Top 5 Government Loan Schemes for Small Businesses in India

India was recently termed as the only, truly emerging market in the world at the moment. A part of this growth is fueled by the micro, small and medium enterprises of the country. The SME sector contributes over 40% of the total GDP and remains a critical source of employment for the India’s growing population. Recognizing the importance of SME growth in the post-demonetization era, the government has started some new business loan schemes and boosted other existing ones. Here are the top five business loan schemes from the government of India that you can avail for small business finance.

MSME Business Loans in 59 Minutes

Perhaps the most talked about business loan scheme right now is the ‘MSME Business Loans in 59 Minutes’, a scheme first announced in September 2018. The loans under this scheme are given for financial assistance and encouragement of MSME growth in the country. Both new and existing business can utilize the scheme for a financial assistance up to ₹ 1 crore. The actual process takes 8-12 days to complete, while the approval or disapproval is granted within the first 59 minutes of application. It is a refinancing scheme, wherein five authorized public sector banks will grant the funds. The interest rate depends on the nature of your business and credit rating. No information has been given on subsidizing the principal amount or interest subvention.

To apply for business loan under this scheme, you need GST verifications, Income Tax verifications, bank account statements for the last 6-months, ownership related documentation, and KYC details. More information on application and approvals can be sought by visiting the SIDBI portal for this business loan.

MUDRA Loans

Micro-units Development and Refinance Agency (MUDRA) is an organisation established by the government of India to provide business finance to micro-business units. The loans under the scheme are given on the pretext of ‘funding the unfunded’. Since small companies and startups are often left to their own devices for financing their venture, the government has created the concept of low-cost credit to such undertakings. MUDRA Loans are also a refinanced business loans, approved and disbursed through public sector banks, private sector banks, co-operative societies, small banks, scheduled commercial banks and rural banks that come under the scheme. The loans are generally given to micro or small businesses operating in the manufacturing, trading and services sector. The MUDRA Loans are structured as under,

  • Sishu Loans up to Rs. 50,000/-
  • Kishor Loans up to Rs. 5,00,000/-
  • Tarun Loans up to Rs. 10,00,000/-

Credit Guarantee Fund Scheme for Micro and Small Enterprises

The CGMSE was first launched in the year 2000 as a monetary support scheme for micro and small enterprises. It offers collateral-free credit for both new and existing business units that satisfy its eligibility criteria. The scheme provides working capital loans up to ₹ 10 lakhs without any collateral. However, for all credit facilities above ₹ 10 lakhs and up to ₹ 1 crore only primary security or mortgage of land and building associated with the building is obtained and such eligible accounts are covered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Asset created through the credit facility which are associated with the business unit are also considered as security when the loan amount exceeds ₹ 10 lakhs.

The business loans under this scheme are financed by various public and private sector banks covered under the scheme.

National Small Industries Corporation Subsidy

The NSIC subsidy for small businesses offers two kinds of financial benefits – Raw Material Assistance and Marketing Assistance. Under the raw material assistance scheme of NSIC, both indigenous and imported raw materials are covered. Under the marketing support, funds are given to SMEs for enhancing their competitiveness and the market value of their products and services. The NSIC is mainly focused on funding small and medium enterprises who wish to improve / grow their manufacturing quality and quantity.

Credit Link Capital Subsidy Scheme for Technology Upgradation

This scheme allows small businesses to upgrade their process by financing technological upgradation. The technological upgradation can be related to numerous processes within the organization, such as manufacturing, marketing, supply chain etc. Through the CLCSS scheme, the government aims to reduce the cost of production of goods and services for small and medium enterprises, thus allowing them to remain price competitive in local and international markets. The scheme is run by the Ministry of Small-Scale Industries. The CLCSS offers an up-front capital subsidy of 15% for eligible business. However, there is a cap to the maximum amount that can be availed as subsidy under the scheme, which is set at ₹ 15 lakhs. Sole proprietorships, partnership firms, co-operative, private and public limited companies come under the ambit of this business loan scheme.

An Alternative: Quick Business Loans from Lendingkart

While all these schemes display the commitment of the past and present Indian governments for developing the economy of the nation, there is much that needs to be done to make the schemes effective. For example, the refinancing and subsidy model used by the government takes away the ‘quick’ factor from business loans touted by the schemes. Since these loans are essentially funded by the government sponsored banks, the turnaround time is in weeks or even months, which is detrimental for a small business owner looking for quick business finance. Even the most ambitious of all these schemes, the 59 Minutes Loan for MSMEs, takes up to 2 weeks in reality.

On the other hand, MSME finance by non-banking financial companies like Lendingkart is approved and disbursed within 72 hours. This is done by combining business analytics and online technologies for loan approval and disbursal instead of relying on paperwork and age-old processing techniques. For instance, Lendingkart offers business loans online through their website or mobile app. Simply log-in to apply for a business loan, get a same- day approval, accept the quote and upload your documents digitally for verification. The entire process hardly takes 10-minutes of your time and the verification is completed within 3 working days by Lendingkart. So, you have the funds ready for use within a quarter of the time it takes a government scheme to disburse a loan.

