What are the type of Are MSME loans Available in India?

small business loan

As we know, for starting any kind of business, proper financing is the sole requirement. But one can get this finance from the government or private organization. Well, the Government of India providing several loans for the betterment of Small and marginal business holders. They can apply for MSME business loans with significantly fewer interest rates. However, different banks set different terms and conditions for CGTMSE loans.

In India, the organization provides different business loans, such as-.

  1. Line of Credit ( LOC):

It is a separate MSME loan from a standard business loan. In this type of loan, the lenders usually set a limit before issuing a business loan. You can take the loan up to that maximum as per your requirement. But when you have to clear that loan amount, you do not have to repay the entire amount. You will have to clear the amount that you have used for your business proposal. This type of MSME loan is beneficial for the small business holders as their loan requirement is seasonal.

  • Unsecured Business loan:  

This is also the right business loan for small business holders as they do not have to give any collateral for getting the business loan approval. Here the lenders are ready to take more risks on themselves, so it is a bit expensive. With an unsecured business loan, one can take up to 10 lakh.

  • Flexi Business Loan:

 Small business holders can take the business loan from Non-banking financial cooperation to approve the business loan quickly.  Under these Flexi loans, several loan facilities such as Flexi vendor finance, Flexi term loans are offered. Usually, the lenders provide Flexi loans at an interest rate of 17 percent per annum.

  • Machinery Loans:

To run a business, you need special machineries and equipments to make the process faster and smooth and if you want to buy new equipment or machinery to expand your business operations or if you want to upgrade, you can plan to avail a machinery loan.

  • Secured Business Loan: 

With this business loan, one can take get more loan amounts for the business growth. AS the loan amount is more, you have to keep an asset or collateral to get the CGTMSE loan. Small business holders can get up to 2o lakh rupees from this loan. Suppose the business is a little more significant with an annual turnover of 10cores to 20 cores. In that case, the business owner can avail of this business loan to further improve the businesses.

  • Working capital Loan: 

Working Capital loans are mainly used for managing day-to-day operations. Whether it’s paying the employee’s salary, buying some equipment, or paying office rents, this loan can be used. These loans are short-term loans. As we know, the continuous flowing of the business, finance must be required, and a working capital loan will allow that opportunity to continue with the flow. The MSME loan amount varies from lender to lender. However, one can get up to Rs 50 lakh loan amount.

These are the types of business loans available now. It’s your decision what kind of business loan you need for your business. You have to go for the appropriate loan after going through all the terms and conditions set by the banks or private organizations.

FAQs:

  1.  How much loan amount can a person get with LOC?

With LOC, a small business holder can get up to 5 lakh rupees loan amount.

  •  What are the type of MSME Business Loans based on Collateral?

Based on the collaterals, the business loans are of two types: secure and unsecured business loans. In a secured business loan, you have to keep an asset or Collateral for getting the loan, whereas you do not have to give any asset in an unsecured business loan.

  • How MSME loan is processed?

First, you have to prepare the report about why you need the loan, then attach all the necessary documents in the bank or to the lender. Finally, you need to fill all the necessary forms required in the financial institutions.

  • Where can I Get the MSME Loans?

Government banks such as state banks, Bank of Baroda, and Punjab national banks provide MSME loans quickly. Apart from that, Cooperative society and private banks also give MSME loans at a reasonable interest rate.

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