SME Loans (Small and Medium Enterprise)

1. State Bank of India SME Loans

Features:

• The bank offers 16 types of SME loans some of which are SME eBiz Loan, Stand Up India, Simplified Small Business Loan, SME Smart Score, PM Mudra Yojana, Warehouse Receipt Finance, etc.
• All the 16 schemes have different purposes, interest rates, eligibility, repayment tenures, etc.
• Some of these SME loans are unsecured while some are asset-backed.
• The SME schemes cover the financial needs across sectors such as services, manufacturing, trading, etc.

2. ICICI Bank SME Loans

Features:

• Partnership firms, sole proprietorship firms, public limited firms, and private limited firms are eligible to avail the SME loans from ICICI Bank.
• The loan will be given for fulfilling the working capital requirement.
• Commercial/residential/industrial property or liquid securities can be provided as collateral.
• The loans will be offered as term loan, export credit, cash credit, or overdraft.

3. Bajaj Finserv MSME/SME Loan

Features:

• The loans can be availed without providing any collateral.
• The loans are quickly approved and processed, usually within 24 hours.
• Provides the facility of doorstep pickup of documents.
• The loan account can be managed online with a few clicks and funds can be accessed easily.

4. Axis Bank SME Loans

Features:

• Axis Bank offers 10 types of loans for the SME segment namely MSE Power, Services Power, SME power, Business MPower Overdraft, Business Mpower Term Loan, Power Rent, LCBN Power, Zero Collateral Loans, Business Loan for Property (BLFP), and Business Power.
• The maximum loan amount that can be availed under the Axis Bank SME Loans is Rs.20 crore.
• Loans availed under these schemes can enjoy a maximum repayment of 10 years.
• Some of these loans are provided against collateral while some do not require collateral.

5. Tata Capital

Features:

• No collateral is required to avail a business loan from Tata Capital
• The business loan offered is custom-built to suit the borrower’s business needs
• Offers flexible EMI options for loan repayment
• The interest loan is fixed for the entire loan tenure

6. YES Bank SME Loans

Features:

• Offers 6 types of SME loans namely YES Samriddhi, YES Suyog, Smart Overdraft, Cash Backed Lending Program, Channel Finance, and YES GST
• The loan products are customised to match the business requirements of borrowers
• Anywhere anytime banking facility without any additional cost
• Borrowers with good credit score can enjoy preferential pricing.

7. Karur Vysya Bank MSME Loans

Features:

• Karur Vysya Bank offers MSME loans under 3 categories – KVB MSME Pack, KVB MSME Easy Loan, and KVB Micro Plus
• Under the KVB MSME Pack, three types of loans are offered namely KVB MSBE Cash, KVB MSME Term Loan, and KVB MSME Vendor Bill Discounting
• The maximum repayment tenure for the loans is 7 years
• The loans are quickly processed, and the rate of interest is competitive

8. HDFC Bank Business Loan

Features:

• The loans offered by HDFC Bank does not require any security or collateral.
• Dropline overdraft facility is offered in the range between Rs.5 lakh and Rs.15 lakh.
• No foreclosure is allowed before 6 months from limit setting.
• Borrowers can avail life coverage by paying a nominal premium.

9. Aditya Birla Capital SME Finance

Features:

• Five types of SME loans are provided by Aditya Birla Capital and they are Line of Credit, Unsecured Business Loan, Secured Business Loan, Working Capital Demand Loan, and Supply Chain Financing Solutions – Invoice Discounting.
• The rate of interest charged on the SME loans is fixed which means there will be no change in the interest rates throughout the loan tenure.
• The repayment of the SME loans can be done through NACH or ECS.
• Borrowers can enjoy flexible tenures ranging between 12 months and 48 months.

