Guide to SME Business Loans in India

financial institution needs them for further verification. They might also ask for
the business model and your previous documents if you already have a business
and your profit and loss account and balance sheet.
Low Interest Rates:
You must also take into consideration while taking the business loan for your
SME the interest rate as this may affect the growth of your business and may
also turn out to be negative for your business. If your business has not got many
turnovers then you must opt for a loan which has got lower interest rate. Also,
the loan a businessman can opt for if the turnover is low is a loan against
property where the property is kept as collateral and the interest rate is low as
10%. This can also be changed by lending a bank overdraft or a cash credit
where the interest rate is at 11-13%. On the other hand when we take into
consideration the personal loan the interest rates go as high as up to 24% if you
have a low credit score in the market. So, you must check the best interest rates
before going to the business loans and opt for the one where the interest rates
are low and there is less risk. Lastly, you should take into account the assets
which are being used as collateral when you are taking the business loan for
your business purposes.
Low Cash Outflow:
Yes! The cash outflow in the business should be kept low initially when the
business loan is taken for the expansion or some other purpose. This is a very
important aspect to be considered. If your cash outflow is higher than your cash
inflow then you must amend it immediately. The only cash flow you can afford
at the moment is the payment of the loan and the interest of the loan. Cash
outflows include the payment of the salaries, bills, rents, maintenance and
dividend and other outflows. For overcoming this problem the best option that
can be adapted is by borrowing the loan from your friends and family at low-