To apply for a business loan with Lendingkart in 3 simple steps, visit us at www.lendingkart.com.

Business Loan Apply Online

Business Loan vs Personal Loan – Which Is Better for Small Business?

Small Business – Business Loan vs Personal Loan in India?

India has the third largest number of start-ups in the world. We have great entrepreneurial energy and passion. Access to affordable capital is critical for small businesses to thrive and grow to generate enough operating income to sustain by themselves.

The government has been playing a role with the launch of schemes such as Mudra loans wherein it has disbursed Rs 6 lakh crore to 12 crore people since its launch in April 2015.

However, there is still a lot of dilemma among young entrepreneurs who are often confused about opting for a business loan over personal loan. While we cannot have a correct answer to this, a good evaluation with the context and life stage of the business could enable young entrepreneurs to take an informed decision.

Let’s delve a bit more into this and analyze when the choice would, or rather should, veer towards a new business loan:

Interest Rates:

Personal loans are a product that is created by financial institutions to cater to one’s personal needs such as a wedding, home improvement, or some urgent cash requirement. The interest rates are normally high. Entrepreneurs who opt for personal loans as against applying for a business loans will incur an increase in cost of funds which does not help a newly incorporated business.

Shorter Tenure:

A personal loan normally has a shorter repayment tenure compared to a business loan. This means that entrepreneurs will have to pay out more money in terms of EMI per month. This impact on the cash flow is not a favourable one for businesses that have been actively operational for a very little time.

Terms of Future Lending:

If an entrepreneur is funding his business through personal loans, the interest is high and so are the EMI pay-outs. The probability of a default and cash flow problems are much higher. In such a case, it becomes extremely difficult for the business owner to establish credibility and get attractive lending terms for future loans. Should new entrepreneurs apply for a business loan to ensure credibility for their businesses if nothing more?

Use of Funds for personal expenses:

As it is a personal loan, business owners may use it for an emergency personal need. This leads to a lack of discipline and mis-apportionment of existing funds towards initiatives that will not help to drive business growth. A business loan can enable entrepreneurs to circumvent such problems.

Leveraging benefits of Government Schemes for Business:

If the business qualifies for the credit guarantee scheme of the government, the business owner can get collateral-free loans of up to Rs. 1 Crore. In such a case, a business loan of such a high quantum at a better interest rate augurs well for the business compared to a personal loan. Meanwhile, a personal loan of Rs. 1 Crore without collateral backing would be a tall ask for anyone who is just starting his business.

While you can get a personal loan instantly if you fulfill the basic eligibility criteria or by just walking into your nearest ATM, it may, at best, address an emergency business need. It is not advisable as a practice to take a personal loan to expand your business. Astute entrepreneurs would apply for a business loan instead!

Amount and urgency of the loan requirement:

Both are critical factors which can influence the decision of opting for business loan over personal loan. If the amount of the loan required is too high but the business has been doing well over the last few years, the chances of obtaining a business loan at favourable rates of interest is higher. As for the urgency of the requirement, a personal loan may be sanctioned faster than a business loan.

However, the personal loan amount sanctioned will be lesser in case the business owner has an existing personal loan, home loan, vehicle loan etc.

What’s better?

Is your business in the incubation phase? Has it started generating revenues? Has it started generating recurring cash flows? All these questions are significant to address the quantum of new business loan that can get sanctioned.

Business may require loans to manage working capital, expand presence and infrastructure, import systems and equipment, and so on. The amount required for such loans is substantial and it is in the interest of the business to ensure that the cost of raising capital is feasible and affordable. Hence, business loans are better equipped to fund the growth of an enterprise as compared to personal loans.

Unless an entrepreneur is just starting out and is in no position to use personal savings, or raise seed capital, business loans will give entrepreneurs a better chance to ensure sustainable growth of their enterprise.

If you are an entrepreneur who nurtures the ambition of creating a great business and an everlasting brand, it might be prudent to apply for a business loan instead of opting for a personal loan for business growth.

Got stuck Paying the Loan Repayments? – Try these Tips

Debt is one person’s liability, but another person’s asset, rightly said economist Paul Krugman. If you are a business owner, then you should understand the implications of taking a loan and the worth of Krugman’s words. According to a lending platform which conducted an analysis of funding by NBFCs and P2P sector found that nearly 64% of all loans disbursed were towards small and medium-sized businesses.

Even as SMEs contribute heavily towards overall economic growth most businesses face issues with assessing loans from banks and financial institutions. Some of the reasons could be inadequate financial records, lack of credit histories, especially in tier II and III cities, making it tougher for SMEs to access loans.

