When a group or individual begins with a new business, they require a specific amount of capital for financing the initial needs. Credit or capital can be simply raised through distinct ways like personal finances, family and friends, investment from entities, etc. But all such ways come with their own set of restrictions. While the investor may be interested in a considerable business portion and may expect the return in a specific time and your personal finances may deplete at a faster degree, making you financially insecure, impacting your business growth and performance. Instead, a business loan from SBI E Mudra Loan or any other lender is the prudent instrument for consistent and secure business funding.
Lenders of business loans are institutional investors with accurate ideas about the potential of your business and the required extent. Their need depends on the loan repayment tenure and not on the nature or mechanism of business. Owing to their hassle-free liquidity and flexible repayment tenure, such business loans must be availed.
Business loan types
There are numerous business loan types, which cater to distinct sets of needs. Seekers of loans must know about different business loan types available in the lending market. This insight will help them to make an informed decision when availing of business loans.
- Term loans: Term loans’ tenure are usually shorter in duration. Also, they can be availed when the consumer buys or forms assets or space for a short period.
- Project financing: They are long term loans leveraged to sustain or acquire huge assets like industrial goods, machinery, infrastructure, real estate projects, etc. The average repayment tenure for such business loans is ten to fifteen years.
- Balloon loan: Manifestation of the term loan, balloon loan come with a feature through which the applicant can pay just the interest amount during loan tenure, and the principal can be returned towards the end of the repayment tenure.
- Working capital loan or cash credit: All businesses come with a working capital cycle, which begins from acquiring raw material to finished product delivery. The cycle might be capital intensive, wherein business owners might require few credits. Cash credit working capital loan options are formed for such requirements and are secured against the account receivables and assets.
Eligibility criteria of business loan
Like many of the factors, the eligibility criteria of business loans differ from lender to lender. However, there is always an overarching layer of generic requirements like age criteria, which ranges anywhere between 18 and 70 years, minimal annual turnover of 25 lakh or above, declaration of the existing credit-linked obligations, over 700 credit score, permanent residence proof etc.
Importance of approaching a good creditor
Good SME (Small and Medium Enterprise loan) is the one where rates are low; repayment tenure is flexible, liquidity is instant, documentation is minimal and hassle-free. Such features serve as a fundamental framework via which the applicant can assess the business loan, and they massively depend on the chosen creditor. Distinct SME loan creditors, may it be NBFCs, or banks have a distinct set of regulations for opting for a loan. The best creditor is the one whose offering aligns synchronously with the requirement and eligibility of the customer.
SBI E Mudra Loan
Research reveals MSME loan provided by SBI stands steadfast against the mentioned framework. In reference to the question of the degree of alignment of offerings is concerned, the customizable loan provided by SBI E Mudra Loan is one of the best kinds of business loans. The applicant can simply state the requirements and agile loan disbursal procedure, and the feature will ensure all the needs are met on time in a smooth manner.
SBI (State Bank of India) Mudra loan is the loan provided to the individual and MSMEs (Micro, Small & Medium Enterprises) as per the guidance of MUDRA (Micro Unit Development & Refinance Agency). As per the MUDRA scheme, the State Bank of India provides funding support of around Rs 10 lakh to the individuals and SMEs (Small & Medium-sized enterprise) sector units. MUDRA loans from the State Bank of India are provided at competitive rates with low processing charges or nil charges, along with flexible EMI options.
SBI Mudra loan can be utilized for meeting different business needs like buying the raw materials, meeting working capital requirements, stocking up inventory, paying rent, purchasing machinery and plant for business expansion and meeting different other business linked purposes. SBI Mudra loans are provided to the MSMEs, individuals, businesses and enterprises engaged just in manufacturing, services, and trading sectors.
| SBI Mudra Loan Interest Rate & Features | |
| Interest Rate | 9.75 percent onwards |
| Eligibility Criteria | New and existing units |
| Loan Amount | Up to Rs 10 lakh (Loan up to Rs 50,000 are categorized as Shishu, loans between Rs 50,001 and Rs 5 lakh are categorized as Kishore and loans of over 5 lakhs to Rs 10 lakh are categorized as Tarun) |
| Margin | Up to Rs 50,000: Nil, and Rs 50,001 to Rs 10 lakh: 10 percent |
| Processing charges | Nil for Kishore and Shishu to MSE units
For Tarun: 0.50 percent (plus applicable tax) of the loan amount |
| Repayment tenure | Working capital/term loan in 3 to 5 years involves a moratorium of up to six months based on the activity or income generation. Working capital/ term loan is performed annually. |
| Target group | Business enterprise in trading, manufacturing, and service sector involving allied agricultural activities. |
| Purpose | Capacity expansion, business purpose and modernization |
| Type of facility | The term loan and working capital |
How can you apply for an SBI mudra loan?
Existing consumers sharing the relation with SBI in the form of a current account or savings account can apply for the e mudra loan of the amount up to Rs 1 lakh by approaching the SBI e mudra platform and following the listed steps:
Measure 1: Select the application of Pradhan Mantri Mudra Yojana from the drop-down menu.
Measure 2: Visit the official website of SBI https://emudra.sbi.co.in:8044/emudra and select the proceed option.
Measure 3: Provide the details like Aadhar card for the eKYC via UIDAI, as the e sign and e KYC are required to be completed via OTP authentication for loan disbursement and processing.
Measure 4: Once the formalities for SBI and the loan process is done, the applicant will get an SMS that will initiate the further procedure by revisiting the portal of e MUDRA.
Measure 5: The process requires to be done within thirty days after receipt of SMS of loan sanction is sent.
