Small-scale businesses in India have faced a multitude of challenges in the past two years. From worker migration to logistical difficulties to a lack of working capital, Micro, Small and Medium businesses (MSMEs) have truly persevered and are now on a growth path. A silver lining of COVID has been the rapid digitisation of small-scale businesses. As the world gradually unlocks, MSME sector in India continue to face certain hurdles in their business operations. The increase in raw material prices, higher cost of transactions, and capital crunch are all ongoing challenges.
MSME Loans are one of the best ways for small manufacturers to tackle financial setbacks and expand operations. In this article, let’s explore how MSMEs can grow their small-scale business with the help of an Unsecured Business Loan. Before we understand the benefits of a Small Business Loan, let’s understand what a small-scale business is and some of its features.
A small-scale business is defined as an industry where the production is done on a micro or small scale. These industries make an investment in equipment, machinery, or plant with a total investment not exceeding Rs 10 crore. Furthermore, the annual business turnover of a small-scale business is not more than Rs. 50 crore.
Small-scale industries produce and provide services with the help of less manpower and smaller machines. Considered the lifeline of the economy, small-scale businesses in India should come under the guidelines set by the Government of India. These industries rely heavily on labour and are responsible for generating ample employment opportunities. They often provide essential goods and services that are needed in the economy, especially in developing countries.
Small-scale businesses often specialise in a particular type of product or service, such as food products, furniture, or clothing. They are often labour-intensive and provide a source of employment for people in the local community. Small-scale businesses also provide an important source of innovation, allowing businesses to develop and test new products and services in a smaller, more controlled environment. This can help businesses to identify new opportunities and develop products and services that are better suited to the local market.
While registration is not mandatory for small-scale businesses to operate in India, it has its own share of benefits. Let’s take a look at some of those benefits:
Registering a small-scale business in India can help to protect business owners’ rights. This includes protecting the business’s intellectual property, such as trademarks and copyrights. It also helps to ensure that the business is compliant with the various laws and regulations that apply to it. For example, registering a business in India can ensure that the business is compliant with labour laws, tax laws, and environmental laws.
Another benefit is that it can help to provide access to funds from banks and other financial institutions. This is because banks and other lenders view registered businesses as more reliable. This can make it easier for businesses to access loans and other forms of financing.
Registering a small-scale business in India can also provide access to various Government grants and subsidies. This can help businesses to grow and expand. For example, the government of India provides various grants and subsidies to small-scale businesses in order to encourage entrepreneurship and support the growth of small businesses.
A small business loan is a perfect solution for entrepreneurs looking to grow their small-scale business. With a collateral-free small business loan, entrepreneurs can finance their operations, purchase necessary equipment, hire additional staff, and acquire more inventory.
The first step to securing a small business loan is to develop a comprehensive business plan. This plan should include information about the small business, such as its target market, competitive advantage, and financial projections. The business plan should also include the amount of money they plan to borrow, the repayment terms, and the collateral they are willing to put up. It is important to be prepared with this information when applying for a loan.
Once the business plan is in place, MSMEs can begin to look for financing options. First, they must decide what type of loan best fits their needs. There are various types of online loans available, so it's important to research each one and determine which is most suitable for the business. Once they have chosen a loan type, the next step is identifying the best lender for their business. Look for lenders that have a good reputation and are known for working with small businesses. Consider the terms and conditions of the loan. Ensure MSME owners understand how much they will be required to pay each month, the interest rate, and any other fees associated with the loan.
Next, MSME entrepreneurs will need to complete the loan application. Ensure to provide all the necessary information and answer all the questions honestly. They should also include a business plan outlining their plans for the loan. Once the application is submitted, the lender will review it. The lender may contact the applicant for additional information or to discuss the loan terms. It's important to be transparent with the lender and to provide accurate information to avoid any future issues. Finally, if the loan is approved, the funds will be sent to the applicant’s account.
Once the MSME owner has secured a small business loan, it is important to use the funds wisely. This means using the money to purchase equipment, hire additional staff, and acquire more inventory. It is also important to use the funds to promote the business and create a positive public image. With proper management of the funds, a small-scale business can certainly grow and thrive.
