Multiple banks. Different interest rates. Call it a "conflict of interest".
  • Personal Loan BYTES FROM OUR KITCHEN

    SME (Small and Medium Enterprises) Loans

    What is SME Loan?

    Small and medium enterprises are critical for the country’s economic and social development. SME is the biggest employment provider next to agriculture. The SME plays a major role in creating jobs and generating income for the low income group. SME fosters economic growth, social stability and contributes to the development of the private sector.

    Access to financial services is vital for the SME sector to survive in any economy. SME Loan is offered to fund small and medium sized enterprises. There are various banks in India that work hard to provide SME finance to the small and medium enterprises.

    Objective of SME Loan Policy

    The SME loan policy has been framed keeping in mind the following objectives:

    • To improve credit flow to SME sector.
    • To formulate norms to SME sector to ensure that the adequate and timely credit is available to the sector.
    • The SME Loan policy also provides guidelines to the branches offering credit to the SME sector and to formulate norms of lending to the SME sector.
    • To devise an organisational structure to handle SME credit portfolio in a focused manner.

    Scope of SME Loan policy

    The policy will cover the following:

    • Composition of the SME sector
    • Guidelines on lending to the SME sector
    • SME loan factory model
    • Policy on credit rating and pricing
    • Identifying thrust industries
    • Discretionary lending powers
    • Training needs
    • Reporting and monitoring system

    Classification of SME Segment

    SME Segment consists of the following:

    Micro Enterprises

    If it is a manufacturing enterprise, it will have up to Rs.25 lakh invested in plants and machineries. If it is a service sector enterprise, then up to Rs.10 lakh will be invested in equipment.

    Small Enterprises

    If it is a manufacturing enterprise, it will have above Rs.25 lakh and up to Rs.500 lakh invested in plants and machineries. If it is a service sector enterprise, then above Rs.10 lakh and up to Rs.200 lakh will be invested in equipment.

    Medium Enterprises

    If it is a manufacturing enterprise, it will have above Rs.500 lakh and up to Rs.1,000 lakh invested in plants and machineries. If it is a service sector enterprise, then above Rs.200 lakh and up to Rs.500 lakh will be invested in equipment.

    Target for SME Sector lending

    Banks are advised to fix their own targets to achieve the 20% yearly growth in credit to the SME sector. Banks are advised to ensure that 60% of the total advances to small enterprises must go to micro enterprises.

    40% must got to micro manufacturing enterprises who have up to Rs.5 lakh invested in plant and machinery and micro service enterprises that have up to Rs.2 lakh invested in equipment.

    20% must got to micro manufacturing enterprises who have above Rs.5 lakh and up to Rs.25 lakh invested in plant and machinery and micro service enterprises that have above Rs.2 lakh and up to Rs.10 lakh invested in equipment.

    SME Finance for New Business

    SME loan is offered to finance a new business as well. The main reason why most small and medium enterprises shut down is that they don’t receive financial assistance at the need of hour and they won’t have working capital or any funds to buy plants and machinery to function.

    SME Loan Eligibility Criteria

    The following entities are eligible to avail SME loan:

    • Sole proprietorship firms
    • Partnership firms
    • Private limited companies
    • Public limited companies
    • Manufacturing, trading and service units
    • The firms must have made profits in the last two years
    • The firms must be defined under MSMED Act and by Reserve Bank of India.

    SME Finance Procedure

    The following procedure must be followed by the borrower:

    • Fill up the SME Loan application form and submit it with the bank.
    • Submit all the documents required to the bank as well.
    • Get the loan sanctioned and service it on time.

    Documents required for SME Loan

    The documents required are as follows:

