Stress-free financial support is a major priority for each small and micro-business owner while starting any new business or expanding an existing venture. To avail of easy and hassle-free financial aid through some of the best business loans in the market, please keep reading this blog further.
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Every business has assets and debts, and sometimes, to build those assets, debt needs to be taken. This debt is called a business loan that ensures the owner doesn’t lose on his equity while growing his business. You can find some of the best business loans customized to your needs in the market today.
Today it’s cheaper to get MSME business loans than a credit card. With the recent hit to the economy due to the pandemic, even the government has introduced MSME schemes to help businesses sustain themselves. Let’s discuss some of the business loans in the market to get your business the right start.
CLCSS: Credit Linked Capital Subsidy Scheme
The government of India introduced the CLCSS scheme to promote small and medium-scale industries located in rural or semi-urban areas. The government provides a 15% subsidy to the eligible companies to purchase the required plant and machinery. Apart from this, it also helps small-scale industries upgrade their existing machines and equipment. This allows the small industries to produce better quality products and compete in the market. However, eligible enterprises can avail of a maximum of Rs 1 crore as a subsidy. This scheme covers many sectors of industries, both new and old. Following documents are required while applying for a loan under this scheme:
- Proof of business
- Proof of address
- All KYC documents
- Aadhar/ PAN card
- Photographs of the owners
The Government’s MSME 59 Minutes Business Loan
The government of India introduced this loan scheme for small businesses in need of business capital. Small businesses can get funding from a minimum of Rs 10 lakhs to up to Rs 5 crore in this scheme. The key point of these loans is their approval time. Under this scheme, the loan is approved or rejected within 59 minutes rather than making small businesses wait for 30 days or more. Also, if approved, the borrower gets the loan within 7-8 days. It is one of the best business loans in Indiaintroduced by the government.
Following are the eligibility requirements of this loan:
- The SME should have a GST registration number.
- The SME or the MSME should be IT compliant.
CGSMS: Credit Guarantee Fund Scheme for Micro and Small Enterprises
The CGFSMSE was introduced to provide financial support to both the existing and new MSMEs.The eligible MSMEs can avail of collateral-free loans up to the amount of Rs 200 lakhs through this scheme. A special preference is given to women entrepreneurs. Out of the Rs 200 lakhs amount, up to 85% of the sanctioned amount is given as the guarantee cover. There is also a fee of 1% charged by the CGFSMSE on the amount sanctioned. However, the fee is 0.85%, if the loan amount is between Rs 5 lakhs and up to Rs 100 lakhs, and 0.75% if the Ioan amount is below Rs 5 lakhs.
PMMY: PradhanMantri Mudra Yojana
Usually, all small industries’ first preference is to go to banks and NBFCs for their working capital needs. To facilitate easy financial support to such industries through NBFCs and banks, the government of India launched the Mudra Yojana. MUDRA is short for Micro Units Development and Refinance Agency Ltd. In other words, the government offers to refinance the banks and NBFCs for sanctioning the loans to micro industries. The micro and small units can avail of loans up to the amount of Rs 10 lakhs. There are three different categories of loans available with the different maximum loans and different interest rates: Shishu, Kishore, and Tarun. The eligible industries are issued a debit card or the MUDRA card against the loan amount, which can be used for utilizing the credit facilities.
NSIC: National Small Industries Corporation Scheme
The Ministry of Micro, Small, and Medium Enterprises launched this certified enterprise, namely the NSIC, to promote micro and small industries across the country. NSIC aids the needy industries in support services like marketing, training, financial assistance, purchase of equipment on hire purchase, and much more. It offers loans at the floating interest rate between 10.50 % to 12 % per annum. Some of the requirements for availing loan under this scheme are as follows:
- The industry has to be in operation for a minimum last three years.
- A positive CIBIL score.
- The eligible industry to have a turnover of minimum Rs 5 crore and up to Rs 250 crore.
- Details of the business
- Documents- Business proof, Aadhar, PAN, Lease deed, etc.
For more detailed information, please visit the NSIC official website.
An Alternative to Government Schemes: FlexiLoans Term Loan
The tedious application procedure and the numerous eligibility requirements tend to keep small business owners away from the idea of taking loans. However, business owners can now keep these fears at bay with companies like FlexiLoans offering term loans at an interest rate as low as 1% per month.
If you are looking to upgrade your existing business or purchase certain equipment, FlexiLoans.com provides you with that opportunity. These loans give the borrower a chance to get a loan of up to Rs 1 crore free from any collateral and flexible repayment options. The loan tenure can vary up to 24 months.
However, like every other best business loans in the market, this loan also has specific requirements to be fulfilled before sanctioning the loan:
- The monthly sale business of the enterprise should be a minimum of Rs 2 lakhs.
- The said business should be in existence for a minimum of 1 year.
Every business involves risk. Hence, all business owners should first do a cost-benefit analysis to evaluate whether taking a loan is worthwhile. However, after due diligence, if you believe that this financial support taken now will be fruitful in the future, you should go for it. Always remember that even the unsecured business loans and their interest rates may vary from time to time as per the RBI guidelines.
Download the FlexiLoans app today and get your loan processed in 3 easy steps!