Small and medium enterprises (SMEs) make up over 95% of all businesses in India, surpassing large businesses in manufacturing output and employment generation.
However, when it comes to accessing funds to survive and grow their business, SME owners face a lot of difficulties. According to a 2021 survey by TradeIndia, despite several measures by the government, 83% of Indian SMEs lack access to credit opportunities.
There are currently two ways for a business to access SME lending – SME loan and SME credit card. The SME loan helps small businesses meet their needs, such as purchasing raw materials & machinery, managing cash flows, investing in marketing, or expanding operations.
If you are thinking of taking an SME loan for your business, here is the process for application:
Submit the application
Once you have decided on accessing SME lending and did your research on the lender for the loan, you can directly visit the lender’s website to make the application. Thanks to the rise in digital banking, most banks & other lenders have an online portal for applications.
You will be asked to submit information like your business name, official address, date of establishment, details of other partners (if any), bank account details, existing SME lending instruments, and business registration details.
After furnishing all the details in your application and submitting it, you will be required to upload several personal and business-specific documents. Here are the most common documents required by lenders to process the loan:
- Proof of identity: Voter ID card, passport, PAN Card, driving licence
- Proof of address: Telephone bills, power bill, property tax receipt, passport, voter ID card
- Proof of business address
- Rent agreement, if the business operates from an office on rent
- MSME registration certificate
After the successful SME loan application, you have to wait for a specified time for the loan to be sanctioned. While the sanction times were previously vague, banks must now follow the BCSBI guidelines for SME lending regarding credit decisions.
According to these guidelines, the timelines provided for SME loan applications are as follows:
- Within 2 weeks for applications for a credit limit of up to Rs 5 lakhs
- Within 3 weeks for loan applications for above Rs 5 lakhs and under 25 lakhs
- Within 6 weeks for complete applications for above Rs 25 lakhs
While SME loans can be a huge help for high-value credit requirements, an SME credit card like founderscard is the best option to pay for recurring business expenses and small to medium value requirements.
founderscard is a leading SME credit card in India, providing a high credit limit for small business owners to meet their requirements. It allows up to 51 days of interest-free credit limit, 3x rewards points with hassle-free redemption and a low forex fee of 2% for international transactions.
Interested in getting founderscard for your business? Visit our website today to know more.