Here is Why Every Business Should Consider The Option of SME Finance

Needless to say, SMEs or small and medium-sized businesses play an indispensable role in the economic development of a country. As from ensuring employment generation to increasing production, and contributing to exports, they undoubtedly act as major support for the economy. However, they have their own set of challenges that often hinder their growth. One such widely experienced issue is lack of readily available funds as unlike large corporates, SMEs fail to arrange the required funding through the conventional lending system.

However, to cater to the needs of small businesses without burying them under any financial stress, there are many lending institutions that now provide highly flexible SME finance. This is a credit facility offered to all the small and medium-sized businesses for their long-term growth or expansion requirements. Since these loans are designed specifically for small businesses, they are provided at a low rate of interest to make it easier for them to pay back the loan amount. While applying for the loan, you must keep the points listed below in mind.

• Before applying for an SME loan, it is important for the borrower to make sure that his/her business is recognized as an SME, as this acts as a deciding factor for the approval process.

• You have to first decide the amount of loan you require and then look for a lender accordingly, as every lender may offer you a different loan amount. In addition, if you need a higher loan amount, then you must maintain a positive credit score in order to gain the trust of the lender, otherwise your application may get rejected.

• Your businesses must reflect at least two years of existence, signs of profitability and must have all the documents to verify the same.

Few advantages of SME loans that can help you make an informed decision

• Collateral-free funding - The most important advantage of taking SME finance is that it is provided without demanding any collateral. Hence, you are not forced to submit any property papers or a business asset to raise the funds. All you require is a basic set of documents and a positive credit score to seek the approval.

• Flexible repayment tenure - The loan amount that you take actually decides the tenure for which you will be offered the loan. However, mostly the lenders offer them for a period ranging from a month to three years. In fact, the borrowers are also provided flexibility in terms of the way they can set the repayment cycle as the lender may allow you to make weekly, monthly or bi-monthly payments, depending on your income structure.

• Alluring interest rate - Since these loan plans are decided specifically for small businesses, the lenders make sure to offer an affordable rate of interest, so that the borrowers can make the best use of the loan, while smoothly making the repayments.

Conclusion

For every small and medium-sized business, SME finance has undoubtedly open various opportunities with its flexible set of eligibility and repayment conditions. This collateral-free funding options allows you to take your business to greater heights, without putting yourself under any heavy financial liability and stress associated with it. You just have to select a reliable lender with favourable terms and conditions in order to avoid any regrets later on.

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