If you want to start a business but do not have enough funds, you can take a business loan or machinery loan from a bank or any non-banking organization. The interest rate charged by the bank will rely on the loan amount obtained by you and the reimbursement term.
In India, there are over 39000 start-up businesses that have a reach to lots of private equity and debt funding alternatives. But, it can be tough to get finance while the business is only an idea or is in the initial stage. In addition, the MSME subdivision in the country has limited reach to formal credit. That’s the reason why the Government chose to roll out loan schemes for start-up businesses and micro small and medium enterprises.
SIDBI or Small Industries Development Bank of India has too started providing funds to start-up businesses and MSMEs directly instead of channelizing it via banks.
The rates of interest on the funds are lower as compared to one provided by banks by nearly 300 basis points. Here are a few of the most prominent business loan schemes for MSMEs and start-up businesses in India.
Sustainable Finance Scheme
Regulated by SIDBI, the Sustainable Finance Scheme aims at providing finances to sectors that deal in renewable energy, non-renewable energy, green energy, and technology hardware. This scheme was initiated with an objective to give backing to the whole value chain of energy efficiency, and sustainable development ventures.
Credit Guarantee Scheme
The Micro Small and Medium Enterprises entailed in service or manufacturing activities qualify to apply for a loan under this scheme. Under this scheme, the applicant can acquire a loan of up to 2 Crore INR. Also, the trust fund provides credit guarantees to financial institutes that offer financing to MSMEs. To repay the loan under this scheme, the borrow needs to pay an added guarantee CGTMSE fee and service charge.
Bank Credit Facilitation Scheme
The prime objective of the Bank Credit Facilitation Scheme is to comply with the credit requirements of the MSME entities. This scheme is regulated by the National Small Industries Corporation. Also, the organization has united with many banks to offer financing to MSME entities. This scheme has a reimbursement term ranging between 5 and 7 years. In certain instances, the term period can be extended up to 11 years.
Stand up India
The Standup India program was introduced in April 2016. This scheme is also regulated by SIDBI. One can avail a loan amount between10 lakh and 1 Crore INR under the Standup India scheme. It mainly aims at the enterprises involved in trading, manufacturing, or service.
Pradhan Mantri Mudra Yojana Scheme
PMMY was introduced in 2015, and it is regulated by Mudra. The objective of this scheme is to provide finances to every type of trading, service, and manufacturing subdivision activity. Shopkeepers, machine operators, artisans, vegetable sellers, etc., all are eligible to apply for a Mudra loan.
What are the documents needed to apply for a machinery loan?
In order to apply for a loan to buy machinery, you will need:
- Income proof
- Bank statement of the last 12 months
- Completed application form with recent passport-sized photos
- ID proofs like Aadhar, PAN card, Voter ID, Driving License, or passport
- Residential proof, counting telephone bill, water bill, and electricity bill.
Applying for a Machinery Loan
You can apply for this type of loan both offline and online
- To apply for a machinery loan offline, you need to visit the nearby bank or financial institute in person.
- You must take all the essential documents with you.
- Once you submit the application form and required documents, the official of the bank will continue with the loan procedure.
- After the acceptance of the required documents, the bank will approve the loan and pay out the loan amount in a few working days.
- Firstly, you have to go to the official site of the bank or loan provider.
- Then, you have to fill up and submit the application form online.
- Gather all the necessary documents or certificates and submit them with your recent photos.
- Once you have submitted the documents, the bank official will get in touch with you to advance the loan process.
- Bank will approve the loan in defined working days if the documents and application are accepted.
- Following the loan approval, the amount will be transferred to the bank account you have mentioned during the application process.