The reality is most people do not know what a credit score is. Let’s not get into individual/personal scores or SMEs. Both are sailing on the same boat. A credit score is like a birth certificate. You know you have one, you even know the importance, but have you seen it off late? We know you must have not unless you have to submit it as a proof for some activity.

A credit score is a 3-digit number ranging from 300-900, 900 being the obvious highest. When you apply for a loans or credit card, your credit score is checked by the lender in order to ensure that you have the ability to repay. A higher credit score makes you reliable in the eyes of the lender, making it easy for loan approvals. The Credit Reference Agency (CRA) generates this score/number to indicate how reliable you have been with the past payments. Maintaining a credit score is important on individual basis, but is to be done by SMEs also, so that it becomes easy for them to avail SME loan.

We discussed about credit score and stated its importance in order to share information on the vitality of the subject.  An individual can easily work on improving his credit score as he’s aware of his financial story.

We would talk nothing like the appalling website popups which make you believe in them, there’s no magic potion to improve your credit rating overnight. It is a process and you can work towards improving your credit score gradually. So, it’s in your own interest that you maintain a good credit score to make it smooth and maybe less expensive to obtain small business loan whenever needed.

The SME sector in India is huge. 42.50 million, both registered and unregistered together is the number of SME businesses in India. Collectively, it comes up to a jaw-dropping 95% of the total industrial units in India. It employs a huge workforce and hence considered as the backbone on Indian economy. Most of these organisations face shortage of funds, and they seek monetary aid from financial institutions. These lenders, primarily consider their credit score to determine whether loan should be sanctioned or not, also to decide the offer to be made to applicants.

Following are some effective tips on how you can maintain a good credit score for your SME.

Pay all your dues on time:

You score is determined on the basis of your payment history. Credit bureaus check all your previously made payments to assess or give you a credit score. All your payments are to be paid before the due date, whether they’re credit card bills or loan EMIs. Dues paid before leave a positive impact on your score. Similarly, late or payments done after the due date leave a negative impact on your score. A default can ruin your credit score for a longer period of time & you can face a lot of trouble getting out of it. Even if you manage to get out, a default stays forever.

Your business information should be regularly updated:

We previously discussed on how important it is for a business owner to keep a check on the credit score. The credit bureaus can check any reports; one cannot track or be sure about any of them. Apart from this, as a business owner you also have to make sure that all your reports reflect the correct information of your business so that you get a good score during the assessment. Information such as bank statements, balance sheets, no. of years of operation, size of the company, etc. should be regularly updated as an up-to-date profile gets a higher score. There are multiple credit bureaus so it is suggested that you monitor your scores by different bureaus to take action in time.

Not all lender report to credit bureaus, partner with the ones who do:

All your efforts may be wasted if the payments you do on time aren’t reported to credit bureaus. This will not help you improve score. In order to make sure, lenders report to the credit bureaus, partner with the bureaus who do this activity. Before you enter into an agreement with your lender or creditor, make sure they report your payment history and habits to the credit bureaus.

Monitor credit utilization:

The utilization of the available credit also impacts the assessment of the credit score. Over utilization gives an impression that your business is facing trouble in profit-making. The higher the utilization of credit goes, the lower your score will go. Limiting credit applications can also help.

Personal credit matters too:

Business and personal credit is recommended to be kept separate, but repayments for both are to be kept clean. As the business is in its initial stage, the business has less or no credit history, in that case, loans or credit cards are sanctioned on your personal credit score.

Achieving a credit score will take time, you will have to work for it by keeping your finances under observation. Once you achieve a decent score, it is vital to maintain it as your future credibility is dependent on it. In the initial stage of maintaining a credit score for your business identity or on personal level, things may seem difficult. Don’t give up, go ahead with discipline. Achieving a high credit score is possible, with a strong credit score; you can make your business achieve heights.

