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Give Your Business The Boost It Requires With An Sme Loan

By Author: Manish Damani
Total Articles: 9

SME loans or small and medium enterprises loans are a type of loan for business that is provided only to small and medium-sized enterprises or companies. Generally these loans are tailor-made to meet the specific requirements of a particular business. A bank may provide such a loan to an enterprise if it thinks that it fulfils all the eligibility criteria. Business loans were once hard to avail due to the large number of regulations that are imposed by the banks and the financial institutions. However, it has become relatively easier for small or medium-sized businesses to avail a SME loan in order to tide over a period of uncertainty and financial problems. This is because banks too have understood the potential of small businesses.

The different types of enterprise which are eligible for SME loan are:

• Partnership firms
• Private limited companies
• Public limited companies
• Manufacturing, service and trading units
• Sole proprietorship firms
• Such firms which are defined under the MSMED Act and by the Reserve Bank of India.

Another important criterion that a small or medium business needs to fulfill in order to become eligible for a SME loan is that it must have made profit in the previous two years.

The advantages of SME finance include:

• A businessperson availing a SME loan can enjoy tax benefits. This is because most business loans have the facility of profit repay excluding the tax.
• Transacting with banks can be easy and convenient for a person with a good credit history. Long-time association makes us familiar to the banks and vice versa. This association makes it easier for a person to get a loan which is customized to the needs of his/her business.
• Banks get a lot of revenue from the interest they charge on loans for small and medium enterprises. The banks even come up with different schemes and offers to attract owners of small and medium-sized businesses. Thus a person who wants an SME loan have the freedom of choosing from options like term loans, standard business loans and other options as well.
• Another important feature of SME finance is that availing such a loan can help a person to avoid the demands that a businessman faces if he takes a loan from a venture capitalist or from angel investors. Such investors provide loans in exchange for part ownership of the business, and they also want a say in the decision-making process of the organization. An SME loan availed from a bank to do not put the borrower under any such obligations.
• Banks provide SME loans at interest rates lower than other institutions and agencies. This implies that a person has to pay back less.

Thus, a small and medium enterprises loan is the best opportunity for a small or medium-sized business to overcome its predicaments.

Author Bio:-Manish Damani a financier by profession, loves to write during his spare time. He combines both his interests, by dispersing financial related information whenever possible. Through his work, he gives us tips on how you can boost your business by availing an SME loan.

Total Views: 55Word Count: 505See All articles From Author

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