Get A Low Interest Small Business Loan to Grow Your Business

Published: Jan 18, 2023

Being a significant contributor to the country’s GDP (Gross Domestic Product) and exports, the Micro, Small, and Medium Enterprises (MSME) sector is a major part of India’s socio-economic development. The sector has contributed greatly to the entrepreneurship evolution across the country, especially in the rural and semi-urban regions, and today, there are more than 80 lakh MSMEs in India (registered at the Udyam Registration Portal, as on 31 March ’22).

Whether big or small, almost every business needs additional funds from time to time, but usually, it is in the initial stages when this need is felt the most, especially for enabling business growth.

Here’s Introducing the Small Business Loan

There are a number of advantages to availing a startup business loan for your new business. Some of them are as follows:

Easy Funding

A commercial loan product that has been designed specifically for business investments, small business loans cater to the financial needs of MSMEs, facilitating their growth and success. These financial products offer advantages like fast approvals, minimal documentation, easy eligibility, and the option to avail unsecured loans, where there’s no need for collateral.

MSME loan disbursal saw a 40% increase, from Rs 6.8 trillion (91.66 bn USD) in FY 2020 to Rs 9.5 trillion (128.06 bn USD) in FY 2021, which makes it easy to see how these instruments are a preferred financing solution among entrepreneurs.

Types of Small Business Loans

Popular business loans sanctioned by major financial institutions in India include:

●Working Capital Loans: Short-term business loans designed to help businesses with daily requirements, expansion needs, business flow enhancement, inventory replenishment/addition, etc.
●Term Loans: Short-term and long-term loans ranging from Rs. 5 to 50 lakhs, repaid in EMIs over a tenure of up to 15 years.
●Line of Credit: This is offered in lump sums of cash (within an established line of credit). The funds can be reused throughout the repayment term as well.

How Small Business Loans Can Foster Business Growth

Finance various aspects of growing a business with the right small business loan.

●Purchasing Inventory: Inventory is crucial for success and having sufficient inventory helps ensure hassle-free business operations.
●Expansion: Support expansion plans; from renting more office space or setting up a new branch to purchasing new inventory or hiring new staff.
●Integrate New Tech: From having a strong digital footprint to having relevant management software in place, going digital is the call of the hour.
●Improve Business Infrastructure: Whether it is a comfortable office space for employees, storage areas, or warehouses, proper infrastructure is essential for business growth.
●Hiring: Skilled employees are valuable assets for any business and hiring the right candidates needs higher budgets.
●Marketing: Having the best products/services and a proper website and points of sales is not enough if you can’t reach your customers.

Maximising the Value of Your Loan

Finding the right finance solution depends a lot on being able to get the lowest possible interest rate. The business loan interest rate is the amount a borrower pays the lender as a ‘fee’ for the facility and is generally calculated as a percentage of the principal amount. The interest rate can be fixed or flexible and is decided based on the applicant’s eligibility.

Types of Interest Rates

●Fixed: Start higher than flexible rates but involve low risks and have fixed repayments.
●Flexible: Start lower than fixed rates but involve more risk. Fluctuations in the market, affect the rate and the repayments.

Tips for Getting a Low Interest Business Loan

●Ensure a strong business credit profile with sufficient cash flow.
●Have a good credit report and repayment history.
●Have a credit score higher than 700.
●Draft a good business plan, showcasing loan purpose, business priorities, strategies, and company goals.
●Specify your intent clearly.
●Ensure company financial records are properly updated.
●Use an SME loan calculator to check what loan amount you are eligible for.

Small business loans are the best solutions for self-employed business owners who have dreams to expand the reach of their ventures as far as possible. As small business owners endeavour to make their world bigger, Capri Loans offers a range of customised MSME loan schemes to fuel the dreams that drive India