SME/MSME Business Loan Guide
1. What is an SME/MSME loan or finance?
Ans: SME finances are specially created loans for the small business enterprises (SME). These are designed to be in tune with unique requirements which small businesses encounter during various phases of their business.
2. What are the typical business requirements for an SME (or) MSME to take a loan?
Ans: Typical SME's require finance for new product launch, warehousing needs, expansion to new locations, developing new product categories, hiring new employees, marketing and many more such business needs.
3. What are MSME/ SME finance options in India?
Ans: MSMEs / SMEs have various options to avail loans like banks which have small business unit, NBFC, crowd funding or peer to peer lending etc. As compared to the traditional banking system, non-banking financial companies (NBFCs) are quicker and more flexible while serving the finance requirements of SMEs. NeoGrowth is a NBFC registered with RBI and helps SMEs with business loans which are business friendly.
4. How to apply for an MSME (or) SME Loan?
Ans: Every bank or NBFC have their own processes around the application procedure. But broadly, you need to apply online or by going to the branch. Submit the required documents and you get a loan post verification.
5. What are the documents an SME (or) MSME needs to provide to avail a business loan?
Ans: The documentation requirement for availing a business loan are different for every bank and financial institution. It also varies with the type of business entity and type of loan applied for.
6. How to find the best financing companies in India for your SME (or) MSME?
Ans: You need to explore finance options according to your business needs. For instance, NeoGrowth is well suited to serve businesses that use POS/EDC machine or are online sellers. Our flexible repayment model allows business owners to repay loans based on their business cycles and not on fixed EMI basis.
7. How should you prepare to get a MSME / SME loan quickly?
Ans: Below are some generally accepted guidelines when it comes to getting a business loan from a bank.
- Update your financial records
- Know the value of your assets
- Keep your bank statements handy
8. What is the difference between business loans by NBFCs like NeoGrowth and SME bank loans?
Ans: Traditional bank loans come with fixed EMIs. Also, banks have very strict documentation and eligibility criteria. We at NeoGrowth have minimal documentation requirement, simple eligibility criteria and flexible repayment model.
9. How are MSME / SME loans for online sellers different from traditional bank loans?
Ans: Online business comes with its own challenges and unique business requirements. Traditional bank loans require a lot of paper work, business experience and company financials which online businesses do not generally have. NeoGrowth online business loans have an eligibility criteria and documentation requirement understanding the online business space.
10. Can you throw some light on MSME / SME loan eligibility?
Ans: Eligibility varies for different financial institutions. We at NeoGrowth require the following criteria to be fulfilled for retailers.
i. Retailers operating a business should have a minimum experience of one year in their line of business.
ii. Retailers should have an annual revenue of Rs.1 Crore or an average Digital sale(online transactions + Card Sales) of Rs.1 Lakh per month.
11. Can MSMEs / SMEs get loan without collateral?
Ans: Yes, they can. Based on Digital sales (online transactions & Card sales) and credit history many NBFCs provide MSME / SME loans without security. We at NeoGrowth not only provide unsecured loans but also provide the customer with flexible repayment options. We also provide door-step service to our customers offering a better and faster experience.
12. Are MSME / SME loans given to new businesses?
Ans: If you are a startup and want to begin a business, it is unlikely that you get an unsecured loan. However; many banks provide loans for some collateral or security you provide.
13. What is the interest rate for an MSME / SME loan?
Ans: The rate of interest varies for different businesses. More the risk involved, more the rate of interest. Secured SME/MSME loans generally have low rate of interest. The interest rate for unsecured SME/MSME loans may depend on previous credit history as well.