Know-How to Get SME Finance in India

SMEs (Small and Medium Enterprises) have gained augmented attention in India in recent times. Given their explicit worth, they are often actually strategic to the economy and thus, to the nation.

SMEs play a significant role in generating employment for the country too. As a matter of fact, 4.88 crore SMEs within the country give employment to 11 crore individuals.

SMEs within the producing sector alone turn out quite 6000 merchandise and contribute 7.7% to the GDP of India. Similarly, SMEs within the services sector contribute 27% of the country’s GDP.

SMEs face a number of difficulties to cope with everyday life situations in this cutthroat race among numerous industries. Attributable to the harsh nature of market and shopper redemption, SMEs face numerous obstacles in running their businesses swimmingly.

Mostly, they even go short on their funding and notice it exhausting to even pay their listed staff, manage infrastructures, squirt debts, etc. In this situation, their square measure is several non-public lenders, NBFCs, government banks, etc. that wholeheartedly facilitate in providing SME finance.

What are the Obstacles to Accessing SME Finance?

Major challenges in accessing finance reported by SMEs in their early phases include:

Issues with providing security or even a guarantee.
Processing time of loan applications.
Not enough understanding of available schemes.
Procedural problems regarding purchases.
Trouble in completing the necessary paperwork.

To help the flourishing entrepreneurs across the SME sector strengthen their businesses and the overall economy, the Government of India has introduced numerous financing avenues.

The ascending entrepreneurs of the SME domain can acquire funding in the form of a loan via any of the below-mentioned schemes that satisfy their requirements.

Mudra Yojna: Endorsed by the Micro-Units Production and Refinance Service Institution, the plan of MUDRA lending products is conventionally introduced by the Government of India guaranteeing financing assistance to micro-businesses. The majority of high street bank twigs across India provide the services of MUDRA schemes. An amount of as much as Rs.50,000 is justly available under Sishu financing. An amount between Rs.50,000 and Rs.5,00,000 and Rs.5,00,000 to Rs.10,00,000 may be sanctioned under Kishore credit and Tarun mortgage avenues severally. All businesses and organizations appropriating to partnership steady, exclusive obstacle, public group, Pvt. Ltd. companies, along with other regulatory companies are worthy of availing funding under this pyramid.
Stand-Up India: Introduced by the Indian government to facilitate certain financial loans for businesses operated by SCs, STs, and women entrepreneurs, the Stand-Up India scheme provides funding anywhere between Rs.10 Lakhs to Rs.1 Crore. Loans under the Stand-Up India scheme are provided by virtually every lender in India. The fund is anticipated to cover about 75 % of the cost associated with the general project as per this loan. At least 51% of the stocks should be apprehended by an individual who is often a lady or should belong to the SC or ST community if the business is managed by way of a group.

Common Eligibility Requirements to Avail SME Finance in India

To avail of SME funding, one –

Should be an existing business for at least 5 years in the same locality/area.
Must be the legal holder of the business premises or must have a valid tenant agreement aided by the original holder of the premises. (In the case of rented premises, a residual period of a minimum of three years is required).
Must have a current account in any nationalized or in a private bank for a minimum duration of 3 years.
Must produce trade license and ITR certificate of past 3 fiscal years.

To give a boost to already existing slow-paced businesses, SME finance has been rightly introduced as a viable funding solution. The structure is designed keeping in mind the various needs of different industries of different calibers where these businesses operate.