Table of Contents
- What is SME and MSME Loan?
- MSME loans may be of the following types:
- Working Capital Loans
- Term loans
- Equipment finance
- Bill Discounting
- SME Loan Features
- Customized loans
- Flexible tenure
- Accessibility
- Easy repayment
- Fast and secure processing
- How SME Loans Fuel Your Business Growth?
- Finance at Competitive Rates
- Working Capital Management
- Debt Consolidation
- Marketing
- Business Development
- Tax Benefits
- To Sum It Up
Micro Small and Medium Enterprise (MSME) and the Small and Medium Enterprise (SME) sectors are an integral part of the Indian economy. These sectors contribute significantly to innovation, employment generation, and exports; the sector also facilitates inclusive growth.
Per a Government of India Report, the MSME sector contributed 30.27% to India's GDP in 2018-2019. According to a report, the SME sector employs around 106 million people, 40% of India's workforce
Like all businesses, the MSME and SME segment also requires financial support from time to time. MSME and SME loans help these enterprises fulfill their financial obligations when needed.
What is SME and MSME Loan?
The terms SME loan and MSME loan are used interchangeably and refer to the finance offered by lenders to businesses that fall under the MSME and SME category (refer to table below).
| Sector Type | Micro Enterprise | Small Enterprise | Medium Enterprise |
|---|---|---|---|
| Manufacturing and Services Sector |
|
|
|
Banks and Non-Banking Financial Companies (NBFCs) offer loans to start-ups, small entrepreneurs and women on a short-term basis under this category. You can apply for an MSME loan online with all leading banks and NBFCs or through special government schemes too.
MSME loans may be of the following types:
Working Capital Loans
help the business owner meet their daily fund requirements. These loans are short-term and generally have a repayment tenure of one year. Finance for working capital is available under the MSME loan without collateral in 2021. The interest may be higher, and the loan can only be used for specific purposes.
Term loans
may be short-term loans with a repayment tenure of one year or long-term loans with a repayment tenure of 1 to 5 years. Shriram Finance SME loans are available for a flexible term; you can choose a tenure per your requirements.
Equipment finance
loans help the borrowers buy new equipment/machinery or upgrade their existing machinery. These loans are available to businesses engaged in the manufacturing sector.
Bill Discounting
is a facility where the lender offers you (seller) an amount in advance at discounted rates. You have to pay interest or monthly fees to the lender for this credit facility.
Terms and conditions for loans may vary across lenders. Shriram Finance SME Loan can help you grow and modernize your business; the features of their loans are:
SME loan features
Customized loans:
Tailor-made solutions match your profile and business requirements.
Flexible tenure:
Ranging from 12 months to 60 months to help you get your business back on track or expand it.
Accessibility:
New, as well as existing customers, can avail of finance. Loans are offered to unique segments too, who find it challenging to obtain funds from other financial institutions.
Easy repayment:
With the ECS mandate, monthly installments are debited automatically every month from the bank account of your choice.
Fast and secure processing:
You can apply for Shriram Finance Online SME Loan or walk into a branch at your convenience.
How SME Loans Fuel Your Business Growth?
Lenders and the government (through special schemes) offer loans to help small businesses start their operations or help them grow their existing ventures. Below we discuss how loans can help you in your business growth.
Finance at Competitive Rates:
MSME loans are available at very competitive rates. The interest rates may vary depending on the lender's policies and also the borrower's credentials, loan tenure, amount of loan, business model, and financials. If you are a small business looking to expand or modernize, an MSME loan can help you fulfill your dreams without burdening you too much. You can avail yourself of Shriram Finance SME loans at competitive interest rates based on your profile and requirements.
Working Capital Management:
Efficient working capital management is an integral part of running a business. Working capital refers to the funds required by an organization for its day-to-day activities. It involves provisioning for weekly and monthly operational expenditures so that the company can operate independently of its supplies and buyers. Lack of working capital can hamper your business' daily functioning. SME loans can help you manage your cash flows and working capital effectively, which is crucial for the growth of your business.
Debt Consolidation:
Short-term MSME loans can help your business grow by combining smaller payments into a single EMI. You do not have to pay multiple installments at different times. You can match debt payback with your business invoicing schedules. With debt consolidation, you have a chance of reducing your monthly outflow as you may get a loan at better rates, or you could opt for a longer term.
Marketing:
Even the best business in the world needs the right marketing strategy to reach potential customers. An SME loan can help you in your marketing plans. With the right marketing mix, you can acquire new customers and also consolidate your existing customer base.
Business Development:
Your business cannot grow till you upgrade your technology or expand your area of operations. Expansion or modernization requires funds, and many NBFCs offer MSME loans without collateral in 2021 so that your business growth is not hampered due to a lack of funds. Some lenders may require collateral; you can approach the lender of your choice based on your situation (whether you can provide collateral or not).
Tax Benefits:
SME loans offer tax advantages too. You pay tax on your net income earned from your business during the financial year. As per the IT Act provisions, your loan EMI is deducted from the gross income to arrive at the net income. This deduction can lower your net income and, as a result, your tax burden significantly. The savings can help you fuel your business growth.
To Sum It Up:
Your dream of a flourishing business can come true with an MSME loan. The loans can be used as per your needs, whether it is growth or running daily operations smoothly. Whatever be you need, research well before you take a loan. Shriram Finance Online SME Loan can help you in your growth story. With a legacy of 45 years, they are a trusted name that offers quality service at your doorstep.