SMEs in India employ 40% of India’s workforce, employing about 106 million people. 42.50 million, both registered and unregistered together is the number of SMEs businesses in India. Collectively, it comes up to a jaw-dropping 95% of the total industrial units in India. These numbers are from the most trusted sources operating under the government. With our country developing in terms of technology through digitization, increasing FDI boosting opportunities, the last five decades have seen a remarkable change in the SME sector.

SME sector is growing rapidly and with this swift growth, we ought to address the challenges that are faced by the SMEs in India. A business needs everything from finance to manpower to administration and much more in order to start, survive and ultimately succeed in the market. Some vital obstacles the business owners face are unavailability or shortage of finance, lack of skilled/talented manpower. There are a number of challenges faced by SMEs in India, but for now we would filter down to the top 3 and most important ones.

Coping with the technological advancements:

It becomes difficult for us to manage inventory, staff, accounts, etc. all at once, and that is why humans came up with advanced software for managing business activities. Whether it is ERP or inventory or accounting software, all these are a boon to a business owner. Adapting or encouraging use of these systems can make a business run longer. Businesses nowadays rely on such software or advanced AI-equipped machines and tools. However, it is a task for SMEs to get access to new technology due to lack of capital and awareness. As per a research, about 20% of prevailing SMEs operate from rural and backward areas, this justifies the point that why there is no awareness to technological advancements. You can opt for SME loans in India; many banks, financial institutions, NBFCs have come ahead to offer loans to SMEs.

Depending too much on acquired clients:

Acquiring some big clients should not just stunt your business growth. In India, businesses or their owners have a thought process that let the business run as it is post they acquire a handful of big clients. This can limit your business & profit and the growth slows down and ultimately comes to a point where it stops. But this dependency can prove fatal if existing clients stop doing business with you for whatsoever reasons. In order to stop this from happening, try to market your products and business activities to more and more people. Spend a good budget on marketing and customer retention. Avail quick SME loans to do so as it has become easy to get loans for running your business. Get into print media, use social networks for promotions, and more such methods to add client to your existing clientele.

Grow, but do not deteriorate quality:

Any or in fact all SMEs should make sure that during the process of growth or in the times when the business is growing, the quality shouldn’t deteriorate. Remember, it was the quality that got you the clients you currently have. Your Quality is your USP, so do not compromise on it. In order to do this, you need to hire the right people who know how to keep your product quality even when they have not introduced it. Outsource HR recruiters; spend on technology in order to do so. This definitely requires finance, but it is worthy enough to grow your business.

To make your business prosper and grow in the market in today’s competitive world, you need to have a strong financial backup. Do not hit the floors when it comes to financing your business. NBFCs today provide loans to SMEs. These loans fall under the unsecured category but there are only a few eligibility criteria which a business owner has to meet which are laid down to cut down the risk on the lender’s side. Lendingkart is one such NBFC which provides MSME loans exclusively for startup owners, small business owners, women entrepreneurs on a short-term basis. The range starts from Rs. 50,000 to a whopping 1 crore. The process is quick and online, the disbursement is usually done within 3 days, depending on the completion of procedures and clearing the eligibility requirements.

Other features of the loan offers – flexible repayment tenure, zero prepayment charges, no requirement of collateral/security.  The loan offers vary from lender to lender. So, availing a quick SME loan is worthy to run and grow your business in today’s competitive world.

Micro, Small & Medium Enterprises (MSME) sector is still one of the highly underutilized segments in India and is extremely essential in developing socio-economic development in India. Currently, the MSME sector which includes the Khadi, Village & Coir industries has 51 million units in it and employs about 117 million people. It also contributes to about 7% of the GDP, provides 45% of the total manufacturing output and 40% of international exports.

That said, being a small business owner in India has its own set of difficulties, mainly because it usually involves paying out of your own savings for initial investment. About three out of four small businesses in India rely on personal savings or borrowings from family & relatives to start their business with. But what would you do if insufficient funds clamp your business’ potential growth?

While you could look into borrowing from the bank, the chances of your loan request being sanctioned are extremely slim if you do not have a really good guarantor. Thus, relying on a non-banking financial organization becomes extremely important and that’s where Lendingkart can help you. What is it that makes us one of the best SME Loans providers?

