Have you been planning to set up your own business for a long time now but procrastinating it due to a cash crunch? Or lack of finance is a stumbling block in expanding your existing business? If the answer to these questions is a big “yes,” then it's time you consider opting for a business loan.
Entrepreneurs often require capital either to finance the initial business expenses or fund their day-to-day expenditure of the existing business. Friends, family or others may offer financial help, but that comes with its impediments—you might not get the required amount or may not manage to get regular funding. That’s when business loans offered by banks and non-banking financial institutes help small, medium or large business enterprises keep the ball rolling.
A business loan is capital borrowed by an individual or an organisation to fund business needs such as buying land or leasing a factory, purchase new equipment, running daily business affairs or paying salaries to the employees. Banks and non-banking financial institutes cater to the financial needs of these business enterprises depending on their requirements and business potential. Business loans are a secured funding option to help jump-start a new venture, expand and diversify the existing business or meet daily expenses.
Depending on the requirements of a business, financial organisations offer different types of business loans. Some are as follows:
It’s for start-ups/new businesses that may not have a unique credit history. The borrower’s credit, the present turnover, etc., are considered while deciding the loan amount, tenure or rate of interest. Proof of the existence of the business and its registration number is mandatory.
It falls under the category of small business loans and helps fund an enterprise's everyday operations. Manufacturers, traders, wholesalers, service providers and retailers generally apply for working capital loans.
It’s the most prevalent type of business loan meant to generate capital funding and often paid as a lump sum; it can be secured or unsecured. A secured business loan backs small businesses against personal guarantees or valuable assets put up as collateral. If the borrower fails to repay the loan, the lender can use the mortgaged asset to recover the loss. Collateral-based business loans offer economical interest rates and lengthy tenures. An unsecured business loan, conversely, requires no collateral. Therefore, it’s a faster and easier mode of raising capital. In a term loan, the amount depends on the credit history of the business. The tenure is 15–20 years for a secured business loan and 1–5 years for an unsecured business loan.
This is a secured business loan for small and medium enterprises. The applicant can avail loan against putting up a litigation-free residential or commercial property as collateral.
Also known as a machinery loan, it funds purchasing of equipment for the manufacturing unit of a business and offers an affordable rate of interest. It is very discrete—the equipment for which the fund has been approved is also considered collateral and other assets.
When small businesses incur/have to incur expenditure on behalf of their clients, it submits an invoice to the concerned client for reimbursement/funding. However, there’s a time lag between invoice raising and receiving payment from the client. Invoice financing helps these small businesses sail through this time lag by providing up to 80% of the invoice amount.
This is meant for small- and medium-sized businesses run by women entrepreneurs.
The loan amount depends on the portion of everyday debit card sales.
It is a facility where funds are sanctioned against a mortgage—mainly a fixed deposit the borrower has with the lender. A fixed overdraft limit is authorised depending on the borrower’s relationship with the institute, credit history, repayment history, business cash flow, etc.
It’s ideal for a business owner who needs immediate cash and adds to his credit score simultaneously.
Shriram Finance is an MSME financier offering competitive customised loans to micro, small and medium enterprises—a one-stop financial solution for MSMEs, hoteliers, proprietors and professionals. It provides working capital loans for running day-to-day business affairs, machinery loans for purchasing equipment and other business loans to maintain company infrastructure and meet other business-related expenses. The customised MSME loans offered by Shriram Finance are unique. It aligns different loan offerings with your requirements and helps you make a mark on your venture.
Different financial institutes have other eligibility criteria. Eligibility criteria that are specific to Shriram Finance are:
The following features of the MSME loans offered by Shriram Finance make it a go-to financial institute:
Giving your business a much-needed boost is now just a click away. With Shriram Finance, all you need is to meet the eligibility criteria and choose a loan that best suits your needs. Moreover, calculate the monthly instalments payable with the help of the inbuilt business calculator.