    • Certified copy of Memorandum and Articles of Association or certificate of incorporation or certificate of commencement of the business as the case may be.
    • Audited last 3 years’ financial statement of the unit and of the associate concerns, if any.
    • Present shareholders list.
    • List of directors or partners.
    • IT or wealth tax assessment order or returns for the last 3 years.
    • Last three year’s sales tax return and assessment order.
    • Copy of ration card, passport, voter ID of promoters, directors or guarantors.
    • Photographs of promoters, directors or guarantors.
    • Bio-data and net worth statement of promoters, directors or guarantors.
    • Title documents of land and building on which the unit is being operated.
    • Government order to convert land to industrial land.
    • Site map of the land and the building plan.
    • Estimate of the building by the architect.
    • Quotations from machine suppliers for the plant and machinery.
    • Write up about marketing.
    • Copies of sanction letter for present credit facilities must be provided.
    • SSI registration certificate.
    • NOC from pollution department.
    • Power sanctioned and installed.
    • Detailed project report.
    • Details of technical personnel’s and key managers.
    • Manufacturing process and its flow chart.
    • Sale or lease deed copy of collateral securities.
    • List of plant and machinery.
    • Collaboration agreement, if required.
    • Agreement with technical consultants, if any.

    Factors the banks must consider while lending to SME Sector

    The bank must comply by the following focal points while lending to the SME Sector:

    • The application form must be free, easy to understand, simple and standardized.
    • The application form must be acknowledged in writing.
    • The loan applications are to be disposed of within a stipulated time. Credit limits up to Rs.2 lakh must be disposed within 2 weeks, credit limits up to Rs.5 lakh must be disposed within 4 weeks and credit limit exceeding Rs.5 lakh must be disposed within a reasonable time frame of 4 weeks.
    • The loans that are sanctioned must be disbursed within 2 working days.
    • If the application is rejected, then a written reason for the rejection should be conveyed to the applicant.
    • Collateral must not be insisted for credit up to Rs.10 lakh.
    • Working capital limits to SME manufacturing units is based on the minimum of 20% of its projected turnover.
    • If loan up to Rs.5 lakh is not sanctioned, then no processing charges to be recovered.
    • The credit rating system’s parameter is to be shared with the borrower.
    • Prepayment without prepayment charges is allowed for prepayment of loans up to Rs.5 lakh.
    • Deposits or third party products are not to be insisted for sanctioning credit.
    • To be in regular contact with the borrower and to provide counselling services to help borrower deal with their problems.

    Facilities offered to SME Units

    Following are the facilities offered to the SME units:

    • Term loan or demand loan or deferred payment guarantee
    • Working capital through cash credit, overdraft etc.
    • Bill purchase or discounting
    • Export credit facilities
    • Foreign or Inland letter of credit
    • Bank guarantees
    • Standby letter of credit

    SME Finance for Women

    Most of the women entrepreneurs are found in the small scale units. These units are managed by one or more women who have stake not less than 51% in the equity. The banks have realised that there are many such units that need help, hence specific products are offered to the women entrepreneurs to meet their working capital requirement, to expand their business, alteration and renovation of hotels, restaurants or lodges or to acquire plant and machinery, etc.

    Loan are also provided for establishing catering units for selling tiffin or food or lunch packs. Other loans offered are:

    • Loan for beauty parlour
    • Loan for day care centre
    • SME easy loan to meet the working capital requirement
    • Loan against Property
    • Shree Shakti package

    SME Loan Interest rate

    If the loan is provided to the SME category, the rates applicable to Micro, Small and Medium enterprises are to be applied.

    The SME loan interest rate starts at 12% per annum. Please check with the bank, the rate they are offering before applying for the loan.

    Charges applicable on SME Loan

    Following are the applicable charges:

    Processing fee Up to 1% of the loan amount plus taxes.
    Renewal fee Up to 0.50% of the loan amount plus taxes.
    Commitment charges

    Average utilisation of the loan is more than 40% - Nil

    Average utilisation of the loan is less than 40% - 0.50% per annum on the difference in the actual amount utilised and average quarterly utilisation of 40%.

    This charge is applicable for cash credit and overdraft facility.

    Stamp duty charges As per the applicable laws
    Prepayment charges

    2% if loan is prepaid after 6 months from the date the loan was sanctioned.

    4% if loan is prepaid within 6 months from the date the loan was sanctioned.

