What Are the Benefits of SME Loan?

Benefits of SME Loan

 

A small and medium-sized business requires funding at different stages of its cycle, from starting the business to running the operations, stocking the inventory, and recovering from unexpected losses. As an SME owner, it is paramount that you utilise the resources at your disposal to their optimum capacity so that you have stability in your business operation and keep the business afloat.

 

But even with efficient management of resources, there may be times when you need some financial help to accomplish your business goals. Getting the funds in the right can make a huge difference. Although there are different ways to raise the funds you need, getting an SME business loan could be the right fit for you.

 

Need for an SME Loan

 

If you are wondering what an SME loan is, in simple words, it is a form of credit you can get from a bank or an NBFC (Non-Banking Financial Company). Generally, most SMEs do not have the financial resources at their disposal like large corporations do.

 

For example, let us assume that you run a Kirana store. Your accounts show that you have a great sales record, but on the flip side, most customers purchase things on credit. In such a situation, it can be difficult for you to stock the necessary inventory in your store to keep up with the demands.

 

In such a case, getting an SME loan can greatly help your business. You can get the funds you need, stock up on inventory, and keep your business running. Nowadays, many NBFCs, like Udyog Plus, which is part of Aditya Birla Finance Limited, offer SME loans that are specially tailored to the needs of small business owners.

 

Advantages of SME loan

 

Now that you know what SME loans mean, it would help to know their benefits.

 

• Easy access to funds

   

  When it comes to running an SME or any other business, you really cannot predict the risks or when an expansion opportunity will arise. Either way, it is important to act quickly to mitigate the risk or capitalise on the opportunity.

   

  This is where SME business loans can be extremely helpful. You can get access to the funds you need immediately. And with lenders like Udyog Plus offering same-day approval and disbursement, you need not wait for days or weeks to get the money you want. So, when time is of the essence, an SME loan is the best funding option for your business.

   

• No security needed

   

  This is perhaps one of the most significant SME loan benefits. Today, many lenders in India, like Udyog Plus, offer SMEs a wide range of business loan services and offer them credit without any security or collateral.

   

  This means you need not pledge any of your personal or business assets against the funds you want to borrow. So, you need not worry about losing ownership of your valuable asset. Instead, focus on getting the funds and using them wisely to grow your business.

   

• Repayment flexibility

   

  Another significant benefit of getting an SME loan is that most lenders offer flexible repayment options to suit your exact needs. The lenders understand that as a small business owner, you may have to face several hurdles, so they offer repayment flexibility.

   

  This means you can choose the repayment tenure to suit your repayment capacity. Also, you have the flexibility to pay more when your business profits rise and repay the full amount earlier than the actual tenure.

   

  No matter the situation, the repayment flexibility allows you to repay the loan comfortably.

   

• Tax benefits

   

  As a business owner, applying for an SME loan not only helps you get the funds you need to meet business expenses but also provides valuable tax benefits. When you pay taxes on your annual business income, certain expenses are considered deductible from the gross amount.

   

  One such deductible is the EMI paid on the SME loan. Thus, it helps you reduce your overall tax liability and increase your savings. As per the tax laws, the interest you pay on the business loan is tax deductible. So, you can take advantage of this tax benefit.

   

• Minimum documentation

   

  One of the most common reasons why a lot of SME owners avoid applying for a business loan is that they believe the whole process is complicated and it involves submitting many documents. However, the truth is that modern lenders, especially NBFCs like Udyog Plus, have a simple documentation process for approving SME loans.

   

  In fact, with Udyog Plus, you need not submit any documents for loans up to Rs. 2 Lakh. For loans above Rs. 2 Lakh, you must submit only a few basic documents like proof of business existence and continuity, GS T (Goods and Services Tax) returns, bank statements, ITR (Income Tax Returns), identity proof, etc.

   

   

• Simple Eligibility

 

Getting an SME loan has become easier than ever before. Today, lenders have simple eligibility requirements so that a maximum number of small and medium-sized business owners can take advantage of the loan facility and grow their business enterprise.

 

While the eligibility requirements vary from one lender to another, lenders like Udyog Plus have very simple criteria, including –

 

• You must be aged between 21 to 65 years at the time of applying for the loan
• The credit score issued by reputed credit bureaus like CIBIL must be more than 675
• You must be a sole proprietor and individual running a trading, manufacturing or service enterprise

 

How to apply for a business loan?

 

As lenders in India offer 100% digital services, applying for a business loan has become much easier. Also, the online process ensures complete transparency in the transaction. With Udyog Plus, you can apply for an SME loan in four simple steps:

 

• Step 1 – Enter your business details and get instant sanction
• Step 2 – Complete the KYC (Know Your Customer) process
• Step 3 – Register eNACH and e-sign agreement
• Step 4 – Get disbursement on the same day

 

Final Word

 

SME loans offer a convenient way for small and medium-sized business owners to get the funds they need and help them grow their businesses. When you plan to apply for an SME loan, it is critical that you have a proper repayment plan so that you can repay the amount on time consistently and enjoy a smooth borrowing experience.