Why choose Lendingkart?

Lendingkart has SME & MSME Loans for businesses who are looking for quick finance in India. Using online processes, we help speed up the process of lending money to you.

• Ticket Value up to Rs. 1 Crore

Bust that myth which says small businesses can’t get large loan amount. At Lendingkart, we have a flexible ticket price with starts at Rs. 50,000 and ends at Rs. 1 crore for short-term, intermediate or long-term financial needs. This is why, we are a preferred choice for MSMEs.

• Apply for SME or MSME loans online

Like mentioned earlier, we know how small businesses in India are in need for quick financing options. By opting for Lendingkart’s online loan application, you can get your loan approved on the very same day if your documents are proper.

• Quick Loan Approvals

Post document verification, your loans can be approved within 3 days to get you your loans when you need it. Thereby, making loan approvals the most hassle-free process as required for your growing business.

• Collateral-Free SME Loans

Every business loan provided by Lendingkart is unsecured. This means that there is no need to park collateral with us and you can get your loan when you need it with minimal documentation.

• Best Interest Rates

With the help of advanced financial data analytics, we calculate the best interest rates we can provide you with – fair and in accordance to your business’ capability to repay the SME Loan.

• Flexible Repayment Tenure

At Lendingkart, you get to choose how you want to repay your business loan. Choose from a loan tenure of a month to a year and choose if you must repay through monthly, bi-weekly or equal monthly installments.

• No Hidden Costs

Barring the upfront processing fee of 1-2% of your loan amount, SME Loans from Lendingkart do not have any hidden costs.

• Zero Prepayment Costs

Once you have enough money to repay your loan before the loan tenure, you can do it any time you want after paying the first EMI – without any worries about penalties or charges.

So, all you need to do is visit our site and apply for an SME loan! Grow your business with Lendingkart’s SME loans. It’s time to turn your small business into a successful venture.

The government announced a new scheme for small and medium business owners as a festive gift, ‘business loans / MSME loans within 59 minutes. The announcement had the business world buzzing with excitement as the scheme promises business loans up to `1 Crore. However, little else was clear about the due process to be followed for getting these quick business loans. In this post, we analyze the feasibility of the latest scheme and the hurdles one might face during the loan approval process. Furthermore, we will also have a look at other government initiatives for funding MSMEs and startups, and compare their performance to NBFC loans in India.

Details of the ‘59 Minutes Loan’

The loan being offered under the government scheme is mainly a working capital loan of ₹ 10 lakh up to 1 Crore. The minimum business loan rate of interest offered is 8% but it may vary based on the applicant’s credit score, business activities and other factors that determine the financial health of an MSME. There are no collateral requirements for this loan, hence making it an unsecured business loan – similar to the working capital loans offered by NBFCs like Lendingkart. Processing fees and charges are pegged at ₹ 1000 plus applicable taxes for borrowers who are accepted for lending.

Now, coming to the main highlight of the ‘59 Minutes Loan’ scheme. Participating banks offering products under the scheme are required to provide approval in principle to the borrowers whose proposal matches their product. While this approval will be given within 59 minutes, the actual disbursal of the loan will still take 7-8 working days.

Documentation required for the ‘59 Minutes Loan’

• Last 6-month bank statement in PDF format for all business-related accounts.
• e-KYC paper i.e. a digital version of know your customer paper.
• Income tax returns for the last 3 years in XML format including income tax codes and e-filing details.
• GST certification is necessary and the borrower has to provide his / her GST ID and password.
• Ownership certificates / details of current ventures of the applicant.
• Personal and educational details of the applicant.

The application process for ‘59 Minutes Loan’

The application starts with a ‘new user’ registration on the official website, https://www.psbloansin59minutes.com/home.