    Penal interest 2% additional on existing rate of interest for not submitting insurance or stock statement.
    ROC filling charges Rs.3,000 per filing.
    Issuance of solvency certificate Rs.10,000 per solvency certificate.
    Cheque swap charges Rs.500
    Repayment schedule charges Rs.200
    Rebooking charges Rs.1,000

    SME Loan application

    The borrower will have to fill up the following sections in the SME loan application:

    General Details:

    • Name of the entity
    • Registered address of the entity
    • Operating address of the entity
    • Date of incorporation
    • Name of the contact person
    • Telephone and mobile number
    • Email address
    • Constitution code
    • Industry code
    • Nature of business
    • PAN number
    • Sales Tax or Service Tax number

    Financial Details:

    • Details of bank account and credit facility from banks
    • Details of associates and group entities
    • Financial information that includes net sales or total income, operating profit, net profit after tax and tangible net worth.
    • Credit facilities that you have applied for
    • Basis of cash credit limit applied
    • Details of machinery if it is a Term Loan
    • Security details of the company

    Other Details:

    • Details of promoters of the entity, which must include name, date of birth, gender, marital status, PAN number, nationality, residential address, contact number, email address, business experience, and shareholding and DIN number.
    • Personal details of guarantor. This includes name, date of birth, gender, marital status, PAN number, nationality, residential address, contact number, email address, net worth and relationship with the borrower.

    Additional Details:

    This section includes the statutory obligations status, such as:

    • Registration under Shop and Establishment Act
    • Registration under MSME
    • Drug License
    • Latest Sales Tax Return filed
    • Latest ITR filed
    • Any other stipulated dues remaining

      • You will also have to fill up details of premises held by entity and business details with corporates.

    Finally, the application form must be duly signed and the bank will give you the acknowledgement receipt of the loan application.

    Banks offering SME Loans

    ICICI Bank Offer SME Loans

    Following facilities are offered by ICICI Bank:

    • Cash credit or overdraft facility to provide working capital finance requirement.
    • Export Credit to pre-shipment and post-shipment finance
    • Bank guarantees
    • Term loans

    SBI Bank Offer SME Loans

    SBI offers SME Collateral Free Loan to meet working capital requirements and term loans for construction.

    IDBI Bank SME Loans

    IDBI Bank offers SME Smart Line of Credit and the following facilities are provides:

    • Term loan
    • Working capital loan, fund and non-fund based.

    HDFC Bank Offer SME Loans

    The following facilities are offered:

    • Working capital finance
    • Working capital for contractors
    • Term loan
    • Loan against assets
    • Commercial or construction equipment finance
    • Business loan
    • Healthcare or medical finance
    • Rural loans
    • Working capital finance to transporters
    • Loans for professionals
    • Commercial vehicle finance
    • Dealer finance

    Axis Bank Offer SME Loans

    SME Fast Track loan offers the following facilities:

    • Financing non-priority sector entities
    • Overdraft against property
    • Financing priority sector entities
    • Term loan against property
    • Lease rent discounting
    • Zero collateral loans to SSI units
    • Business loans for property
    • SmartSwipe Credit Line

    PNB Bank Offer SME Loans

    The schemes offered are as follows:

    • SME Sahayog scheme
    • PNB Artisan Credit card
    • PNB Laghu Udyami Credit Card
    • Scheme for Advances to Small Road Transport Operators
    • Scheme for Advances to Owner-Driver of Taxi
    • PNB General Credit Card Scheme
    • Scheme for Financing of Individual Business Correspondent agents deployed by the Bank for carrying out Financial Inclusion works.

    Bank of India Offer SME Loans

    The following facilities are offered by Bank of India:

    • Star SME Liquid Plus
    • Star SME Auto Express
    • Contractor Line of Credit
    • Star SME Education Plus
    • Star SME Term Loan
    • Star SME LAghu Udyami Samekit Loan

    Bank of Baroda (BOB) Offer SME Loans

    Following products are offered to the SME Sector:

    • Baroda SME Gold Card
    • Baroda SME Loan Pack
    • Baroda Overdraft against Land and Building
    • Baroda Vidyasthali Loan
    • Baroda Arogyadham Loan
    • Scheme for financing existing SME Customer or Current Account holder for purchase of new vehicles.

