SME Loans

What is SME Loans?

As the name suggests, SME loan is offered to Small and Medium Enterprise (SMEs) to meet their financial requirements and for business expansion purposes. SME loan is majorly availed by the start-up enterprises, small and medium enterprise and business owners.

Interest Rates for Availing SME Loans

While every bank or NBFC might charge different interest rates for providing loans to SMEs, the lowest interest rate provided under Government Loan Schemes is 8.40% and can go up to 24% per annum. The interest rate charged for SME loan will depend on different conditions like provision of collateral, loan amount, repayment tenure, and applicant’s profile, creditworthiness and repayment capacity.

How to Apply for an SME Loan?

Every bank or NBFC will have a loan application form which requires to be filled. Some of the common details that are required in these forms are:

• Name of Company
• Date of firm creation
• Address of the firm
• Operating address of firm
• E-mail address of firm
• Contact Details
• Sector/Industry code
• Permanent Account Number
• GST No.

When you apply for a loan from any financial organization, it is common that they will require certain financial details regarding your current debts and background. These are some of the commonly required details:

• Bank A/C details
• On-going Loans/Debts
• Any other financial service applied for
• Brief regarding security of facility
• Details of parent company/associates/group entities
• All relevant profitability/liquidity-oriented details mentioned in an annual accounting report

Apart from financial details you are also required to mention certain legal details necessary for processing:

• Documents regarding registration of firm/shop/manufacturing unit
• Registration certificate of the firm under MSME
• Copies of sales tax-return filing documents
• Copies of income tax-return filing documents
• Drug license (if running a pharmaceutical manufacturing/selling enterprise)