounts:
Lenders these days are very strict about small business loans. Since these loans are given without collateral, banks are very careful as to who they give out the loan to. It is necessary for the business to maintain proper books of accounts. If the business qualifies for an audit, it is better to get accounts audited as banks will get more comfort if they see that the business has audited Financials.
3. Prepare a business plan:
While applying for a small business loan, banks ask the business for a plan showing how the funds are going to be used. Preparing a business plan showing the expansion that is planned will help the business show that the funds are being raised for a legitimate purpose.
4. Choose the lender:
There are many different lenders who give SME loans. If you have a prior banking relationship with a lender, then you should approach them first. Check the terms, charges, and conditions of each lender before choosing.
5. Check if you can apply for a Government SME Loan:
The Government of India has 3 different loan schemes for small and medium business enterprises. Before applying for a small business loan, it is better to check if your business qualifies for a Government loan. There are 3 such loan schemes
● Credit Guarantee Fund Scheme for Micro and Small Enterprises: This scheme is run by the Government along with SIDBI. Loans can be availed up to Rs. 1 crore.
● MUDRA scheme: This scheme has 3 different levels for of loans, Shishu, Kishor and Tarun. Shishu scheme is for loans up to Rs. 50,000. Kishor scheme is for loans up to Rs. 5 lakhs and Tarun scheme is for loans up to Rs. 10 lakhs.
● Stand Up India Scheme: This provides loans to SC/ST and women entrepreneurs between Rs. 10 lakhs and Rs. 1 crore.
How to get small business loans?
1.Check eligibility criteria:
Each bank has its own eligibility criteria. But the most common ones relate to a minimum turnover, profitability of business, minimum years of operation, previous income tax returns. To ensure your business gets a loan, it is important to check if your business meets all the eligibility criteria’s set by the lender. This will ensure you get the best loan as per your business’s repayment capability.
2.Ensure the business has proper books of accounts:
Lenders these days are very strict about small business loans. Since these loans are given without collateral, banks are very careful as to who they give out the loan to. It is necessary for the business to maintain proper books of accounts. If the business qualifies for an audit, it is better to get accounts audited as banks will get more comfort if they see that the business has audited Financials.
3. Prepare a business plan:
While applying for a small business loan, banks ask the business for a plan showing how the funds are going to be used. Preparing a business plan showing the expansion that is planned will help the business show that the funds are being raised for a legitimate purpose.
4. Choose the lender:
There are many different lenders who give SME loans. If you have a prior banking relationship with a lender, then you should approach them first. Check the terms, charges, and conditions of each lender before choosing.
5. Check if you can apply for a Government SME Loan:
The Government of India has 3 different loan schemes for small and medium business enterprises. Before applying for a small business loan, it is better to check if your business qualifies for a Government loan. There are 3 such loan schemes
● Credit Guarantee Fund Scheme for Micro and Small Enterprises: This scheme is run by the Government along with SIDBI. Loans can be availed up to Rs. 1 crore.
● MUDRA scheme: This scheme has 3 different levels for of loans, Shishu, Kishor and Tarun. Shishu scheme is for loans up to Rs. 50,000. Kishor scheme is for loans up to Rs. 5 lakhs and Tarun scheme is for loans up to Rs. 10 lakhs.
● Stand Up India Scheme: This provides loans to SC/ST and women entrepreneurs between Rs. 10 lakhs and Rs. 1 crore.
This blog is one of the best that I have seen recently. I am interested to know about Small Business Loans in Hyderabad. The schemes that were mentioned above really helps. You made my searching stop at this point. In my findings, I have also come across some interesting loan advisers named FinFree Enterprise. I heard this one is a reputed firm in Hyderabad who connects its customers to the trustworthy financial firms like banks and NBFCs as they are providing small business loans up to 3 crores with minimal paperwork. Thank you.
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