How can you avail new business loan schemes for SMEs

Corporate Finance

SME (Small and Medium Enterprise) loans are a variety of loans that are offered to both small and medium-sized enterprises. These loans are highly flexible in terms of the requirements of both small and medium enterprises. So, opting for a business scheme of SME loans can be beneficial and trustworthy. 

One of the primary motives of this loan is to satisfy the working capital requirements of the business firms. It mainly targets businesses that specialize in trading, service, and manufacturing sectors, catering to their capital expenditure requirements. All the small and medium businesses that fulfill the obligations set by the MSMED Act of 2006 fulfill the eligibility criteria for SME loans. 

In India, the top SME loan schemes introduced by the government are mentioned below. Let us read about them.

SIDBI Make In India Soft Loan Fund for MSMEs (SMILE)

By signing up for the SMILE scheme, one gets access to flexible and coordinative terms when they wish to connect with the debt-equity ratio of micro, small and medium enterprises. You can either apply virtually or from the closest SIDBI for small business loans.

Availing in this scheme will help you opt for loans between Rs. 10 Lakhs to Rs. 25 Lakhs. In order to extend the loan, you will be charged with the personal guarantees of promoters as well as the overall assets. The SIDBI will need 15% of the minimum contribution by the promoters to make you eligible for the loan. The digital loans and their rates will be determined by the borrower’s profile as well as the amount of loan applied for.  

Eligibility Requirement

Any micro, medium and small enterprise operating for three years and in stable financial condition passes eligibility. Also, the newly set up medium and small enterprises in the service and manufacturing sectors are prioritized. So, small business loans can be granted to newly-established business owners. The maximum period within which one has to repay the default loan is ten years. The business owners who reach out to SIDBI can also go for a 36-month moratorium. 

RMA Against Bank Guarantee

Set up by the National Small Industries Corporation (NSIC), this loan scheme of India grants loans in the form of advanced payments as well as credit options. One can apply for this SME loan to purchase raw materials. Different business units get access to different loan amounts, depending on the sector they are responsible for.

A single unit MSME managing the manufacturing sector can go for loans up to an amount of Rs. 6 crores. On the contrary, a group of MSME units who are involved in the manufacturing sector can get access to loan amounts up to Rs. 20 crores.

A single unit MSME functioning for the service sector can apply for a loan up to the amount of Rs. 10 crores. On the other hand, a group of MSME units coordinating the service sector can apply for loans up to Rs. 15 crores. Those who are dealing with infrastructure activities can go for loans up to Rs. 5 crores. An MSME can either apply virtually or through the field offices of NSIC. 

Eligibility Requirements

The MSMEs who are in the manufacturing sector and have Udhyam Registration Certificate or Udyog Aadhaar Registration are eligible.

MSME Business Loans In 90 Minutes

This loan scheme was launched as an initiative of the Atmanirbhar Bharat Campaign. It can be utilized for purchasing raw resources, expanding your firm, diversifying, and scaling your operations. As the name denotes, the transaction can be processed within a period of 59 minutes. 

A business owner can apply for loans worth between Rs. 1 Lakh to Rs. 5 Crores within a period of 59 minutes. One can get this amount from the most authorized and trusted banks. The transaction takes about eight to twelve business days to process. One can apply for this loan by means of an online portal established by SIDBI. The flexible repayment tenure paves the way for seamless transactions in the way of digital loans as well as other options. 

Eligibility Requirements

A person older than 18 years of age, bearing firms with GST registration along with other required documents like bank statements of the last six months, is eligible for this loan. 

The Bottom Line

Going for the top government loan schemes introduced can grant you an immense amount of benefits and convenience. An SME loan can be favorable for those enterprises who wish to meet their capital requirements during the initial stages of their business too. One also gets the choice of applying for small business loans online, making it simple and convenient for users. If you want to reach the banks or apply by visiting the actual financial institutions, you are free to do so too.