Once the application is approved and the loan gets sanctioned, the next step is to keep up with the process of loan repayment. Here are things you should know about business loan repayment to ensure a clean history of credit.

1)      Chalk out a business loan repayment plan:  As a business owner you will have requirement of working capital more often than once in your business cycle. This prompts SMEs to apply for loans, but the process doesn’t merely ends at approval of the loan. It is important to chalk out a business loan repayment plan as soon as the loan is cleared. It is important because timely business loan repayment reflects on the credit score which usually determines the ability to get loans in the future. Firstly, you should know whether the loan approved is based on fixed or variable payment, which means how often the payment has to be done. You should also know the interest rate at which you took the loan so that SME loan repayment amount can be calculated. You can check this amount from lender or calculate the payment online with the help of repayment calculator. Next you need to provide options for automatic repayment system where the bank can be instructed to deduct the payment directly from the bank account. Make sure there are funds in the account at the time of payment.

2)      Check the scope for loan prepayment: At the time of loan approval the bank should intimate you about prepayment opportunities of SME business loan. This means paying back the loan before the approved tenure. Many business owners would want to repay loans if there is extra gain or profit generated from business. One can make a lump sum payment and finish the entire loan before the actual tenure. This could save the interest amount besides strengthening credit score. However, some lenders charge a penalty for prepaying, because it loses out on the interest which a full-fledged loan would have generated. Ensure that the cash flow from your business is enough to allow you prepay the loan in advance. A loan calculator can easily help you determine the prepayment amount. You can simply check on the latest SME business loan including the rate of interest, tenure on Lendingkart and decide on prepayment.

3)      Keep a note on credit ratings:  It is critical to take a note of your credit ratings and always communicate any delay in payment of loan with the lender. If the loans are not paid timely or there are too many lags, then you may be considered a defaulter. In such a scenario make sure the reason is communicated to the lender to avoid any impact on your credit ratings. You may also find alternate payments schedule in case the present schedule is not doable.

4)      Consider refinance of debt: Did you know about the option to refinance debt into a cheaper loan?  But before you think of debt refinance you should understand its importance and evaluate all the reasons. There are times when the SME business loans become attractive where the tenure is longer, installments are smaller, and the rate of interest is cheaper. You can decide to refinance the old debt, especially if the business is doing well. A repayment calculator can help you check on the installments of the new loan.

5) Keep a close watch on growth: A SME loan repayment can pinch you if the loan that you have taken for business is not yielding desired results. It is not about funding the business but also keeping a tab on the growth and the effectiveness of the loan. Make sure that the SME loan repayment is on track and that business graphs are moving in the right direction. Moreover, if at any point you feel payments are difficult to sustain then look for ways to reduce the risk of default.

Make sure every loan taken is used wisely because it could be a step towards creating a successful business.

School Loan – Business Loan for Private School in India

What Can A School Do With 50 Lakh Worth Unsecured Loan

A well-rounded education system nudges student to explore avenues beyond the confines of academic excellence. This is the reason why parents seek private schools that can offer state-of-the-art education infrastructure to match international standards for their children. In today’s competitive environment, schools have to invest in innovative ways to aid comprehensive development of their students. Unsecured business loans provide a quick and hassle-free financial solution to deal with the associated expenses.

For the uninitiated, an unsecured loan is a loan issued without requiring any collateral or security from the borrower. Online lenders and non-banking financial companies (NBFCs) can lend up to Rs. 50 lakhs to eligible schools after verifying the requisite loan application documents.

What next? Here are several ways a school can utilize a 50-lakh worth unsecured business loan.

School Building Construction:

One of the allures of private schools is a favourable teacher to student ratio. Small sized classes allow teachers to focus on the progress of individual students. In order to maintain this ratio, schools need to expand their infrastructure to match the corresponding influx of new admissions. A 50-lakh loan for private school will enable it to build classrooms, faculty lounges, canteens, and other required spaces.

Renovation and Repair:

With an average of 200-250 working days, schools undergo a lot of natural wear and tear and require regular maintenance to keep up with safety regulations. The total cost may vary depending on the undertaken course of action. NBFCs like Lendingkart.com are the optimal funding sources for cash needed to carry out urgent repairs and renovation of the school campus and property.

ICT Resources:

The education industry is rapidly shifting towards Information and Communication Technology (ICT) oriented teaching methods. This includes using digital learning resources like educational tablets, licensed software, online curriculum management systems, smart class equipment, etc. The cost of educational tablets ranges from Rs. 5000 to Rs. 18000 per unit. Eligible academic institutions can quickly procure up to 50 lakhs of business loans in India through digital portals to cover the cost of this one-time investment.

Building and Furnishing a Science Laboratory:

A fully equipped science laboratory adhering to regulated safety standards is a necessity in secondary and higher secondary institutions. Separate lab kits are required to support different subjects like physics, chemistry, and biology. A 50-lakh unsecured loan is sufficient to build and furnish multi-purpose laboratories with effective storage and flexible design.

