SME Loan

SME Loans stand as a financial lifeline for startups, small business owners, and women entrepreneurs offering essential capital on a short-term basis.

With varying durations depending on the lending institution, SME business loans often range from Rs. 5 lakh to Rs. 5 crore. The other SME loans include working capital loan, term loan, and equipment loans, along with specialized schemes like Pradhan Mantri Mudra Yojana and Stand Up India.

Read through to know about SME loans and to know what various lenders offer for individuals in need of a sound business plan for approval.

Features of SME Loans in India

SME loans in India offer a spectrum of features for a better loan availing experience designed to bring your business sustainability. Here are features that encompass a diverse range of features,

SME Loan Interest Rate, Fee & Charges

SME loan interest rates, fees, and charges are critical components influencing borrowing decisions. The table below helps you understand the charges and rates associated with businesses seeking financial help:

SME Loan Eligibility

SME loans eligibility criteria to manage risk and facilitate easier access to financial resources for burgeoning enterprises.

Borrower's Age: Minimum 21 - 65 years

Minimum annual income: Rs. 1.5 lakh.

Minimum Business Turnover: Rs. 40 lakh.

Profitability Requirement: The business should be consistent with profitability for the last 2 years.

Business Experience: Applicants should have engaged in the same line of business for a minimum of 3 years.

Documents Required for SME Loan

These documents serve as evidence of the financial health and repayment capacity, forming the cornerstone of a smooth and successful SME loan application process:

Identity Proof: Passport, Aadhaar Card, Driving License, Voter's ID, PAN Card, etc.

Address Proof: Aadhaar Card, Passport, Voter's ID, Driving License, etc.

Proof of Business: Business Entity Proof, Partnership Deed, Incorporation Certificate, Shops and Establishment Certificate, Articles of Association

PAN Card: Of business entity and of partners/promoters

Company Financials: Provisional/audited financials - tax audit reports, balance sheet, profit and loss, VAT returns, etc., for the last 3 years

Bank Statements: For the last six months

Application Form: Duly filled and signed

SME Loan Offered By Various Banks & NBFCs

Here are the major banks and NBFCs offering SME business loan with competitive interest rates:

SME Loans offered by Banks

SME Loans offered by NBFCs

Different Types of SME Loan

SME loans encompass a diverse range of financial products to meet the specific needs of small and medium-sized businesses. SME business loans come in various forms, each designed to address different aspects of business growth, operational needs, and financial requirements.

Term Loan: Term loans can be secured/unsecured loans, credit limit up to Rs. 30,00,000 based on credit history. An unsecured term loan has a tenure period of 1 to 5 years whereas secured loan, the term might range from 15 to 20 years.

Working Capital Loan: Aims to cover daily operational needs, manage off-season financial shortages, and meet high-season demand.

SME Loan Secured by Real Estate: Secured loan against property, loan amounts typically over Rs. 50,00,000. Individuals can borrow up to 70% of property value, repayment period: is 15 to 20 years.

Equipment Financing: It is a popular SME loan for purchasing machinery required in manufacturing businesses. However, in secured loans, interest rates are generally lower than term loans.

MUDRA Yojana by Pradhan Mantri: Offers loans categorized as Shishu, Kishore, and Tarun based on business size and stage of growth. The loan amounts vary from Rs. 50,000 to Rs. 10,00,000 at different interest rates.

Cash Credit: Obtainable by pledging current assets like raw materials, accounts receivable, or stock.Can be used as revolving credit to boost working capital.

MSME Loan: Government-sponsored program with quick loan approval (in 59 minutes) for up to Rs. 1 crore. Low-interest rates starting from 8.50%, minimal documentation required for eligibility.

SME Loans EMI Calculation

Calculating EMIs for SME loans helps to budget and forecast,to accurately plan the monthly finances and allocate resources efficiently. Calculate your SME loan EMI swiftly. Just enter your loan amount, eligibility, and tenure in the SME EMI calculator below for quick results!

SME Loan Schemes By Government of India

SME loan scheme has specific eligibility criteria and application procedures, providing various financial support to diverse segments of the MSME sector in India. Here are the SME Loan schemes provided by then government of India:

Pradhan Mantri Mudra Yojana (PMMY):

Loan up to INR 10 lakh for non-corporate & micro-enterprises.

Eligibility: Indian citizens in non-farming sectors with credit demand < INR 10 lakhs.

Apply online through the Udyamimitra portal or visit bank/NBFC branch.

MSME Business Loans in 59 Minutes:

Loan from INR 1 lakh to 5 Crore.

Eligibility: Individuals and businesses with GST registration apply through SIDBI's online portal.

SIDBI Make in India Soft Loan Fund for MSMEs (SMILE):

Loans from Rs. 10 Lakh to Rs. 25 Lakh for MSMEs with 15% minimum promoter contribution.

Eligibility: MSMEs operational for at least 3 years with satisfactory financials, apply online or at the SIDBI branch.

Stand-Up India:

Collateral-free loans up to Rs. 200 lakh for MSMEs from banks/NBFCs.

Eligibility: New and existing MSMEs apply by approaching lenders with a viable business model.

Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE):

Collateral-free loans up to Rs. 200 lakh for MSMEs from banks/NBFCs.

Eligibility: New and existing MSMEs apply by approaching lenders with a viable business model.

RMA Against Bank Guarantee:

Loans for MSMEs in manufacturing/service/infrastructure sectors.

Eligibility: Udyam Registration Certificate/Udyog Aadhaar Registration, apply at NSIC field offices or online.

Bank Credit Facilitation Scheme:

Fund and non-fund credit support for MSMEs through MoUs between banks and NSIC.

Eligibility: New and existing MSMEs from all sectors, approach NSIC branch offices.

Growth Capital and Equity Assistance Scheme:

Subordinated debt for MSMEs for growth expenditures.

Eligibility: Profitable MSMEs for 3 years with good banking records, apply at SIDBI branch.

Prime Minister Employment Generation Programme (PMEGP):

Subsidized loans for self-employment in non-farm sectors.

Eligibility: Individuals >18 years, not availing other government subsidies, apply online or at KVIC office.

Loan Amount up to ₹50 lakhs can be availed.

Steps to Apply For SME Loan

Here are the quick steps to apply for an SME loan through Buddy Loan:

To get quick access to your SME loan login to buddyloan.com or download the Buddy Loan app on Android or iOS.

Access the Business Loan Application Page and input your mobile number along with the OTP.

Specify the desired loan amount and provide your email. Then, select the Business Loan option.

Show whether you possess Business Proof (Yes/No).

Input your income details and proceed by clicking the 'Submit' button.