sme

What are the Benefits of an SME Loan

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An SME loan is designed specifically for small and medium enterprises. Therefore, it comes with a lot of benefits attached to it. These benefits include.

Benefits of an SME Loan:

  • Minimal Documentation

When wondering how to apply for an MSME loan in a time of emergency, the first thing that might strike business owners is how lengthy the process will be. This is far from the truth. MSME loans require very minimal and basic documents to get sanctioned which saves you a lot of time. 

  • Flexible Tenure

Most SME loans have flexible repayment tenures which ensures that the borrower is not burdened by the stress of tight deadlines. Hence, allowing them to focus primarily on the growth of their business and get good returns to be able to pay back on time too.

  • Unsecured

MSME loan eligibility is not based on the pledging of assets. Due to its unsecured nature, small and medium business owners find it much more convenient to avail it as they do not have many, or any assets, for that matter in the initial stages of business establishment.   

  • No Prepayment Charges

Prepayment penalties are levied if borrowers try to disburse their loan before the tenure matures and to secure lenders from losing out on interests. For MSME loans, however, these charges are not levied. This makes repayment even more flexible. 

Fullerton India offers business loans to MSME’s that can help you boost your business without having to worry about funding. With competitive interest rates and flexible tenures, it is surely a step in the right direction for your enterprise

Must Read: What Are The Steps To Get A Small Business Loan?

How to Maintain a Good Credit Score as an SME?

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Having a high credit score as Small and Medium Enterprises is important. It helps get funding through as well as new clients. This is because your business credit report can be accessed by other stakeholders in the industry before getting into business with you. The following are a few things you can do to maintain a good credit score: 

Things to Do to Maintain Good Credit Score are:

  • Consistency 

A good credit score is built overnight. When availing an SME loan, your credit score needs to be in place consistently. A good practice to boost your score over a period is by credit utilisation – use your line of credit but do not max it out. 

  • Updating Information 

There are a few major bureaus in India that maintain profiles of companies. Make sure your profile is up-to-date across these platforms. Information such as years in operation, number of employees, and financial statements must be updated periodically. It is also advised to only borrow from lenders registered on these bureaus.

  • Credit History
    It is essential that business owners have a good credit history. This means that they must have no defaults in repayments of previous debt or financial commitments. Having a clean public record is also of the essence, it is a business loan requirement and not having a good rep makes lenders sceptical. 

Fullerton India has expertise in business loans that can give your SME a head start. With our flexible tenures and competitive interest rates, you can focus on your business’s growth and be at ease about financing.

Additional Read: Tick-off These 5 Requirements Before Availing Small Business Loan

What is SME Loan and What are the Documents Required To Get an SME Loan?

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SME loans are credit facilities provided to small and medium enterprises to cater to their financial needs. SME loans are tailor-made to suit the specific requirements of SMEs. For instance, you can use the loan amount to invest in your factory infrastructure or maintain a healthy cash flow in your business. 

SME loans are particularly beneficial for women-run businesses. Through proper funding, small businesses can flourish in their operations and make significant contributions to India’s GDP. 

It is mandatory to prepare the following small business loan documents to apply for an SME loan.

  • Identification Proof: Passport, Aadhaar Card, Driving License, Voter ID Card, PAN Card. 
  • Address Proof: Aadhaar Card, Driving License, Voter ID Card, Passport, Utility bill, etc
  • Valid Business Proof: Business Entity Proof, Incorporation Certificate, Article of Association, Partnership Deed, Shops and Establishment Certificate. 
  • PAN Card of business entity and those of partners. 
  • Company financials: Tax audit reports, Balance Sheet, Profit and Loss, VAT returns for the past three years. 
  • Last three months’ bank statement. 
  • Duly signed application form. 

Before applying for an SME loan, you will need to make sure that you meet the underlying eligibility criteria: 

  • You must be a proprietor, self-employed individual, or a private undertaking. 
  • The borrower must be 21 years old at the time of application and 65 years old at the end of the loan tenure. 
  • You must show a minimum income and turnover of the business based on your lender’s policy. 
  • Your business must have been making profits for at least 2 years.
  • You must have a minimum of five years of business experience.

It is one of the popular options among small business owners to secure funding for their businesses. Its popularity stems from features and benefits like minimum business loan documents requirement, collateral-free, flexible tenure, and no prepayment charges. 

Must Read: 5 Major Obstacles That Confront MSME Loans in India