Commercial loans are a type of short-term, collateral-free, or secured funding. These loans are customized for SMEs, and it is usually obtained to buy raw materials, purchase machinery, or upgrade the existing machinery. Businesses can even finance large-scale expenses and back operational costs with this type of loan.
Lack of finances is among the significant challenges faced by small and medium enterprises in India. These businesses work with a considerably smaller investment as compared to their large-scale counterparts, leaving them with limited resources to finance their expansion.
Along with several funding institutes, NBFCs also provide commercial loans to enterprises and start-ups across the country. These institutions generally grant a considerable amount of money as well as many additional perks and features that let an enterprise make use of the finances appropriately.
How Can Commercial Loans Benefit A Business?
Commercial loans provide an alternate source of funds for enterprises that don’t wish to strain their working capital for making pricey acquisitions. The extra money can aid you in organizing your enterprise, enhance the superiority of the manufactured products, or even tap into business domains that will thrive in the upcoming years. Continue reading to know the benefits of commercial loans.
Collateral-free
Commercial loans can be available in secured or collateral-free sort of funding. This unsecured option lets off a borrower to assure any business or personal possession to be eligible for a commercial loan. It lets them focus on their business operations without having to be anxious about a default.
Large financing option
Funding institutes usually provide a significant amount as commercial loans for enterprises. This amount can be up to 30 lakhs INR. Such an amount gives sufficient investment to spend on a revamp of essential machinery and support business expansion.
Attractive rates of interest
The rates of interest on commercial loans are generally based on the kind of credit a borrower decides to obtain. For instance, the rate of interest of collateral-free commercial loans is usually greater than secured advances. It is because of the higher possibility of reimbursement issues entailed in a collateral-free loan.
What Is The Eligibility Criteria For A Commercial Loan?
It is pretty easy and straightforward to apply for a commercial loan. It is due to its easy to comply with eligibility criteria. If you are looking to apply for a commercial loan, you must make sure that you are at least 25 years of age and hold a business that has existed for a minimum of 3 years. In addition, the business must have its IT previous years’ correctly filled and other essential documents such as business permit, KYC, etc.
Commercial loans can act as a steady financial backbone to depend on throughout the growing phase of the enterprise. This is all because of its considerable loan amounts and affordable rate of interest. This type of business loan in Mumbai can be the right funding tool for elevating your enterprise.
What Is an MSME Loan?
An MSME loan is a collateral-free business loan that many funding institutes provide to meet several business-associated expenditures on credit. Micro Small and medium-sized enterprises can avail of this loan for their expansion. It would also involve acquiring equipment, machinery, or raw materials, paying rent, paying the employees, and managing cash flow. Based on the type of your business, you can be benefitted from this loan.
Such loans are granted to borrowers in small-scale enterprises like private limited companies, partnership firms, and sole proprietorship firms. The term of an MSME loan is for a maximum of 15 years.
Documents Needed For MSME Loan Registration
MSME loan registration is a necessary procedure for any business to start and function in the country legitimately. There is no fee for MSME loan registration, and it is characterized under two categories: services enterprises and manufacturing enterprises.
Here is a list of documents needed for MSME loan registration:
- Bank account statements of last six months
- Business PAN card
- Completed application form
- Income proof
- Lease contract
- Business Establishment Certificate
- Bank details
- KYC documents, counting Aadhar card, electricity bills, passport, voter ID, driving license.