    Canara Bank Offer SME Loans

    Various schemes are offered for:

    • Capital investment
    • Working capital
    • Composite requirements
    • Others

    Indian Bank Offer SME Loans

    Indian Bank participates in the following schemes:

    • Prime Minister’s Employment Generation Programme
    • Revival, Reform and Restructuring Package for Handloom Sector
    • Weaver’s Credit Card Scheme
    • Artisan Credit Card Scheme
    • Credit linked Capital Subsidy Scheme for Technology Upgradation of Micro, Small and Medium Enterprises
    • Credit Linked Capital Subsidy Scheme for Technology Upgradation Fund Scheme for Textile Units
    • CGTMSE

    Union Bank of India Offer SME Loans

    Union SME Plus is offered to meet:

    • Working capital requirement.
    • To meet the increase in cost of raw materials.
    • Genuine credit to tide over liquidity crunch.
    • To realization of book debts.

    Tamilnad Mercantile Bank (TMB) Offer SME Loans

    MSME Credit scheme is offered to:

    • Provide working capital requirement.
    • To provide Fund Based and Non-Fund Based Limits to provide credit to Micro, Small and Medium Enterprises.
    • Credit Guarantee Fund Scheme for SSI.

    Small Industries Development Bank of India (SIDBI) Offer SME Loans

    The following are the schemes offered by SIDBI:

    • National Equity Fund Scheme
    • Technology Development and Modernisation Fund Scheme
    • Composite Loan Scheme
    • MAhila Udyam Nidhi Scheme
    • Scheme for Financing activities relating to marketing
    • Equipment Finance Scheme
    • Venture Capital Scheme
    • ISO 9000 Scheme
    • Micro Credit Scheme

