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What Are The Best SME Options in India?

India has come a long way in terms of loan and financing options. Numerous financial institutions advertise loans at competitive rates with added features. As a business owner, thorough research must be done before committing for an MSME loan or a business loan.

The best way to begin the research is by asking what the best SME options in India are. 

MSME loan in 59 minutes 

This is one of the most sought after MSME schemes announced by the government in September 2018. Under this scheme, any MSME owner can avail MSME loan of up to INR 1 crore. The total period taken to avail of the loan is quite less, while the approval or disapproval of the loan takes a quick 59 minutes. The scheme was created by the Central Government to uplift the MSME sector.

The MSME sector is the largest economic sector of the country after agriculture. Giving it a financial boost will augur well for the overall economy of the country. It is primarily a refinancing scheme where the loan is disbursed by 5 public sector banks.

The interest rate will depend on the nature of the business and the credit rating of the applicant. The qualifying criteria are proper documentation and risk quotient. 

MUDRA Loans 

This is another Government scheme that has a lot of takers. MUDRA stands for Micro-Units Development and Refinancing Agency. This scheme too is directed towards micro, small and medium scale industries. The motto of the MUDRA scheme is “funding the unfunded”.

For too long economic growth was stunted because of the paucity of funds. The central government realising it has opened up the financial sector for financing institutions. This will create a financial cycle benefitting everyone. 

NBFC Business Loan 

One of the best alternatives to a banking institution is an NBFC. NBFC stands for Non-Banking Financing Company. These are usually private companies following the Companies Act, 1956 while there a few that are registered under RBI as well.

This gives them immense flexibility in designing their products and advertising their schemes. NBFCs like Ziploan– which is an RBI registered firm, offers unsecured business loan and have some of the best services available in the financial sector. The usual time disbursement of the loan is 72 hours. 

The business loan interest rates of NBFCs are either at par or lower than those offered by the banking institutions. There also other features that they offer making them an attractive proposition for customers.  

CGTMSE loan 

CGTMSE stands for Credit Guarantee Fund Trust for Micro and Small Enterprises. This scheme has been there for the past 18 years. It provides collateral-free business loans to the MSME sector. An interesting feature of the CGTMSE loan is that any scheduled commercial bank and the rural bank can become a part of the scheme through empanelment.

The CGTMSE loan provides working capital loans of up to INR 10 lakhs. However, it is not limited to that. There are provisions within whereby an applicant can avail of loans over INR 10 lakhs. But for that to be approved, collateral has to be provided to the lending agency.  

National Small Industries Corporation (NSIC)  

NSIC was established in 1955. It is aimed at assisting small scale industries in the field of raw materials procurement and marketing. The qualifying factor is being a part of the Udyog Adhaar Memorandum or UAM. Anybody registered under the UAM scheme can avail of funds from NSIC.  

To conclude, there are plenty of schemes that dot the Indian financial sector and for a business owner, this is a problem of plenty. There are government financial institutions as well as private firms which offer MSME loans at varied interest rates. A good amount of time needs to be spent by the applicant in researching the pros and the cons before making a final decision.  

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