Computer Laboratory and Campus Connectivity:

Setting up a computer laboratory requires a substantial amount of money. An unsecured business loan for a private school can be used to purchase and install IT infrastructure such desktop computers, printers, multimedia equipment, and licensed software. Schools can also use it to establish or improve connectivity with campus-wide LAN and PA systems.

Sports Facilities:

Co-curricular activities like sports and games are an integral part of school life. Schools can apply for an unsecured business loan to upgrade their sports facilities. These include construction and maintenance of appropriate spaces where students can practice indoor sports like basketball, badminton, table tennis, swimming, etc. as well as outdoor sports like cricket and football.

Auditorium:

Every school needs a well-designed auditorium with good acoustics, stage lighting arrangements, and a sound system. It is a space that can be used to hold school assemblies, public lectures, theatre productions, and award ceremonies. The average cost of building an auditorium is Rs. 1800 – 2300 per square feet. A loan of 50 lakhs is good enough to build an auditorium large enough to accommodate a sizeable audience.

Transportation:

Safe transport for pupils is a primary service offered by private schools. Maintaining a fleet of vehicles allows institutes to not only overlook the safety of their students but also ensure that they reach school on time. Starting from Rs. 7 lakhs for vans or minibusses and going up to Rs. 50 lakhs for larger buses, the cost depends on the type, size, brand, and condition (new/used) of the vehicle. After approval, NBFCs can disburse a collateral-free loan for a private school to buy the required means of conveyance.

Administrative Services and Miscellaneous Development:

With an unsecured business loan of up to Rs. 50 lakhs, the borrowing institutions can increase their transparency and efficiency by streamlining their administrative services. Customized ICT backed solutions can be used to create individually designed School Management Software. Such management tools keep track of student and faculty data and also other tasks like accounts, recruitment, transport, etc.

Schools may also require funding to launch various development projects as and when the need arises. Restocking teaching equipment, introducing a meal plan, setting up a uniform and stationery store on campus are some examples.

Thus, with a clearly stated purpose, educational institutions can promptly get business loans in India with flexible EMI options and minimal processing charges with the help of online lenders.

Business Loan for Grocery Store – How LendingKart helped Pawan Singh Business

Business Loan for Grocery Store

There are times when you want to unshackle and set yourself free from a regular job. The idea of starting your own business from scratch can give a kick like no other thing in this world. Also, the Indian start-up ecosystem is thriving making it the best time to take that leap of faith.

Unlike earlier, you don’t have to wait for years before you decide to quit a regular job for the business.  With the ease in financing and institutions lending business owners, many people are undertaking an entrepreneurial journey. NBFCs and online lenders such as get Lendingkart have also proved to be a boon for those trying to succeed in their businesses.

Pawan Singh, a resident of Delhi, was looking to expand his grocery store business which he started a year back but could not afford due to paucity of funds. However, this year he took that bet and expanded the venture with a quick business loan from Lendingkart. Singh didn’t have to spend much energy and efforts in finding access to capital for the grocery store. He simply checked online and discovered LendingKart was offering business loans for a shorter duration. He went ahead and got the loan sanctioned within a span of four days. Today he takes pride in his grocery store which is in the expansion mode after it added a new bakery section.

Like Singh, you can apply for a quick business loan online at the click of a button. Such quick business loans are easily approved within three to five working days and give the much-needed acceleration to your business.

How to apply for a business loan in Lendingkart?

If you have an established business which has been in operations for more than six months, you are eligible for a loan through Lendingkart. You can also check on other eligibility criteria for a business loan on the website. The online lender offers 50,000 up to 2 crore loans to eligible SMEs which can be used for expansion of your venture. Singh had applied for a Rs 10 lakh loan for which he pays a monthly EMI of around Rs 91K for duration of 12 months. You also need to have a minimum turnover of 90,000 or more in the three months preceding your loan application. Make sure your business doesn’t fall under the blacklisted/excluded list for SBA finance. Also, check on the physical location of your enterprise as it should not be in the negative location list. In case you are not sure about the category or location, you can directly contact Lendingkart to confirm your eligibility.

How much time does it take for loan approval?

It can happen at the click of a button provided you have the requisite documents. You need to create an online account on the platform and apply for a loan based on your financial information. Once you accept the quote you have to upload documents for final verification. Your business loan through the online platform gets approved within three days unlike banks which might take 8-10 days for approval. The platform has a specific business loan scheme under which a loan can be approved within 59 minutes. The loans are processed faster as the eligibility requirements are not complicated and require minimum documentation. A business owner can skip unnecessary paperwork on the platform which otherwise delays approval process. You have to pay a processing fee of 1-2% depending on the principal amount.

Do you have to show collateral?

