Small and medium enterprises (SME) Loans
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.