For every business, big or small, the most threatening situation is not having enough capital to meet daily operating expenses. Thus, if proper precautions are not taken on time, the business loses its existence. In such financial fix, an SME loan acts as a blessing.
Now, before you start scavenging for suitable options, here are some SME business loan options every entrepreneur can look for:
Business loan: Business loan is the usual finance option which any business can apply for, in case their business needs financing. An applicant can secure a business loan from public sector banks, non-public sector banks, cooperative societies, and NBFCs. Other than supporting the business, a business loan serves a variety of purposes like purchase of assets, financing expansion, training staff, etc.
Loan against property: Loan against property is available for all entrepreneurs who need financial support for business needs. You just have to meet all the eligibility criteria and submit the official papers a property whose value is approximately 70-80% of the required loan amount.
Secured loans: The concept of secured loans is very similar to ‘loan against property’, yet, there is a very small difference: the asset used as security can be anything like Gold, commercial land, FD bonds etc. Also, the same rule of security, “your asset value should be at least 70-80% of the amount you’re seeking” applies here too.
Flexi loans: the Flexi loan is a new and upgraded version of regular business loan available in all NBFCs and few non-public sector banks. The flexi loan makes an applicant eligible for a certain amount of loan, usually beyond what the applicant is actually eligible for. Moreover, with flexi loans you get repayment flexibility- you can either pay the interest sum as EMI and settle the principal amount later, or vice versa.
Finance from equity: We all know what an equity is, a business exchange a part of the ownership for money with random investors. Using the method of equity, a business can collect a large amount of money, but the only drawback is you can lose the ownership of your own company.
Bottom line: Before applying for any of the above-mentioned SME loans, it would be smart to read and research a lot more about the SME loan, best-related offers, and the eligibility criteria.
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.