A business loan from Lendingkart will be an unsecured Business loan which does not put your valuable assets on risk. Such a business loan does not have a requirement of any collateral or security. You need not have to stress about developing your capital assets to meet the need of working capital. In fact the loan tenure of minimum one month and maximum 36 months offers a credit relief. Also, if your business faces any temporary problem, you can get the necessary extension for mitigating operational issues if the loan tenure is six months or more.

How often do you pay?

Moreover, business loans can be repaid monthly or bi-weekly. The EMI options allow you to stagger your installment as per your invoicing and sales cycle Depending on the sales you can choose to repay your business loan much faster with the bi-weekly EMI option.

Can you maintain a credit score?

An NBFC loan from Lendingkart is the best way to improve your business credit score as it reports loan accounts to all credit bureaus. Moreover, a business loan with Lendingkart is especially beneficial for companies witnessing a recent dip in credit score due to unforeseen market conditions.

What’s the big deal with the interest rate?

The online lenders have incorporated the latest technology such as big data and machine learning tools to determine the lowest interest rates on business loans. This means the best rate is arrived upon for business loans using technology depending on the case.

No matter you are in which stage of your business, platforms like Lendingkart are available to give wings to your dreams.

Small Business Loan Application Checklist

Business Loan Application Checklist

With easy accessibility of loans and various lending options, business owners are in a much better position today. But before you decide to take your business to the next level, make sure it is moving in the right direction and is set to achieve the intended targets. Earlier getting a loan sanctioned from bank would mean running from pillar to post for compiling documents, but today online loan for small business require minimum documentation. Even though loans are approved within 59 hours, you have to organize the documents before you apply for a SME business loan online.

An SME business loan is typically taken to fund expansion of business, purchase inventory, buy machinery and equipment, or funding working capital, etc. Finding the right SME business loan at a reasonable rate of interest may require a lot of research.  Always consider your financial capacity before quoting a business loan amount because if that is proved, you will stand a better edge and even avail a small business loan at competitive rates. Small business loans can be applied online on platforms such as Lendingkart at a reasonable rate of interest. There are a host of documents which will still be required if you apply for a loan online or offline. Firstly, you will have to complete the loan application form with correct information. You will also need to provide passport size photographs. Documents can vary from one lender to another depending on the type of loan.

To avail a small business loan, you will have to submit documents depending on whether your loan is secured and unsecured. For instance, a secured loan will require collateral which means you have to provide essential documents related to your asset which could be a property (residential or commercial), gold or shares. However, unsecured business loans will require some of the following documents stated below. A secured loan will also require the same documents along with the proof of assets.

Here we take you through the list of documents to be submitted along with the application form.

  • Identity proof: You will have to provide identity proofs which can be in the form of a passport, photo pan card, voter’s identity card, driving license, etc.
  • Residential proof: This is another critical requirement of a loan. You should be able to provide a proof of residence in the form of a ration card/telephone bill/ lease agreement/ electricity bill/ passport/trade license /sales tax certificate.
  • Proof of age: You need to have an age proof and this can be supported by passport, photo pan card or voter’s identity card.
  • Financial documents: You have to get copies of IT returns for the last two years along with the latest bank statements for six months and profit and loss and balance sheet for the last two years. The P&L also needs to be audited by a chartered accountant.
  • Track your credit score: Being aware of your credit score before applying for a loan is important. Lenders take note of your credit scores to check your capability of paying off the loan amount.  A good score increases the chances of your loan approval.
  • Get your documents in order: It is always advised to organize all the documents when you apply for the loan. Some of the above documents such as ID proofs, balance sheets, address proofs, cash flow statements, business documents and permits, and income statements are mandatory for a business loan. These documents give credibility to the lender about the borrower’s ability to service the loan on time.

Though banks require a host of documents to be submitted with a business loan application, the entire loan approval process has been made easier through online processing. You can further ensure that loan processing remains smooth by compiling documents in advance. This allows the lenders to verify and process your loan at the earliest.

If you have been considering an easy business loan, then make sure you meet all the requirements including documentation. It is always good to maintain recent copies of KYC, ITRs, bank statements and other documents required for SME business loans.

There are times when you start fretting over documents and qualifications for a loan at the last minute to raise money. If you have organized documents in advance, then that can help you save precious time and opportunities arising out of your business.  Hence, keep a note of the most commonly required documentation for loans mentioned above and read your offer documents carefully before you sign off.

Small Business Trends to watch out in 2019

India’s GDP growth at 6.6% bears a testimony to its development which thrives on the growth of small businesses among other factors. Let us crunch more numbers on the growing economic powerhouse: At 6.6% India grew faster than China’s 6.4% GDP growth in the third quarter. As the fastest growing economy in the world, India accounts for about 15% of global growth. MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities. The sector’s contribution to the country’s GDP is expected to increase to 22% in 2020. With SMEs playing such a critical role it is imperative to identify key drivers that can help the sector grow in leaps and bounds. Here are the latest Small business trends that will set the course of its future.

