Whether you have a running business or you are starting a business, you need to have enough amount of capital so that the business can run smoothly and the things can be done in a hassle free manner. You may require a Business Loan for running your business easily.
Indian Government has already come up with variety of business loan schemes and various programs to encourage entrepreneurs to start new business as the growth of business ultimately contributes a lot to the growth of economy. Under this, many types of different schemes are offered by public sector banks to give these types of business loans to small and medium enterprises (SMEs) such as Credit Guarantee Fund Scheme for Micro and Small Enterprises, Market Development Assistance Scheme for MSMEs, Mini Tool Room and Training Centre Scheme, Credit Link Capital Subsidy Scheme for Technology Upgradation, etc.
A Business Loan is a loan which is specifically extended for business purposes. It may be obtained from a bank and can be either secured or unsecured. For secured loans, banks will require collateral as a security for that loan. Hence, the borrower pledges an asset such as plant, equipment, stock or vehicles for availing a secured loan which may be used, if loan is not repaid by the borrower in due course. Unsecured Loan is not backed by any security though the bank (lender) will have a general claim on the borrower's assets, in case repayment is not made by the borrower in time.
Business Loan is a borrowed capital and the business needs to pay a regular interest and repay the whole principal at the end of the loan period.
Broadly, Business Loan has been divided into following 2 categories:Working Capital Business Loan: It is provided for running daily operations of a business smoothly. It is generally given for shorter term.
Broadly, Business Loan has been divided into following 2 categories:Secured Business Loan: This loan is backed by collateral. This loan is available at comparatively low interest rate, as the bank can sell the collateral in case of any default by the borrower. Unsecured Business Loan This loan is not backed by any collateral. This loan is available at comparatively high interest rate to the borrowers.
The Business Loan Application Form is to be filled up and submitted to get a business loan. The form requires the details of following items:
The Micro, Small and Medium Enterprises in Manufacturing and service sector are defined as under in MSMED ACT, 2006
|Enterprises*||Units engaged in manufacturing/ processing of Goods||Units engaged in providing/rendering of Services th>|
|Micro Enterprise||Investment in plant and machinery not exceeding Rs.25 lakhs.||Investment in equipment not exceeding Rs.10 lakhs.|
|Small Enterprise||Investment in plant and machinery exceeding Rs.25 lakhs but not exceeding Rs.5 Crores.||Investment in equipment exceeding Rs.10 lakhs nut not exceeding Rs.2 Crores|
|Medium Enterprise||Investment in plant and machinery exceeding Rs. 5 Crores but not exceeding Rs.10 Crores.||Investment in equipment exceeding Rs. 2 Crores nut not exceeding Rs.5 Crores|
Manufacturing Enterprises i.e. enterprises engaged in the manufacture or production, processing or preservations of goods with investment in Plant & Machinery as stated above.
Service Enterprises i.e. Enterprises engaged in providing or rendering services and whose investment in equipment as specified above. (Original cost excluding Land & Building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006).
Loans for food and agro processing will be classified under Micro and Small Enterprises, provided the units satisfy investments criteria prescribed for Micro and Small Enterprises, as provided in MSMED Act, 2006.
*All individual/s, firms/ company /LLP, etc.
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