• Step 1: Complete the sign-up process by entering your name, email and mobile number. Click on ‘get OTP’ to verify your credentials.
• Step 2: Enter the OTP received on your phone and agree to the terms and conditions before clicking on ‘Proceed’.
• Step 3: The next screen will ask a few basic questions which you need to answer in ‘yes’ or ‘no’ by selecting the corresponding radio selection box. Click proceed again to continue to the next step.
• Step 4: Now, you will be asked to input your GST details, such as GST number and password, followed by income tax information. Here, you can either upload the statements in XML format or login with your ITR details such as PAN and date of incorporation.
• Step 5: This step involves the upload of your past 6-month bank statements in PDF format. You can also login with your net banking credentials and allow the lenders to access the financial statements.
• Step 6: Here, you provide the details of directors, proprietor and company address.
• Step 7: Now select the purpose of your loan and provide the details of any previous / existing loans taken by your business.
• Step 8: Select the bank through which you want your loan to be processed. The interest amount may vary from bank to bank.
• Step 9: Pay the ₹ 1000 convenience fee, plus taxes for approval.
• Step 10: Download your approval letter, pending further due diligence by the loan providing bank.

Potential pitfalls to be faced by the ‘59 Minutes Loan’ scheme

The thing to note here is that the ‘59 Minute Loan’ scheme is not the first initiative by the current government to ease business finance. A similar fast track business loan scheme called the Pradhan Mantri Mudra Yojna (PMMY) is already in place. The PMMY is also backed by the public sector banks and offers loans up to ₹ 10 lakh to MSMEs and startups. However, a closer analysis of the scheme reveals some major bottlenecks and drawbacks of government run financial schemes for small businesses in India.

For exahttps://www.lendingkart.com/blog/5-tax-saving-tips-for-small-business-owners-in-india/mple, since the Mudra program was started in 2015-2016, a whopping ₹ 4.68 lakh crore have been disbursed to 9.9 crore loan applicants. While the sum of loans given is impressive, simple math tells us that the average amount per application is just ₹ 47,249. So, the question that needs asking is, can anyone setup a successful enterprise with less than ₹ 50,000?

While someone may be able to setup a shop or similar retail business for that amount, keeping it up and running is not possible without some minimum working capital expenditure. Thus, the amount of money offered under the Mudra program is not sufficient for startups and MSME funding at all.

Moreover, the CBI is already investigating a senior Punjab National Bank Official for fraud after his PNB branch approved ₹ 62 lakh in lieu of 26 loan applications under the Mudra program. The charges as quoted in the CBI complaint are “without conducting meaningful pre-inspection or physical verification of spot of business or residence and without ascertaining end use of the loan amount or creation of assets from the loan amount”.

Now, isn’t that the Mudra program? The PMMY was meant for offering quick business loans without collateral requirements and stringent check and balances. Which in turn makes the ‘59 Minutes Loan’ scheme susceptible to unforeseen hindrances. Since the new scheme offers unsecured business loans up to ₹ 1 crore, bank officials are going to be even more cautious in scrutinizing loan applications. Also, similar to the Mudra scheme which was a refinancing scheme, for which the funds were provided by banks, NBFCs and MFIs under pressure from the government, the new scheme also adds the burden of funding loans on public sector banks (PSBs). Thus, given the NPA crisis faced by almost all PSBs, the 7-8 days loan disbursal policy also seems a little far-fetched right now.

Comparing the ‘59 Minutes Loan’ scheme with NBFC loans

The concept of fast business loans is not a new one and the latest government scheme is just an extension of same-day loan approvals being given by NBFCs like Lendingkart, albeit with some sugar-coating. Some of the features being touted by the new loan scheme, such as online portal for loan application and digital submission and verification of documents, are already in use by NBFCs like Lendingkart. Moreover, the simplicity and steps involved in loan application process are also fewer for NBFC business loans.

Here are some of the key differences between the ‘59 Minutes Loan’ scheme and NBFC business loans.