1)      Fintech companies to pave way for easier loans:

It is a well-known fact that the primary barrier for SME growth has been finance. Most businesses face extreme difficulties in getting access to working capital loans. Their problems range from inability to provide collateral, lack of comprehensive credit score and a challenging application process for approval of loan. Some of the lending platforms offer up to Rs 1 crore loan at a reasonable interest rates within three days and, that too, without collateral.  The new age online lenders are using AI-driven algorithms to generate a credit score for applicants to make the process of disbursing SME loans in India faster. There is a surge in non-banking finance companies offering customized quick small business loans solutions on online platforms. Going forward digital start-ups and alternate lending platforms will become an effective platform to solve the problems of SME business loans.

2)      SMAC technologies to find resonance with SMEs:

In a digital landscape when businesses are adapting technologies, SMEs cannot afford to remain behind. SMAC which combines technologies like social, mobile, analytics and cloud will be the most sought after solutions and emerge as small business trends 2019. It will aid businesses to sell products and services in an engaging, personalized and comprehensive manner, and that, too within affordable cost structure. The technology helps to create a level playing field for SMEs and enables them to compete with larger players as well.

3)      P2P lending to pick up:

With businesses crossing borders, the needs of SME business loans have expanded significantly. Today peer-to-peer lending has gained momentum as it eliminates the traditional approach of raising SME loans in India which is tedious, cumbersome and take a longer time.  Under P2P model, a business owner can place the request which is viewed by lenders who then decide on the requirements.  Once a borrower’s profile is approved, a loan can be sanctioned in a few hours. Even the credit rating procedure and background check of a borrower is processed faster as compared to traditional banks leading to better disbursal of SME business loans.  With digital banking you can easily get quick business loan approvals on platforms such as Lendingkart. Such innovations in lending space would emerge as one of the key sme business trends in 2019.

4)      Payment companies to expand services:

Those businesses have a successful run which relies on efficient tracking payments mechanisms. A new set of tech savvy companies have emerged to make the process of collections for merchants easier. These companies operate in the cloud and simplify the transactions. The entire payment is made seamless for merchants who can share payment links with customers via email, SMS, or WhatsApp. Such companies also work in tandem with traditional payment methods like credit cards, NEFT/RTGS, wallets, net banking etc.

5)      Social media will remain a top priority:

Around 96 per cent of the SMBs use social media in their marketing strategy. Facebook has been the most preferred social media channel for expanding the reach of SMEs and the platform keeps introducing features and insights to help them connect with new customers from different cities, regions or countries. One of the major small business trends in 2019 will be to weave social media in their marketing strategy and explore areas such as live videos to connect with audiences.

6) Cloud continues to be the main stay:

SMEs adopting the cloud have witnessed clear benefits because the technology is advanced, affordable, and easy to use. Cloud can solve some of the biggest challenges including password management, CRM, and managing mailing lists. According to the latest study, SMEs witnessed a multiplier effect of 1.5 times in its productivity and profitability with multiplier effect of 3 times after shifting from low to medium cloud technology. In fact, data and advanced analytics solutions are being explored to increase efficiency and cut cost. Businesses are developing algorithms and investing in artificial intelligence (AI). AI and analytics will dominate the SME trends in 2019.

With advancements in technology, it is time SMEs notice these trends and adapt them to stay ahead of the pack.

Starting a New Business in India – Infographic

Starting a new business is not difficult. There are seven steps you will have to take in order to become a business owner.

Business Plan

First and foremost, you need to formulate your business plan. In order to do so you need to grab a pen and paper and write down a statement of purpose, a business description, classify and clarify roles, operating procedures and have a clear understanding of the finances which include loan applications and cash flow management.

Secondly, you need to choose where you establish your business location (Headquarters). Manufacturing businesses are usually located away from urban areas.

Financing

Research will form the backbone of your businesses success. You will have to find suitable financing options and establish your legal structure in order to move ahead with your business plan. An institution like Lendingkart can help you secure a business loan and realize your business goals.

You will have to recognize opportunities such as government grants which can help you in your business finances. Define whether your business will be a single ownership firm or a partnership and then manage your finances accordingly.

Business Name

Next, the name of your business is what your customers and vendors will use to remember you. You will have to choose a name that is apt towards the business you do and or the customers you wish to serve. Do not delay once the name is decided. It is best to legally register the name of the business at the earliest.

Business Tax

A clean business is the one that lasts for long. Paying your taxes and applying for income returns, will ensure that the government has a clear picture of your books and there won’t be any locking of funds by the authorities to check your accounts. To avoid any untoward event, register your business with a PAN ID and tax registration number. Always report your business income, expenses and investments truthfully to enjoy a good business.