Kinara Capital offers collateral-free business loans for small entrepreneurs operating in the manufacturing, trading, and service sectors. As a socially responsible fintech, Kinara has enabled small manufacturers to bring economic prosperity to their communities with job creation and income generation. Kinara’s MSME Loans have enabled small manufacturers to exhibit significant income growth, curate job opportunities, and fortify local economies.
Small manufacturers in India can choose from a plethora of options when it comes to acquiring the right amount of capital. The following are the types of MSME loans that can be availed from Kinara Capital:
Machinery is a vital part of the operations of a small-scale business. Small business owners can avail an asset purchase loan to invest in new or second-hand machinery for their enterprise. This can improve the overall production capacity and enhance the efficiency of operations.
Kinara provides Asset Purchase Loans up to Rs. 30 lakhs that can be used for growing small businesses efficiently. The interest rate charged by Kinara for Asset Purchase Loans starts at 24% p.a., and the repayment tenure can range from 12 to 60 months.
Small business owners have to maintain and manage the routine cash flow of the enterprise to ensure long-term sustainability. A working capital loan can help a manufacturing firm meet its daily expenses, such as rent, wages, raw materials, renovations, etc. A working capital loan allows business owners to maintain a healthy cash flow and seize new opportunities for business growth.
Kinara’s Working Capital Loans are available from Rs. 1 lakh to Rs. 30 lakhs, wherein the repayment tenure can range from 12 to 60 months, and interest rates begin at 24% per annum.
Women entrepreneurs have long faced disparity when it comes to acquiring the required amount of capital to commence or expand operations. Formal banking institutions have deemed women entrepreneurs under the ‘high risk’ category and hampered their ability to grow in the manufacturing sector. However, the advent of special loans for women has closed any financial gaps and allowed women entrepreneurs to soar in the competitive landscape.
HerVikas Loan from Kinara Capital is a special business loan for women entrepreneurs. Women MSME business owners engaged in the manufacturing, trading and service sector can avail of a 1% discount on interest rates under HerVikas program to take their businesses to the next level with no additional documentation required.
MSME Loans are a great option for entrepreneurs who are looking to grow their small-scale businesses. The loan can provide the necessary funds to purchase equipment and hire employees to help the business reach its goals. It is important for entrepreneurs to remember to pay back the loan on time and to have a good credit score in order to qualify for the loan. With the right planning and preparation, a Small Business Loan can help entrepreneurs to grow their small-scale business into a successful venture.
Getting a Small Business Loan from a reputed NBFC like Kinara Capital can be a great way to fund your business. This type of loan offers various benefits, such as collateral-free business loans, minimal documents and faster processing times. The process of obtaining myKinara Business Loans can be relatively simple and straightforward. Once the loan is approved, MSMEs will be able to access the capital they need to expand their business, hire new staff, purchase inventory and more within 24-hours.
Kinara Capital is a leading last-mile lending firm that strives to help MSMEs in India to access formal credit and avail fast business loans. Kinara's digital process enables small business owners to check their eligibility in just 1-minute through the myKinara app. MSME entrepreneurs can avail of a collateral-free business loan from ₹1 lakh - ₹30 lakhs with doorstep services in their preferred vernacular language. So, expand your small-scale business with a small business loan and make an impact where it matters! Give a missed call to 080-68264454 to reach our in-house customer care team for more questions.
A small business loan is a type of loan specifically designed for small business owners. It can be used to finance equipment, inventory, and working capital, or to fulfil any other business-related expenses.
To qualify for myKinara Business Loan, you must be registered as an MSME in your respective states. Your minimum monthly turnover should be greater than Rs. 50,000 and less than Rs. 2 crores. Other than this, your business should complete 1+ years if you are into manufacturing and 2+ years if you are into trading or services sectors.
As Kinara’s online document submission speeds up the loan application procedure, the loan amount can get disbursed within 24-hours.
There are various types of MSME loans available in Kinara Capital, such as Asset Purchase Loans, Working Capital Loans and HerVikas Program.
To apply for a Small Business Loan from Kinara Capital, you will need the following documents,