10. Mahindra Finance SME Loans

Features:

• Mahindra Finance offers 7 products under the SME loan category and they are project finance, equipment finance, corporate loans, secured business loans, working capital loans, bill discounting, and lease rental discounting.
• The SME loans offered by Mahindra Finance can be structured against lease rents, retention receivables, and other such identified receivables.
• Any tangible security purchased with the loans such as plant, machinery, etc., and any other tangible property will act as collateral for the loan.
• Short term loans will have a fixed rate of interest while loans with a tenure of over a year will have a floating interest rate on them.

Eligibility Criteria for SME Loans

The eligibility criteria for SME loans may vary from lender to lender but in general, most lenders look for the below-given eligibility criteria:

Documents Required for Availing SME Loans

When applying for an SME loan, you will be asked to furnish the below-given documents:

Please note that based on the type of applicant (whether partnership firm or individual), nature of business, income profile of the applicant, etc., the lender may ask for additional documents.

Frequently Asked Questions on SME Loans

1. How can I repay my SME loan?

Answers: There are many ways by which you can make the repayment of your SME loan. They are postdated cheques (PDCs), Electronic Clearing Service (ECS), Standing Instruction (SI), direct debit, and National Automated Clearing House (NACH). The preferred mode of repayment can vary from lender to lender.

The repayment can be done in equated monthly instalments (EMIs) which can be calculated by using the EMI Calculator tool.

2. What is a dropline overdraft facility?

Answer: The facility offered by lenders wherein borrowers can withdraw extra money from their business current account is known as an overdraft facility. It works as a short-term loan. Dropline overdraft facility is when the overdraft is taken for a longer term (maximum 10 years) but does not require annual renewals or attract yearly charges. The money withdrawn using the dropline overdraft facility can be used in the expansion of business or working capital.

3. Can I prepay my SME loan?

Answer: Yes. Most lenders will allow you to prepay your SME loan but will charge you a prepayment penalty. However, there are some lenders who do not charge any penalty for foreclosing or prepaying your SME loan. One such lender is Mahindra Finance.

4. Can I get an SME loan without providing any collateral?

Answer: A majority of lenders will ask for a collateral or security for an SME loan. However, there are some lenders such as IIFL Finance, State Bank of India (scheme-based), etc., who do not require you to provide a collateral for an SME loan.

5. What is bill discounting?

Answer: When the sales bills of reputed consumers are discounted leading to a reduction of the cash cycle of the business, it is known as bill discounting. It helps free up cash that the business can utilise for funding its operations, as working capital, and fulfil any other financial requirements.

6. If I wish to avail a lease rental discounting loan, what security do I need to provide?

Answer: To avail a lease rental discounting loan, the property against which the lease rentals have been discounted can be provided as security.

7. What is the maximum amount of loan I can avail under the Pradhan Manti Mudra Yojana (PMMY)?

Answer: You can avail loans ranging between Rs.50,000 and Rs.10 lakh under the PMMY to finance your small business enterprise in trading, manufacturing, and services sectors. Agriculture and its allied activities are also covered under the Mudra loan.

8. I am a doctor. Am I eligible for an SME loan?

Answer: Yes. Under the ‘Doctor Plus’ scheme offered by State Bank of India, you can avail SME loans ranging between Rs.10 lakh and Rs.5 crore to buy medical equipment, setting up your own clinic/nursing home/drug store, etc., and to expand your existing medical business. The repayment tenure for this loan ranges from 3 years to 7 years.

9. Is there a special SME loan for women entrepreneurs?

Answer: Women entrepreneurs can avail SME loans under a special scheme known as ‘Stand-Up India’ scheme. Under this scheme, women entrepreneurs can get finance from Rs.10 lakh to Rs.1 crore to set up a greenfield project. The repayment of this loan can be done in a maximum of 7 years. The scheme can also be availed by people belonging to the Scheduled Caste and Scheduled Tribe category.

10. I wish to set up my own fashion boutique. Can I get an SME loan for that?

Answer: Yes. Any business that generates income is eligible for an SME loan under the Pradhan Mantri Mudra Yojana. Since a fashion boutique is an income generating business, you can definitely avail the Mudra loan.