• Application Process: Both use online application process, needing users to register with name, email and phone numbers.
• Documentation: The government’s business loan scheme requires the submission of 6-month bank statement, 3-year income tax filings, GST details (including your password) and incorporation certificates along with personal, educational and financial details of the owner / partners / directors. On the other hand, Lendingkart offers loans based on 6-month bank statements and 2-year ITR returns if your revenue is less than 60 lakhs. It is not mandatory to have net banking and Lendingkart does not ask for ITR and GST in case of Green Zone.
• Loan Amount: The ‘59 Minutes Loan’ scheme offers loans from ₹ 10 lakh up to ₹ 1 crore whereas Lendingkart has a wider scope in terms of funding with business loans ranging between ₹ 50,000 to ₹ 1 crore.
• Loan Disbursal: If all details check out, the government’s loan scheme offers business loans within 7-8 days, which is not a lot quicker than the existing loan products offered by banks. On the other hand, Lendingkart promises the disbursal of loan funds within 3-days’ time once your application is verified.
• Additional Features: Both, the government’s MSME loan scheme and NBFC loans are unsecured business loans. However, Lendingkart offers several additional advantages such as top-up loan, renewal upon full repayment, zero evaluation charges and no pre-closure charges. Furthermore, Lendingkart also has a dedicated mobile app, customer support and social media presence to assist customers in real-time.

Advantages of NBFC business loans

In its current form, the new scheme by government is a tough sell once you go beyond the face value. Here are some of the things which an NBFC business loan still does better than the ‘59 Minutes Loan’ scheme.

• NBFC loans are self-funded whereas the government’s scheme relies on SIDBI and PSU banks – State Bank of India, Bank of Baroda, Punjab National Bank, Vijaya Bank and Indian Bank. Hence, the NBFC business loans retain the advantage of being fast and free from bureaucratic delays.
• The starting value of ₹ 50,000 gives NBFC business loans another advantage as it increases the probability of getting a small business loan for an applicant who may not be able to service a loan worth ₹ 10 lakh, which is the minimum under the government’s proposal.
• In essence, the 59 minutes loan approval time is similar to same day loan approvals, as the condition of ‘pending verification’ applies in both cases. However, where NBFC business loans from Lendingkart are disbursed within 3 days of verification with attractive interest rates, the same process takes 7-8 working days under the government scheme.
• NBFC loans offer the facility of revolving capital through products like business loan renewal and zero pre-payment charges, making them more suited for working capital finance. On the other hand, fresh loans under the government scheme will have to follow the same application, approval, processing and disbursal cycle all over again.
• NBFCs like Lendingkart also offer monthly and bi-weekly EMIs to help businesses with extended invoicing cycles. This flexible EMI feature may not be a part of the government’s MSME finance scheme from the onset.
• The questionable success of previous government financing schemes also puts NBFC loans in perspective, where companies like Lendingkart Finance are now offering business loans across India.

Concluding thoughts

While we should laud the government’s efforts to make India more business-friendly, only time and numbers will tell the real story here. The political detractors of the government were quick to point out that the new MSME finance scheme has all the trappings of a same-day approval loan and that it is merely a pre-poll sop. Even several bankers have questioned the feasibility of the ‘approval within 59 minutes’ approach as the public sector banks which are expected to shoulder the burden are still reeling from a bad loan crisis and the shadow effects of demonetization. The most concerning part of the scheme remain the actual turnaround time for the business loan. The disbursal time of 7-8 working days can easily stretch up to 8-12 days when you count weekend holidays and public holidays. So, in reality, getting a business loan from the bank will still remain a cumbersome task.

On the other hand, NBFCs are offering a wider range of loan options and complementary products and services like auto-renewals and zero penalty pre-closures, which are hard to ignore. Add to that the possibility of getting a business loan within 72 hours and the government’s proposal loses some of its sheen. So, when compared head on, NBFCs like Lendingkart are still offering better value to their customers until the time the government scheme matures.

So, in the end, answering the question ‘is it really possible to get a business loan within 59 minutes?’. Unfortunately, the answer is no. You can get a business loan approval within 59 minutes, but all it means is that the banks refinancing the government’s scheme will follow their usual application and verification process after that. The actual loan will only be given after the process is complete, which can take up to 12 days. You can, however, get a business loan within 3-days by signing-up on Lendingkart’s website or mobile app.