As an ambitious entrepreneur or business owner, you’re always looking for ways to grow, innovate and improve operations. One of the most effective ways to fuel this growth is through an SME (Small and Medium Enterprise) Loan. Whether you’re planning to expand your team, invest in new technology or streamline your working capital, an SME loan can provide the financial support you need.
In this blog, learn more about SME loan, its eligibility and how it can be beneficial for your business. Read on!
What is an SME Loan
An SME or MSME loan is specifically designed to meet the financial needs of small and medium-sized enterprises. It provides you with working capital to run day-to-day operations, expand business, hire new staff or invest in new infrastructure. A SME loan requires minimal documentation and comes with quick approval and attractive interest rates.
Types of Businesses Who are Eligible for SME Loan
You’re eligible for an SME loan if you own or operate any of the following types:
- Retail Shop Owner: If you run a physical or online store, an SME loan can help you manage inventory, upgrade interiors or expand your customer base.
- Micro, Small or Medium Enterprise: Whether you’re in manufacturing or trading, your business is qualified if it falls under the MSME category as per government norms.
- Sole Proprietor: If you are a sole owner of a business, you can apply for an SME loan to meet your financial needs.
- Women Entrepreneur: Many lenders actively encourage women-led businesses by offering SME loan schemes with simplified application process and attractive terms.
Key SME Loan Eligibility Criteria
1. Credit Score
Your credit score is the direct reflection of your past repayment behavior. A score of 750 or above is generally considered good, however, some lenders may accept lower scores provided your interest rate might affect. Both your personal and business credit scores may be evaluated, so make sure to keep your records clean.
2. Annual Turnover
Lenders want to ensure that your business generates enough revenue to manage loan repayments comfortably. While the minimum turnover requirement may vary, most institutions expect your operations to have a consistent income flow.
For instance, at Poonawalla Fincorp, your business should have a minimum annual turnover of ₹6 lakh. A higher turnover not only boosts your loan approval chances but also helps you secure high loan amount and interest rates.
3. Business Vintage
Your business vintage refers to the number of years you have been operational. Most lenders require your business to be active for a minimum of 2 to 3 years. This helps them assess your venture’s stability and revenue trends.
4. Required Documents
To verify your eligibility, lenders will ask you for the following:
- KYC Documents
- Business Address Proof
- Financial Documents
*Note: The above-mentioned documents are indicative. Additional documents may be required during loan processing.
Tips to Improve Loan Eligibility
Below are some tips to improve your chances in the future:
- Choose the Right Lender: Some lenders offer relaxed criteria for SMEs. Compare options and find the ones that suit your business profile.
- Maintain Healthy Cash Flow: A consistent positive cash flow assures lenders of your repayment capacity.
- Reduce Existing Debt: Lower your current liabilities before applying for an SME loan.
- Boost Your Credit Score: Pay bills and EMIs on time to avoid maxing out your credit limit.
If you’re looking for a quick online loan, Poonawalla Fincorp offers MSME loan up to ₹75 lakh with quick disbursal and flexible repayment tenure up to 48 months.
How to Apply for Poonawalla Fincorp’s SME Loan
Follow the 3 simple steps to apply:
Step 1: Click on “Apply Now”
Tap on the ‘Apply Now’ button to initiate your application.
Step 2: Enter Your Details
Enter your DOB, PAN card number, monthly income, and residential details.
Step 3: Upload Your Documents
Upload the necessary or required documents for quicker approval.
Once your verification is successful, the loan amount will be disbursed into your bank account instantly.
To Conclude
An SME loan can be a powerful tool to help your business grow, however, getting loan approval starts with knowing about the eligibility factors inside out. By maintaining a solid credit score, steady annual turnover, an established business vintage and proper documentation can increase your chance of securing the loan you need.
Poonawalla Fincorp offers MSME Loan at competitive interest rate starting at 15%* p.a. without the need to pledge any collateral. Apply now and take your business to the next level.
Frequently Asked Questions
1. What is the minimum credit score required for an SME loan?
A credit score of 750 or above is generally considered good for SME loan eligibility.
2. What is the minimum annual turnover required for an SME loan?
Poonawalla Fincorp requires a minimum annual turnover of ₹6 lakh. A higher turnover not only boosts your chances of loan approval but also helps you secure a higher loan amount and better interest rates.
3. Can sole proprietors apply for an SME loan?
Yes, sole proprietors can apply for an SME loan. These loans can help them meet various financial needs, such as expanding their business, purchasing equipment, or managing working capital.
4. What is the maximum loan amount offered by Poonawalla Fincorp for SME/MSME loans?
Poonawalla Fincorp offers MSME loans up to ₹75 lakh, providing substantial financial support for various business needs.
About the Author
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply