Guide to SME Business Loans in India

interest rates which can be very much beneficial for you and you can maintain
the cash flow. The minimum cash outflow can also be possible by taking
advantage of the bank overdraft service since only the interest needs to be paid
regularly and that too on the amount used. A personal loan, on the other hand,
would result in huge cash outflow which is not advisable for the business.
Low Processing Fees:
The processing fee is taken in the initial moment when the loan is sanctioned by
the bank. Ideally, this thing should be kept low as it results in benefit for us.
Personal loan charges 2% initial processing fees and other loans also charge in
the range of 1-3% as the initial processing fee. There may be additional charges
too as the bank charges other fees too.
Collateral Requirement:
Collateral is an asset which is kept against the loan. Every loan demands
collateral against the loan except for the personal loans and the loan from the
local lenders. The loans need to be backed by the security which should not be
kept at risk. If any contingency happens and you are unable to pay back the loan
then this becomes a point of concern for you as the assets would be confiscated
by the banks. For the risk level to be kept minimum one can opt for gold loans.
Gold loans are available at low interest and can be repaid easily without the fear
of the loss of the asset. The second best option can be the overdraft facility
provided by the bank followed by the bank. Lastly, the requirement should be
given proper importance for the loan as the asset is at risk.
Future Payment Ratios:
You must always take this thing as a priority that whenever you’re taking a loan
for any purpose the ratio of your EMI to your income should not be more than
25% which is normal. This gives you an edge over the banks over the payment
ratios. The payment should be kept properly and without any delay as most