Getting an SME loan is the easiest way of managing the finance of your small or medium-sized business. To get SME finance, you need to meet specific criteria. Read on to learn more.
SME loan and eligibility
SME finance is a blessing for every small business. It allows you to run your enterprise smoothly and further improve its productivity. You can use the loan amount to buy new equipment, hire people, and ensure that the SME is not struggling due to a lack of funds.
However, before applying for such a loan, you must learn about the SME loan credit eligibility criteria. While the parameters differ among lenders, you need to meet certain expectations. Here is a list of the Mahindra Finance loan eligibility norms:
- You must use collaterals to secure the loan
- Your SME has to be active for at least three years
- You must run an SME that operates in automobiles, agricultural, auto ancillaries, or food- processing sector
- You can get funding for automobile Original Equipment Manufacturer (OEM) SME for financing inventories only if you are already well-known
- Your SME must have made a profit in the previous financial year
While applying for financial assistance, you must submit these SME loan documents:
- Collateral offered
- Balance sheets for last three years
- Know Your Client (KYC) documents along with your profile
- Business profile stating your current products
- Purpose of the loan
What you can use as collaterals
SME loan collaterals are securities that you can offer the lender to be eligible for business financing. Lending is a risk-oriented business, as it comes with the possibility of default. This is why banks and non-banking financial institutions offer you loans in exchange for specific securities to lower their risk-quotient. Collaterals allow you to get more affordable loans.
The assets that you can use as collaterals include:
- Real estate property
- Plant and machinery
- Fixed deposits
- Deposit certificates
- Cash equivalents like gold
- State and Central Government-issued securities
- National Savings Certificate (NSC)
- Kisan Vikas Patra (KVP)
The loan amount depends on multiple factors like your requirements, cash flow, and debt metrics. The maximum limit of SME finance relies on the current market value of your collateral. Lenders offer the highest amount of loans when you use a residential property as security.
When deciding on a lender for your SME financing, opt for the one that offers more flexibility. With Mahindra Finance, you get economical SME loan interest rates, multiple tenure choices, fast approval, and a variety of collateral options. Visit the financial institution’s website to apply for the loan.