3 min read

SME finance: Connection Small to Medium Enterprises with business funding

SME finance: Connection Small to Medium Enterprises with business funding

Presently, businesses are growing at a pace compared to previous generations. With such speed, every small to medium business might require an adequate portion of working capital. And, without enough funds, a company possible fail to grow, upgrade technology, pawns, shift the office, meet daily operation obligations and sudden rise in demands, etc. And, that is where SME finance plays a crucial part!

In fact, to maintain consistency in business operations and activities, funding is something a business owner cannot sidestep. It draws the business requirements out of complex situations. Plus, help the graph of its growth to increase having said that.

How can I take an SME Loan in India?

The loan application process has gone through several filtrations over time in India. There was a traditional method of applying for a loan. For the time being, that has become easy and manageable. A number of crowd-fundings like banks, NBFCs and angel investors provide people with working capital service for the time being. However, they do not allow money without collateral or security with other important rules and regulations. They also enable terms and conditions for a borrower to follow.

But, securing collateral is not a simple thing for an SME. Hence, the best possible way for an SME to grab funding is through an NBFC without security. These finance organisations deliver a standard eligibility benchmark and demand minimal documents from every small to medium enterprise owner. These lenders barely check on the financial stability and profit of the business as well as business fundamentals.

However, every financial lender/institution design different qualification criteria for small business financing. Therefore, we always recommend borrowers conduct prior research before applying for the loan. By doing so, you can decide on a suitable lender matching your eligibility and business conditions.

Things to analyse before acquiring the loan:

· Determine the business needs - Every SME owner should hold a clear idea regarding their business needs and working capital value. Without a clear vision, most people fail to process the amount in a positive and effective way. In fact, this activity may decide the future of the business. In that case, an enterprise highly requires expert advice to evade these potential issues.

· Double-check credit history - Reviewing the credit score or CIBIL history before applying for the business loan is a vital step to follow. Since every lender (be it a bank, NBFC or broker) review and evaluate the applicant's credit history, it is somewhat essential. A credit score above 700 is a sound score and is primarily considerable. It increases your chances of getting a loan smoothly.

· Research & choose a lender - Once checked with the credit record, look for available options. Often, smaller financial institutes offer more promising SME finance options than reputable ones. Have a comprehensive and thorough review of all available lenders and their financing products, talk to their agents or loan officer and have a precise concept about their terms and conditions. At last, choose the one that suits your business opportunities.

·    Design a robust business plan - For every business, having a rugged plan is crucial before anything, even a loan. A business plan is something every financial institute and lender inspect in addition to establishing your credit capacity. A detailed business plan will help the lender assess your past business records, evaluate all assets and project statements.

General eligibility criteria for SME Business loan:

Small business financingcomes with a specific range of qualification benchmarks. Eligibility criteria are one of them! So, let us glimpse look at the general yet principal criteria for all finance schemes from banks, NBFCs and other such financial institutions.

· Age of the applicant

· The credit record of the enterprise

· Minimum turnover or profit of the SME

· Overall business activities for a number of years


Getting SME finance for your small to medium enterprise is not a gruelling job. You do not have to play a tricky game either. All you need is just to have an appealing presentation of your business. Rest your loan officer will handle and cooperate with your business obligations after you fix an appointment with the financial institution. So, happy financing!

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