Running a business is not easy, and you will have to factor in a lot of different kinds of cost to run your company. With the rise of start-up culture in India, many wish to start a company by securing a Business Loan. To aid this economic development, the Indian government now offers different Types of Business Loans in India through banks and money lenders. These Business Loans are often long-term with low-interest rates that any business can utilise to either buy property, assets or even expand or acquire another business.
If you are searching for a good Business Loan to apply for small Business Loans should be on your search. Get a government subsidy loan for business or a credit guarantee fund scheme for micro and small-scale businesses which are facilitated through many banks in India.
What are the types of Business Loans which I can apply for?
Depending on the industry you want to function in, the government has devised several different types of Business Loans that one can apply for. This sometimes is also skewed towards the requirements for that particular sector. Say, for instance, a government subsidy loan for a business of farming may be required to buy farm equipment such as tractor or seeds.
The government dispatches loans through Public Sector Banks such as State Bank of India, Bank of Baroda, Andhra Bank to small-scale businesses. The variety of schemes are segregated according to the industry such as the ones to crop loan, horticulture financing, agricultural term loans and land development schemes for agricultural businesses. For other businesses there are loans such as working capital finance, project finance, structured finance, small business borrowing, export and import finance as some of the options.
How do I apply for a Business Loan?
Once you have decided to borrow funds to support your business, you have to prepare the documents required and submit them to avail the loan. Since many of the schemes are provided absolutely collateral free, here are a few things to keep in mind.
The business plan needs to be provided which perfectly details out the roadmap for the company along with the application.
So once you have your business plans ready and want to get a greater understanding of the types of Business Loans to consider, here are the top few that should be on your radar:
- MUDRA Loan Scheme
This Business Loan is to ensure there are adequate funds for micro-units and the non-corporate small business sector. The Micro Units Development and Refinance Agency Ltd is specifically designed thinking of the different stages of business, growth and capital required to benefit micro units. Banks are brought on board to help facilitate these loans without asking for any collateral. For instance, the Shishu Loans can be availed for an amount up to Rs. 50,000 with zero collateral at 1% rate of interest per month for a period of 5 years. Similarly, Tarun is a loan where you can avail an amount of up to Rs. 10 Lakhs for a low-interest rate.
- Government Subsidy for Small Business-Organic Farming
This has been developed under the National Project for Organic Farming where capital is provided commercial production of biofertilizers.
- National Small Industries Corporation Limited (NSIC)
There are many schemes established under this to help provide Business Loans specifically to support equipment financing marketing activities financing; raw material procurement financing is some of the functions for which this Business Loan is furbished.
- Stand Up India Scheme
This bank enabled Business Loan was started by the government to provide anywhere between Rs. 10 Lakhs to Rs. 1 Crore to individuals from Scheduled Caste/Scheduled Tribe to start a greenfield enterprise. This means that the business can be classified under manufacturing, trading or services sector. These loans are great for women entrepreneurs as well as there is a separate special category to promote women entrepreneurship in the scheduled caste and tribes. The loan can be availed for tenure of 7 years.
- Technology and Quality Upgradation Support for MSMEs
This government subsidy loan for business has been specifically designed to help individuals upgrade their business to the quality standards of Micro, Small, Medium Enterprises (MSME) in India. The focus is on providing funds to upgrade technology and quality of products or services of MSMEs which will ultimately help them sustain the business for longer and ensure growth. This will help businesses secure an ‘Energy Efficiency and Product Quality Certification’.
- Bank Credit Facilitation Scheme
Developed by the National Small Industries Corporation, this scheme is aimed at fun small and micro businesses in the country. Credit support is offered through various nationalised banks such as SBI, BOI and Andhra Bank at no extra cost. The repayment model is completely dependent on the income generated by the business. The repayment tenure ranges between 5-7 years.
Now that you have a better understanding of government Business Loans, it is important to consider your different options carefully before jumping in. Taking into account tenure, loan opening charges, interest rates, eligibility criteria will help you prepare all the documentation necessary before applying for a loan. Both Central and State Government are heavily invested in promoting the growth of small businesses in India which makes it easier for entrepreneurs today to pursue their goals.