7 Different Types 0f SME Loans Available In India

Published: Nov 01, 2022
Small and medium businesses in India can avail SME loans in India from various banks and non-banking financial institutions for capital requirements as well as business expansion and growth. As per the Indian Government, an MSME is a business with an investment of up to Rs.20 crores and turnover of under Rs.100 crores. Small and medium businesses often need funds at a short notice. SME loans provide these businesses with the financial assistance necessary to keep their businesses running.
But did you know that there are several types of SME Loans available in India? Yes, indeed. MSMEs can choose an SME loan type that suits their unique requirements.

Term Loans

The loan amount is given against an asset kept by the lender as security. The lender can sell the asset to recover the loan amount in case the borrower defaults on the payments. However, in term loans, the loan is given for a fixed period of time with a fixed interest rate.

Asset-based Loans

Small business owners can also get a loan by using their personal assets as security for the loan amount. These include their residential property, shares and gold as security.

Cash Credit Facility 

Small businesses often require short-term loans to handle their day-to-day financial requirements. The cash credit facility provides such small businesses with short-term loans to take care of their daily financial needs. Small businesses can get cash credit loans by using their current assets as security. 

Gold Loans

MSMEs can also get SME loans against gold assets. It is considered to be one of the best types of SME loans for MSMEs. A gold loan calculator can be used to determine the amount of gold needed to get the required loan amount.

Mudra Loan for Women

The government of India has launched Mudra Loan for Women to provide startup business loans for women. The best part about this scheme is that you do not need any collateral to get a loan. You can easily start a small business such as a tuition centre, beauty parlour or a stitching shop.

Annapurna Scheme

This scheme was launched by the government to provide small business loans to women who want to start a food catering business of their own. Under this scheme, women can get a loan of Rs 50,000 to start their business. The interest rates for the loan amount will be determined on the basis of the market rates. The payment for the loan amount can be made within 36 months from the time of loan approval.

Government Machinery Loans for MSMEs

It is the manufacturing businesses that often require loans to purchase equipment to continue the manufacturing of goods for sale. The Small Industries Development Bank of India (SIDB) provides different MSME loans for machinery. Small businesses that have registered themselves under the MSME Act are eligible for the loan.
At Capri Loans, we strive to bring about a collective change with our financial products that help small businesses scale up and prosper. Financial inclusion for all is a big step towards a self-reliant and financially independent India.