    SME (Small and Medium Enterprises) Loans Reviews

    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      The helpline number was not easily approachable whenever I call the bank bazaar customer service, it does not connect with the representative. I have been using it for 6months. Earlier I took my credit, the process was simple. The mobile app is convenient to check the credit score and have no issues.
      Was this review helpful? 3
      , hyderabad
      Reviewed on Jan 18, 2019
    • HDFC Bank Personal Loan
      "Better"
      0.5 4.5/5 "Excellent!"
      There was delay in the loan process and HDFC have taken around one month. The rate of interest and charges are little bit high compared to others. I have submitted the documents online and also to the executive. I can do pre closure with extra charges and part payment can be done after one year. The loan duration is 2 years.
      Was this review helpful? 3
      , hyderabad
      Reviewed on Jan 18, 2019
    • ICICI Bank Personal Loan
      "Its Good"
      0.5 4.0/5 "Great!"
      I approached ICICI personal loan through online channel, ICICI taken care and disbursed the amount within two to three weeks of time, But I felt interest rate is good in Tata capital as compared to ICICI. But still I recommend ICICI bank its good.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Axis Bank Personal Loan
      "Very Good Service"
      0.5 5.0/5 "Blown Away!"
      I had taken this loan some time back and i had foreclosed this loan a long time back. The overall experience with them has been quite good where the interest rate with them has been nominal when compared with the market rate and there has not been any foreclosure charges with them.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • HDFC Bank Personal Loan
      "Very Good Service"
      0.5 5.0/5 "Blown Away!"
      It has been quite a good experience i had with this loan and the loan amount which they had provided has been sufficient as well. The interest rate which they where offering has been nominal with the market rate, and there is some pre closure charges with them and there has also been some processing fee with them.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Bank Bazaar Personal Loan
      "Quick Wind for the financial products"
      0.5 5.0/5 "Blown Away!"
      I never seen such kind of support any where like Bank Bazaar, whenever I update any request I get reply through msg or mail. Its a right path or helping source for the people to take the banking products on the time schedule. The customer support is very nice and helpful.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Tata capital Personal Loan
      "Good Professional Service"
      0.5 5.0/5 "Blown Away!"
      When I browsed the online channel, Tata capital is the one having less interest with zero processing fee. That is the reason I took this personal loan from them. The loan process was quite good, the processing time is less. The interaction between me and executive was professional.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Bank Bazaar Personal Loan
      "Better"
      0.5 4.0/5 "Great!"
      Although I am not a frequent user of the site, Whenever I need any loans or card that time have visit their website. The website is fine enough. The customer service and response was better. Am using it approx for 6 months. Once have checked the credit score and loan process was simple.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Early Salary Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I took my personal loan from Early Salary through online portal. Everything was fine but executive said will come and collect the documents but nobody turned up . They said if I have refer my friend and will get discount but have not got any discounts. The rate of interest and charges are nominal.
      Was this review helpful? 1
      , bangalore
      Reviewed on Jan 18, 2019
    • HSBC Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have been holding my personal loan with HSBC bank, ,they have given me sufficient loan amount was sufficient for me, and the rate of interest is very nominal compare to other in the market . There are no hidden charges they have charged me apart from EMI.
      Was this review helpful? 1
      , mumbai
      Reviewed on Jan 18, 2019
    • Kotak Personal Loan
      "Average"
      0.5 1.0/5 "Really Bad"
      I have taken a personal loan from Kotak Mahindra Bank and it was closed in the year of 2018. My experience is not good, have not received NOC on time. They need to improve the customer service. The rate of interest is more compared to others. The documentation process was easy but foreclosure is very difficult.
      Was this review helpful? 2
      , pune
      Reviewed on Jan 18, 2019
    • Bank Bazaar Personal Loan
      "Good"
      0.5 5.0/5 "Blown Away!"
      The customer service and response was good. I have been using bankbazaar.com for the first time and it was recommended by friend. The process was simple and faster. The mobile application is convenient and easy to compare with the banks. I have checked the credit score.
      Was this review helpful? 2
      , pune
      Reviewed on Jan 18, 2019
    • Tata capital Personal Loan
      "Good"
      0.5 5.0/5 "Blown Away!"
      I have applied my personal loan in Tata Capital through online. The rate of interest and charges are nominal. I have received 2.7L excluding processing fee. The loan duration is 5 years. The documents are collected by executive as well as submitted online. They took max 8 to 9 days to deliver the loan.
      Was this review helpful? 1
      , pune
      Reviewed on Jan 18, 2019
    • Bank Bazaar Personal Loan
      "Its Convenient"
      0.5 5.0/5 "Blown Away!"
      Its a good experience I had with Bank Bazaar, the entire loan process was smooth I don't want to anywhere. I got the door step service from the bank, the customer support guided well and helped me out through the process. The information is useful to compare the products.
      Was this review helpful? 2
      , bangalore
      Reviewed on Jan 18, 2019
    • Tata capital Personal Loan
      "Good Experience with Tata Capital"
      0.5 5.0/5 "Blown Away!"
      I got best deal from Tata Capital, the customer support is proactive to process the loan application. But the loan disbursement got delay it should be faster. I got the better interest rate and its zero processing fee from the Tata Capital disbursement.
      Was this review helpful? 3
      , bangalore
      Reviewed on Jan 18, 2019
    • HDFC Bank Personal Loan
      "Interest rate should be standard"
      0.5 4.0/5 "Great!"
      I am not happy with HDFC, comparatively the rates are bit high. Its okay for me, the processing fee is also higher in HDFC, They told some interest but I got some other interest rate. I want to discuss with them and after august it will be one year then I close it.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Jan 18, 2019
    • ICICI Bank Personal Loan
      "Good Experience"
      0.5 5.0/5 "Blown Away!"
      That was better experience, interms of rate of interest. ICICI bank agents are proactive they came to my place and collected the documents and done the process. Then I didn't interact with them. I got the better deal from ICICI on the personal loan.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Jan 18, 2019
    • Bank Bazaar Personal Loan
      "Good customer support and satisfactory"
      0.5 5.0/5 "Blown Away!"
      The quick on their work, whatever I approached they helped me out. I could check all the information based on the requirement. Its a good customer support I can view all the banking options. I am getting promotional mails through the link I have raised the request for the credit card.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Jan 18, 2019
    • Citibank Personal Loan
      "Rate of interest should be reduced"
      0.5 4.0/5 "Great!"
      Citi bank rate of interest is too high for the amount of Rs. 3 lakhs, they have taken some processing fee from the disbursement but it was quite nominal. The documentation process was smooth, on the expected time I got the loan amount from the bank.
      Was this review helpful? 3
      , hyderabad
      Reviewed on Jan 18, 2019
    • Early Salary Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      The rate of interest and charges are nominal. I like the process which was much easier to proceed the personal loan. They did not required any documents and executive came for verification then loan amount was processed. I took 10K and it was paid through online.
      Was this review helpful? 2
      , chennai
      Reviewed on Jan 18, 2019
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