A SME or a Small Business Enterprise is considered to be the backbone of the economy. Yes, there are corporate houses running the show and we are very much benefitted by them, but by the end of it all, it is the small businesses that take care of the needs of the average middle class. Setting up a small business was a cumbersome task before but not anymore because today there are easy financing options available in the form of SME loans.
The government is also trying to provide adequate financing to small businesses and to help them realize their dreams by providing them with the opportunities that are required to grow a business.
An SME finance can be used for a variety of purposes and many banks and NBFCs like Bajaj Finserv are providing them. Here are some of the features of the SME loan and how they can be of help:
- SME loans have low business loan interest rates and they start from about 18%. Just in case a business has a bad credit history, it could go up. However, if all the pre- requisites of applying for a loan are met and if the borrower has a strong financial history, then, there are good chances of the business enjoying low interest rates. This also greatly reduces the burden of the borrower and the loan is paid of significantly faster.
- SME loans have flexible repayments and Bajaj Finserv is one of the lenders to bring such options. There are flexi- loan schemes and they can help the small business because it is very unlikely that the business would make a hefty profit at the very beginning. For a new business to have a profit, it would require time and effort and the flexible options give them the opportunity to repay the loan as per the convenience. The business can also make interest only payments and the principal amount can be paid at the end of the tenure when the business has acquired sufficient cash.
- SME loans India requires minimum documentation and the verification process comes at the last stage. Financers like Bajaj Finserv understand that small businesses apply for loans when they are in dire need of money and so they try to keep the paperwork as minimal as possible. The loan application itself can be made online. The documents required are mostly the TAN and the business proof of the owner of the business, the KYC documents and the IT returns, along with the bank details of the last three consecutive years.
- SME finance also comes with a number of pre- approved offers and they can be of great benefit in the long run. They could be reduced interests over a period of time or a longer tenure and this would go towards the benefit of the business in the long run. Pre- approved offers also provide incentives to the business to go for the loan and this only proves beneficial for the business in the long run.
- These are collateral free loan which can help with a considerable amount of tax savings. According to the IT act, the portion of the profit that goes towards repayment of loan is exempted from taxes and so a borrower actually stands a chance to make a very good profit. The amount of money one saves could again come back towards financing the business and for the betterment of the company, or it could also help in improving the lifestyle of the family. Depending on the amount of the loan, it could be a lump sum amount taken.