New Delhi, March 25,2025: MSMEs need capital for operational purposes and expansion, where Indian business owners have access to different sources of loans. Banks provide conventional loan products, and NBFCs can offer more accommodating terms. Government schemes focus on MSME financing support, and online lenders provide instant, digital loans. MSMEs use these loans to buy equipment, increase business activities, or cover daily expenses, which helps the business to grow.
Types of Business Loans in India
Term loans are the most common business loans. Banks and financial institutions provide these loans for a specified duration. Entrepreneurs repay the loan in installments called EMI. Term loans are either short-term (maximum 3 years) or long-term (maximum 10 years). Such loans are suitable for business expansion, buying equipment, or increasing to meet everyday expenses.
2. Working Capital Loans
MSMEs need money to meet recurring expenditures like paying wages, buying raw materials, and renting premises. MSME loans help firms maintain these costs within limits. These loans are typically short-term and assist in ensuring smooth operations.
3. MSME Loans
The Indian government provides loans to Micro, Small, and Medium Enterprises (MSMEs). Some of the schemes provided by the government to small businesses are the Mudra Loan Scheme, Credit Guarantee Fund Scheme, and Stand-Up India. All these loans have simple repayment terms and are provided with lower interest rates. These loans are also provided by Banks, NBFCs, and other online lenders who will also support by providing business loan for women for women entrepreneurs.
4. Machinery Loans
MSMEs that have to buy or replace equipment can apply for machinery loans. These loans are meant for manufacturing companies, construction companies, and other heavy machinery-using industrial sectors and manufacturing units.
5. Invoice Financing
At times, companies sell goods or services on credit. They require cash before customers pay bills. Invoice financing allows MSMEs to take a loan against outstanding invoices. It supports cash flow and manages the business fund flow.
6. Business Credit Cards
Business credit cards provide instant funds for small expenses. They work like personal credit cards but are designed for businesses. Business owners can use them for travel, office supplies, and emergency expenses. Many business credit cards offer rewards and cashback on transactions.
7. Overdraft Facility
Banks provide an overdraft facility to business account holders. It enables businesses to withdraw money that is more than what they have in their account. The bank charges interest only on the excess amount utilized. Overdraft is helpful to MSMEs in managing short-term cash fulfillment.
8. Government Schemes
Indian startups can avail themselves of several government schemes. Startup India, Pradhan Mantri Mudra Yojana (PMMY), and SIDBI loan schemes give new enterprises financial assistance. New enterprises are assisted with these loans at low interest and long repayment terms.
How to Get a Business Loan Online?
Getting a business loan online is easy and quick. The steps in applying for a business loan online are as follows:
1. Select the Proper Type of Loan
To begin with, select the kind of loan best suited for your business requirements. If you require funds to fill the gap of delay of payments from customers, then select an invoice financing loan. If you wish to purchase machinery, opt for a machinery loan.
2. Compare Financial Institutions
Various financial institutions and banks provide business loans with varying rates of interest and terms of loans. Compare different financial institutions and select the one offering the most favorable terms.
3. Verify Eligibility
Each lender follows varying eligibility requirements. Some common requirements are:
-The business must be more than 1 year old.
-The owner of the business must possess a good credit history (typically ranging over 650).
– The business must have a minimum turnover per year.
– The MSME should be registered.
4. Collect Required Documents
Get the required documents ready before applying. Some common documents are:
– Registration certificate of the business
– PAN and Aadhaar card of the owner
– Bank statements for the last 6-12 months
– Income Tax Returns (ITR)
– Financial statements of the business
5. Apply Online
Visit the website of the bank or lender, click the apply now option to apply for a loan, and complete the loan application form online. Upload the documents one by one if the option is available. Some lenders provide instant approval and disbursal in a few hours digitally, and some lender’s sales officers can get in touch with you.
6. Wait for Approval
The lender will check the documents after submitting the application. If all the documents meet the lender’s eligibility criteria, the loan will get approved. Some loans are collateral (security) based, and some are unsecured.
7. Receive Loan Amount
When it is approved, the loan amount will get credited into your business account. You may utilize it towards your business requirement and begin paying back as EMIs on the given dates according to the terms.
Conclusion
A business loan may enable the MSME to expand and handle financial problems. There are various forms of business loans available in India, such as term loans, working capital loans, MSME loans, government schemes, etc. MSMEs may borrow money online by selecting the correct lender, verifying eligibility, and providing necessary documents. By selecting the optimal loan option, firms may fulfill their financial objectives and become successful players in the competitive market.
MSMEs can also opt for loans from NBFCs, which offer quick processing and easy eligibility. Most of the NBFCs offer business loans via online application which is a convenient way to obtain funds quickly. They guide MSMEs and support them in case they are stuck in the process of the online application, and help them to get the business loans without any hassle.
