Loans which cater to the financial needs of the Small and Medium Enterprise (SME) segment are known as SME loans. This segment is responsible for providing huge employment opportunities at relatively lower capital costs and at the same time, also aids in industrialisation of backward and rural areas. By contributing highly to domestic production, significantly increasing export earnings, and by being operationally flexible, SMEs play a key role in the development of the nation.
|Name of the Bank||Interest Rate||Loan Amount||Repayment Tenure|
|State Bank of India||8.25% to 16.95%||Up to Rs.500 lakh||Up to 7 years|
|ICICI Bank||Varies according to type of loan||Up to Rs.2 crore||Up to 7 years|
|Axis Bank||Based on business profile||Up to Rs.5 crore||Up to 60 months|
|Tata Capital||19% onwards||Up to Rs.50 lakh||Up to 36 months|
|YES Bank||-||Up to Rs.4 crore||-|
|Karur Vysya Bank||Linked to Credit Score||-||Up to 7 years|
|HDFC Bank||15.65% to 21.20%||Up to Rs.50 lakh||Up to 48 months|
|Aditya Birla Capital||-||Up to Rs.1 crore||Up to 48 months|
|Mahindra Finance||13% to 15%||Up to Rs.10 lakh||Up to 36 months|
|Name of the SME Loan||Nature of Scheme||Maximum Loan Amount||Processing Fee||Collateral|
|SME eBiz Loan||Cash credit||Rs.500 lakh||
||At least 35% in the form of land/building, liquid securities, etc.|
|Simplified Small Business Loan||Dropline overdraft facility||Rs.25 lakh||-||Minimum 40%|
|Standup India||Working Capital or term loan||Rs.1 crore||0.20% of loan amount||Not required|
|SME Smart Score||Cash credit or term loan||Rs.50 lakh for manufacturing units and Rs.25 lakh for trade and services||As per bank’s terms and conditions||As per bank’s extent norms|
|SME Credit Card||Term loan or cash credit||Rs.10 lakh||As applicable to SBF and SSI units||No collateral for SSI but for SBFs, loans over Rs.25,000 will require a collateral/guarantee|
|Doctor Plus||Term loan||Rs.5 crore||50% concession on card rates||No collateral required for loans up to Rs.2 crore. For loans above Rs.2 crore and up to Rs.5 crore, 25% tangible security needs to be provided|
|Medical Equipment Finance||Term loan||Rs.20 crore||50% concession on rate cards||No collateral required for loans up to Rs.2 crore. For loans above Rs.2 crore and up to Rs.20 crore, 25% tangible security needs to be provided|
|E Dealer Finance Scheme||Cash credit||Based on requirement||Rs.10,000 to Rs.30,000||Up to 50% based on the tie-up|
|E Vendor Finance Scheme||Cash credit||Based on requirement||Rs.10,000 to Rs.50,000||Nil|
|Asset-backed loan||Dropline overdraft||Rs.20 crore||1% of the limit||Immovable property in the form of registered or equitable mortgage of land or building|
|Fleet Finance||Term Loan||Rs.10 crore||1% of the limit||No collateral required for loans up to Rs.1 crore. For loans over Rs.1 crore, at least 20% of the tangible asset needs to be provided as collateral|
|PM Mudra Yojana||Working capital and term loan||Up to Rs.10 lakh||0.5% of loan amount||Not required|
|Export Packing Credit||Working capital||Based on requirement||As per working capital/cash credit limits||As per working capital/cash credit limits|
|Lease Rental Discounting||Term Loan||Rs.50 crore||As per existing instructions||Equitable mortgage or any other acceptable property|
|Open Term Loan||Information Not Available||Information Not Available||Information Not Available||Information Not Available|
|Warehouse Receipt Finance||Working capital demand loan/cash credit facility/revolving demand loan||Based on requirement and eligibility||Nil to Rs.3 lakh||Personal guarantee of directors, partners, etc.|
|Processing Fee||Stamp Duty Charges||Commission on Bank Guarantees and Letters of Credit||Commitment Fees||Foreclosure Charges|
|Up to 2% of the facility amount plus applicable taxes||As per state tax laws||Up to 2% p.a. on pro-rata basis||
|Name of the Scheme||Nature of the scheme||Loan Amount||Collateral Coverage|
|MSE Power||Term loan and working capital requirement including letter of credit, rupee export credit, bank guarantee, etc.||Rs.10 lakh to Rs.5 crore||100% of loan amount|
|Services Power||Working capital and term loan requirement including cash credit, letter of credit, inland bill discounting, rupee export credit, etc.||Rs.10 lakh to Rs.5 crore||100% of loan amount|
|SME Power||Working capital and term loan requirements including inland bill discounting, cash credit, bank guarantee, etc.||Rs.10 lakh to Rs.5 crore||125%|
|Business MPower Overdraft||Overdraft facility||Rs.10 lakh to Rs.5 crore||Residential, commercial, and industrial property to be provided as collateral|
|Business Mpower Term Loan||Term loan||Rs.10 lakh to Rs.5 crore||Residential, commercial, and industrial property to be provided as collateral|
|Power Rent||Term loan||Rs.5 lakh to Rs.20 crore||Contracted lease rental receivables|
|LCBN Power||Short term loan||Rs.5 lakh to Rs.5 crore||Nil|
|Zero Collateral Loans||Working capital and term loan||Rs.5 lakh to Rs.1 crore||-|
