You would be surprised to know that there are more business lending options than you can ever comprehend. However, not every MSME loan serves you right and it is important to take a call based on your requirements, preferences, repayment abilities, and goals.
In the subsequent sections, we shall cover all the existing lending schemes that are either offered by private and public lending institutions or come across as government-backed schemes, catering to the interested parties in the post-lockdown era.
Private Funding Options
Business Credit Line
This lending option comes forth as an overdraft account, allowing you to borrow a specific sum and pay interest only on the utilized line of credit. As an MSME owner, you get a predefined credit limit, based on your eligibility, and you can draw, repay, and close the account, depending on your financial stead.
Working Capital
If you need a short-term loan for managing cash flow, daily expenses, inventory purchases, and other recurring costs, private institutions offer capital loans at standard and competitive interest rates. These loans can either be secured or unsecured, depending on your eligibility and the perspective of the lenders.
Term Loan
A term loan is more like a fixed business loan that can be used in any preferred way. However, in most cases, an unsecured term loan can be repaid over a period of one to 5 years, whereas the secured ones have maximum repayment tenure of up to 20 years. Still, it is advisable to calculate the required financial assistance beforehand, using a business loan calculator, for making informed selections.
Cash Advance
This lending scheme resembles the credit line but depends entirely on the cash flow, transactional frequency, and financial health of the business. The lender gauges and ascertains these factors and extends an advance payment of sorts that can be repaid via a given portion of the sales.
Invoice Financing
Better termed as factoring, this loan aims to offset the lag between payments and invoices.
Government Lending Schemes
59-Minute Startup Loan
If you, as a business owner, fulfill the eligibility criteria concerning proper GST filing timeframe and more, you can procure up to Rs. 5 Crores in less than an hour at a commendable, 8.50 percent!
PMMY
This loan aims at funding small-scale enterprises like vegetable shop owners, small manufacturing setups, and more, as a part of the MUDRA scheme.
SMILE
Governed by the SIDBI, this lending scheme aims to offer cheap credit facilities, as soft loans. You can opt for a minimum sum of Rs. 25 Lakhs and repay the same over 10 years, chargeable at a starting rate of up to 8.36 percent.
In addition to these loans, you can also rely on CGTMSE for the MSME sector and the Stand-Up loan, specifically for women entrepreneurs.
Bottom-Line
If any of these lending schemes interest you, you can always head over to the Finserv MARKETS for picking one, best aligned with your needs.