Business Licensing

You will also need licenses and permits to run your business which you should be able to secure from your local municipal corporation.

Once you have taken care of all the necessary paperwork, you will literally see your business take shape and hence you will soon need employees to grow your company to the size you want it to be. When you reach this stage, make sure you keep your employee responsibilities clear, concise and transparent.

This will promote a healthy work environment and thus attract more people to join you in accomplishing your dream of taking your business to new heights.

Copyright © 2019: This infographic is a part of Lendingkart.com

 

The Role of Textile Sector and How to get loan for textile business

Did you know? India has one of the oldest textile industries in the world. Throughout the course of world history, Indian textiles have remained a fascination in the middle-eastern and western societies. Today, textiles exports contribute almost 11 per cent to the total export by the country and the textiles industry provides employment for millions. Approximately, there are 40 million workers in the textiles industry and another 60 million who are indirectly associated with it.

The textile industry in India has a couple of broad segments. The first is the unorganized segment which includes handloom, handicraft and sericulture. These are operated at smaller levels and often manufactured through traditional tools and methods. Then there is the larger organized segment which includes spinning, apparel and garments manufacturing for local and international clients. Manufacturing in this segment is based on the use of modern machinery and techniques like the economies of scale.

In terms of market size, the Indian textiles industry is worth USD 108 billion, which is expected to reach USD 223 billion by 2021. Apart from providing employment to an estimated 100 million people, the industry contributes almost 5 per cent to the country’s Gross Domestic Product and 14 per cent to the Index of Industrial Production. Currently, the industry is witnessing a growth in investment and market activity. The industry has attracted Foreign Direct Investments to the tune of USD 1.85 billion between April 2000 and March 2016. The Government of India has also come up with several export promotion policies for the industry, allowing up to 100 percent FDI in the sector under the automatic rule. Also, there are plans to set up India’s first integrated textiles city in the state of Andhra Pradesh.

The path ahead for the Indian Small and Medium Enterprises in the Textiles Industry

The future looks bright for the Indian textile industry both for the large-scale and the SME section. There is a marked increase in domestic consumption and export demand also looks strong. As consumerism and disposable income of the middle-class continue to rise, more new international players are expected to enter the market. For example, Marks & Spencer, Guess, and Next have come to India within the last decade. India’s organized apparel segment is expected to grow at a Compound Annual Growth Rate of over 13 percent over a 10-year period. The SME segment, that deals mainly in handloom, handicraft and sericulture, is also benefiting from e-commerce. Several online platforms have come up in the last few years which are promoting the domestic textiles and have helped in expanding their customer reach in India and abroad.

Getting a loan for textile business

If you are a small business owner in the textile industry, you can benefit from a slew of government initiatives, such as:

  • The tie-up between the Department of Handlooms and Textiles has and nine e-commerce players and 70 retailers for increasing the reach of handlooms products. It will generate better prices and continuous business for SMEs in the textiles sector, and facilitate direct access to markets and consumers for small weavers.
  • In addition to the 5 percent interest reimbursement provided for specified technical textile machinery, the Revised Restructured Technology Upgradation Fund Scheme (RRTUFS) now covers manufacturing of major machinery for technical textiles for 5 percent interest reimbursement and 10 percent capital subsidy.
  • The Scheme for Integrated Textile Parks (SITP) provides aid to the extent of 40 percent (with a limit up to ₹ 40 crores) for the creation of infrastructure in the parks.
  • The major machinery for production of technical textiles gets a concessional customs duty of 5 percent.
  • Specified technical textile products are covered under the Focus Product Scheme. The export of these products is entitled to a duty credit scrip equivalent to 2 percent of freight on board (FOB) value.

Apart from these benefits, you can always apply for a small business loan for textile business if you need financial assistance. Nowadays, non-banking financial institutions like Lendingkart Finance are offering instant business loans to the tune of ₹ 2 crores for promising small and medium businesses. As opposed to bank loans, these RBI approved small business loans are faster and easier to obtain. Salient features of these small business loans for textile businesses include,

Features of these small business loans for textile businesses

  • Ticket size of ₹ 50,000 to ₹ 2 crores.
  • Quick turnaround time which can be as low as 3 days.
  • Online application, approval, and tracking.
  • Customized interest rates to match your credit profile.
  • Flexible repayments through monthly or bi-weekly installments.
  • Repayment period of 1 to 24 months.
  • Processing fee of 1 to 2 per cent with no other charges.
  • Zero-prepayment charges.
  • Loan renewal for the same amount upon full repayment.

As you can see, the ticket size and repayment window make these loans ideal for various business activities such as equipment purchase, restocking inventory, working capital management and business expansion. You can use a Lendingkart small business loan to perform any or all of the critical business tasks which require immediate financial attention. The loan application process is quite straightforward and takes only 15 minutes to complete. Simply log in at www.lendingkart.com or download the Lendingkart Finance app on your Android device to get started.

