As we know, Micro Small and Medium Enterprises (MSME) are taking part in the development of India and it is also contributing to the manufacturing output of India. The contribution of the MSME is about 45% in the manufacturing output of India, and therefore, you can’t ignore this enterprise when it comes to business. Many factors affect the development of SMEs such as a loan process, funding, and finance etc. Before you develop your own business you have to have funding that you can use in the business like collateral free loan.
Many people can’t get an MSME loan or business loan because of the collateral. Therefore, you should know all about the upgraded information on different loans. The government has issued many schemes that will make sure that people can get the business loan easily which will be collateral-free. Business loans without collateral are the type of loan in which you don’t have to invest anything but you have to repay the amount in a fixed time with the interest rate. This loan is also called the unsecured business loan. You can apply for a business loan online for the quick process.
Because of the collateral-free loan, many people will be benefited and they will develop their business. This is the main aim of the government of India to increase the contribution of MSME business in the manufacturing sector.
A company must first weigh the pros and cons of both the Business Loans and the SME loans/MSME loans to choose amongst them. And then check and compare the various Business loans or MSME business loans offered by several financial institutions in the market, its interest rate, its processing & charging fees, eligibility criteria, amount of loan being granted, tenure for loan repayment, loan disbursal time, etc and make a wise choice.
Business needs financial support to emerge and grow and there are various options available in the marketplace to seek the required financial help.
Micro, Small and Medium Enterprises (MSMEs) being contributing majorly to the economy of the country and showing consistent growth, several MSME loan schemes have been launched by the government to provide financial help.
How can SME get a collateral free loan in India?
There are three easy steps for applying for a collateral-free loan from any financial institute. Before you apply for the collateral-free loan you have to take look at the eligibility criteria of the loan. Following are the few steps which you have to follow when you are applying for a collateral-free loan.
Apply Online
You have to fill the form for the collateral-free loan on the official website of the financial institute. You have to fill in the right information in the application form for the collateral-free loan. Earlier when you apply for any loan for your business for the confirmation of your loan they were taking much time as usual but at this time because of the online procedures, you will get an MSME loan in 59 minutes.
Submit the Documents
When you visit the official website of the financial institutions that give their customer a collateral-free loan then you will get enough information about the documents you will need for the approval of the loan. You have to scan the documents and submit them online in a PDF file.
Wait for the business loan approval
When you submit all the documents online for the collateral-free loan then you will get an OTP on your registered phone number. They will send you confirmation about the business loan. Earlier, for this step, you will have to wait for several months and you have to run to the bank anytime they calm you but with the help of the online procedure, you will get a confirmation for your loan in about 59 minutes.
SME can get a collateral free MSME loan with simple steps and you will also get many benefits with the collateral-free loan.
Frequently Asked Questions:
What are collateral-required for applying for collateral-free loans?
You have to have the ownership certificate of your business, bank statement of last 12 months, KYC information, PAN card details, and GST and IT filing reports. All these documents are essential for collateral-free loans.
Are the repayment method and interest rates are flexible in the collateral-free loan?
Yes. The repayment method and the interest rates of the collateral-free business loan are flexible and it depends upon the health of your business and the history of your business.
If the customer did not pay the loan money back then what happens?
When you borrow some money from the borrower and you did not pay the money back then they will sue you and block your bank accounts. After that, you will not get any loan from any borrower.
What are the examples of public collateral free loan schemes?
Credit Guarantee Trust for Micro and small enterprises (CGTMSE) and the MUDRA loan yojana are examples of public collateral free schemes.
What is considered as collateral for a business loan?
For a business loan, business assets such as machinery, vehicles, buildings, and inventory can be considered as collateral. Accounts receivables can also be considered as collateral. Any of the business assets that are valuable and have value and can be sold by the lender to settle the loan amount, if required can be considered collateral.
How much funding do you need?
It is very crucial to determine the need for the loan amount to be taken. You should not take a business loan without thinking of the consequences. Any failure to repay the loan can pose threat to your business or shop. You should ask for enough money to accomplish your goal. If you are planning to renovate your shop, you must calculate the renovation cost and apply for a business loan accordingly. If you need a business loan to buy tools or machinery, there are several specific loans you can avail of.
What is your financial situation?
Looking at monthly and yearly budgets may help you understand your expenses and profit. If you have a profitable business then your chances of getting a small business loan may improve. You must have some liquid assets so that you can repay your loans in the worst scenarios.
