This year the furious pandemic has changed the life and livings of millions of people. Particularly the small business holders have suffered a loss. The scenario has changed the backbone of their business.
However, the Government of India has taken certain initiatives and implemented certain schemes in the favor of small and marginal business holders. All the financial institutions have come forward to provide MSME loans with minimal terms and conditions.
Several ways are there through which one can get business loans for new startups.
Getting a good investor
Some investors are there in the market having surplus funds and they used to utilize these for getting higher returns. Small business holders can take this loan and use it to maintain the cash flow in the business.
Although some risk factors are there you can get funds instantly.
Raising of funds through crowdfunding
Many investors are there in the markets that are always in the favor of some social work. Some web portals are there who raises the fund for charity trust, social cause, education for the children and some other events. However, these kinds of funds are meant for the people whose business mainly focused in the betterment of society.
Loans under government scheme
The government of India has introduced several schemes like CGTMSE, MSME loans, for the betterment of women entrepreneurs, unemployed youth, rural people, people living in urban or semi-urban areas. Some highlighted skins include MUDRA loan schemes, Startup India, and many more. Check out the interest rates for business loans here.
Business loans from the banks
The bank is the primary source for getting any kind of MSME loan. It is also regarded as one of the safest sources for the loan. Usually, banks provide two types of loans such as term loans and working capital loans. These days many public, as well as private sector banks, are there who can provide MSME loans quite easily. Certain documentation works like Id proofs, address proof bank statements of the last six months, and ownership proof documents are required for getting the loan approval.
However, every bank has separate terms and conditions and interest rate also varies. So it’s up to you what kind of loan you actually need to operate your business. There are numerous ways where the business loan amount can be used as an expansion of the business, inventory management, working capital management, etc.
Loans from NBFCs
Loans from the NBFCs should be your second option. If you are having any problems in getting the required amount of loans from the bank then NBFC is the best alternative. Here you can get your lain approval instantly. Here you can get a hassle-free loan even if your credit and previous banking history is poor. The interest rate is a bit higher. You can get a loan of up to Rs. 7.5 lacs without collateral.
Business credit card
As we know MSME full form is Micro small and medium enterprises. As the name suggests, a business credit card can help to get a small number of funds instantly in case of any emergency.
Peer to peer lending
This is an innovative approach to minimize the involvement of the middle man in the business. It is famous in the name of social or crowdlending. This is mainly operated through online websites. The interest rate, tenure of the loan is already fixed. One can take advantage of this and get MSME loans at a very lower interest rate than banks.
Overdraft facility in the current account
To get this facility first you have to get arrival from the bank. After successful approval, you can withdraw the money even if your account has zero balance. This is almost similar to if you are taking loans from a financial institution.