Startup Business Loan

A new business generally requires some form of business finance to take off from the ground. With the opening up of markets since 1991, the financial services market in India has seen exponential growth in terms of products and services. Nowadays, there are many ways a small business owner can raise capital for his/her enterprise. In today’s post, we are going to review nine such financial vehicles that allow a startup to raise quick business loans.

Startup Business Loan – 9 Best Resources for Startup Loan in India

1. A line of Credit:

The line of credit is a facility offered by your banking or financial partner, allowing you to withdraw funds as needed up to a limit. So, instead of receiving the full amount as a one-time term loan, you get the funds on a need-to-use basis. One benefit of this mode of startup finance is that the interest is charged only on the balance currently borrowed by you. The line of credit is usually used for short-term working capital to help improve the cash-flow or finance unexpected expenses.

2. Small Business Credit Cards:

Business credit cards can be a very cost-effective way to finance your startup business as many of these products come with zero per cent APR introductory periods, cashback and rewards programs. These cards can be used for covering immediate expenses while you wait for payments from customers and sometimes help in preserving cash for working capital or other requirements. However, small business credit cards are not ideal for funding large capital investments due to the very short-term nature of the loan and high-interest rates.

3. Peer-to-peer Lending:

Online P2P platforms connect you directly to individuals and institutions looking for investment. These business loans are generally known as P2P finance and help you reach lots of debt/income investors. The platform charges a processing fee and interest rates on P2P finance can go up to 26% because of the risk involved for the lenders. A good credit score is also a pre-requisite to borrow from a P2P lending site.

4. Equipment Financing:

You can use equipment financing to purchase equipment, machinery or vehicles for business use. Equipment finance is available through dealerships, banks and online equipment finance providers. Typically, the business loan is given by keeping the purchased equipment, machinery or vehicles as collateral and a processing fee is also charged. The main benefit of equipment finance is that you get the ownership of a valuable asset, the payments for which are spread over a period of time (generally one to five years). Equipment finance is a good choice for startup businesses which rely on equipment or machinery.

5. Small Business Loans for Startups:

Short-term small business loans are one of the best ways to finance your startup business. These loans are offered by banks and other RBI governed financial service providers. Small business loans from non-banking financial companies like Lendingkart come with features that are optimized for modern enterprises. For example, Lendingkart’s small business loans have a ticket size of ₹ 50,000 to ₹ 2 crores, which can be repaid in monthly or biweekly instalments of up to 24 months. Moreover, these loans come with lower interest rates and zero prepayment penalties. Lendingkart also offers a quick turnaround time for approving and disbursing your small business loan when compared to the time and hassle you face in applying for a business loan with a bank. You can get the money in your bank within 3 days of application if all your information and documents are in order.

The benefit of a small business loan of up to ₹ 2 crores is that it can be utilized for several things simultaneously, such as inventory or equipment purchase, streamlining your working capital and paying off immediate debts. A startup which has been in business for more than 6 months can apply for a small business loan with Lendingkart Finance.

6. Micro Loans:

These loans are generally given to very small business startups who have a less than ideal credit rating and no assets to collateralize. In India, these loans are offered by government programs like the Mudra Yojna. However, the loan value is often less than ₹ 50,000 which makes these loans not very useful for enterprising individuals. A plus point of microloans is that they are given at lower interest rates and are unsecured.

7. Crowdfunding:

Online crowdfunding platforms allow you to raise small amounts of money from a large number of people. However, there is a difference between P2P platforms and crowdfunding platforms. In crowdfunding finance, you are not required to pay back the money you get. It is a kind of donation towards your entrepreneurial cause by people interested in your idea. But sometimes, crowdfunding terms may include a provision for equity share if the startup becomes successful. The crowdfunding platforms usually charge a one-time percentage-based fee from the capital you raise.

8. Angel Investors:

Wealthy individuals who invest in your business in exchange for an ownership stake are often called Angel Investors due to the debt-free nature of the finance. However, money raised from Angel Investors is often less than the money you can raise through venture capital. On the plus side, Angel Investors are less likely to interfere with your role in the organization.

9. Venture Capital:

Venture capitalists are a group of rich individuals/investors who operate as firm. VCs, give you debt-free finance in exchange for a percentage of equity in the enterprise. However, VCs are more hands-on in their approach and often induce an organizational change in your business to retrieve their investment. Also, funding by venture capitalists is given in several rounds, such as a seed round (generally known as Series A), and subsequent payments upon achievement of growth targets.

So, this concludes our list of financial vehicles you can tap into for getting a startup loan or investment. Our recommendation is in favour of small business loans from NBFCs because of the versatility and flexibility of this particular financial product. And, the unsecured nature of these business loans makes the deal even sweeter for small businesses and startups who lack assets for collateralization.

To know more about small business loans for startups, visit us at www.lendingkart.com.