|Business Loan for Property||Loan for acquiring office space for business||Rs.5 lakh to Rs.5 crore||-|
|Business Power||Working capital to bank’s existing Current Account customers||Rs.10 lakh to Rs.2 crore||Flexible collateral security|
|Processing Fee||Penal Interest||Foreclosure Charges||Loan Cancellation Charges|
|Maximum 2.75% of the loan amount plus GST||3% of overdue amount per month plus GST||4.5% on the future principal outstanding on the current loan plus GST (Foreclosure allowed only after 9 months)||Rs.5,750 or 2% of loan amount, whichever is higher|
|Name of the scheme||Nature of the scheme||Maximum Loan Amount||Collateral|
||Rs.4 crore||Commercial/residential/industrial plot|
||Rs.2 crore||Industrial/commercial/residential/NA plot/surrender value of LIC/FD/BG|
|Smart Overdraft||Dropline overdraft and overdraft||Rs.1 crore||Industrial/commercial/residential/NA plot/surrender value of LIC/FD/BG|
|Cash Backed Lending Program||Non-fund based – Bank guarantee, letter of credit, buyers’ credit||-||-|
|Channel Finance||Working capital||-||-|
|YES GST||Overdraft based on GST returns||Rs.1 crore||-|
|Name of the Loan||Nature of the Loan||Margin||Security|
|KVB MSME Cash||Short term loan, open cash credit, etc.||
|KVB MSME Term Loan||Short or medium-term loan||20% for machinery and 40% for building||Immovable assets|
|KVB MSME Vendor Bill Discounting||Bill discounting||15%||75% of immovable assets|
|KVB MSME Easy Loan||Loans to existing services and manufacturing units with a turnover of below Rs.100 lakh||
|KVB Micro Plus||Loans for microenterprises||-||125% for immovable properties and 100% for liquid securities|
|Rack Interest Rate||Loan Processing Fee||Prepayment Charges||Overdue EMI Interest||Amortisation Schedule Charges|
|15.65% to 21.20%||Up to 2.50% of the loan amount (Minimum – Rs.2,359 and maximum – Rs.88,500||
||2% per month on EMI or principal overdue subject to a minimum amount of Rs.200||Rs.200|
|Type of Loan||Loan Amount||Repayment Tenure||Loan Margin||Security|
|Project Finance||Up to Rs.40 crore||Up to 5 years||Based on the profile of the customer||Usually 1.5 times of asset cover|
|Equipment Finance||Up to Rs.25 crore||6 months to 5 years||Flexible||Usually 1.5 times of asset cover|
|Corporate Loans||Up to Rs.25 crore||1 year to 5 years||-||Usually 1.5 times of asset cover|
|Secured Business Loans||Rs.10 lakh onwards||Up to 36 months||-||Unencumbered commercial, residential, or industrial, and land properties|
|Unsecured Business Loans||Rs.1 lakh to Rs.5 lakh||Up to 12 months||-||No security required|
|Working Capital Loans||Up to Rs.25 crore||Up to 36 months||-||Plant and machinery, land and real estate property, fixed deposits, deposit certificates, etc.|
|Bill Discounting||Up to Rs.10 crore||Up to 12 months||-||Kisan Vikas Patras (KVPs), securities issued by state and central government, etc.|
|Lease Rental Discounting||Up to Rs.25 crore||Up to 7 years||-||Mortgage of the leased property|
The eligibility criteria for SME loans may vary from lender to lender but in general, most lenders look for the below-given eligibility criteria:
|Who can apply||Proprietors, self-employed individuals, partnership firms, private limited companies engaged in the business of trading, manufacturing, and services|
|Age of the borrower||
|Minimum Annual Income of the Business||Rs.1.5 lakh|
|Minimum Turnover of the Business||Rs.40 lakh|
|Profit Status of the Business||Should have been making profits for the last 2 years|
|Business Experience||Borrowers should have been in the same line of business for at least 3 years and have at least 5 years of total business experience|
When applying for an SME loan, you will be asked to furnish the below-given documents:
|Identity Proof||Passport, Aadhaar Card, Driving License, Voter’s ID, PAN Card, etc.|
|Address Proof||Aadhar Card, Passport, Voter’s ID, Driving License, etc.|
|Proof of Business||Business Entity Proof, Partnership Deed, Incorporation Certificate, Shops and Establishment Certificate, Articles of Association|
|PAN Card||Of business entity and of partners/promotors|
|Company Financials||Provisional/audited financials – tax audit reports, balance sheet, profit and loss, VAT returns, etc., for the last 3 years|
|Bank Statements||For the last six months|
|Application Form||Duly filled and signed|
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.
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.
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.
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.
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.
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.
To avail a lease rental discounting loan, the property against which the lease rentals have been discounted can be provided as security.
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.
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.
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.
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.
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