Small and Medium-Sized Enterprises (SMEs) are a fast-growing industry in India. However, to be successful with your SME, you need to have financial support. An SME loan can help you with that.
What is an SME loan?
Loans for SMEs are available only for small and medium-sized businesses. SMEs have many requirements to run businesses smoothly. These include improving the infrastructure, purchasing equipment, hiring employees, and maintaining a steady cash flow. By getting finance from a trustworthy lender, you will have cash in hand to take care of all the business needs.
SME loan eligibility
The SME loan credit eligibility varies among lenders. Here is a list of the eligibility criteria for SME financing from Mahindra Finance.
- Your SME must be active for at least three years before applying for the loan
- Your SME must operate in sectors like auto ancillaries, food processing, agriculture, and automobiles
- Your SME must show a profit for the previous financial year
- Your SME must have a good credit history
Importance of credit history in getting SME financing
Credit Information Bureau India Limited (CIBIL) is a company that maintains the credit history of individuals and businesses. Depending on their loans and credit card information, the bureau provides a CIBIL or credit score. It is essential to understand the SME Loan CIBIL Score if you want to opt for business financing.
Here is a list of loan-related aspects that depend on having a high credit score:
- Quick approval
Running a business requires strong monetary backing. Although taking a loan might help significantly, getting approval is not always easy. However, if you have a good credit score, banks and non-banking financial institutions can trust you to repay the loan timely. So, the lender will approve your loan request instantly.
- Low-interest rate
If you are looking for affordable SME loan interest rates, a good credit score can help. Lenders decide the interest rate depending on multiple factors, one of which is the business’ credit history. If you have an impressive credit score, you can get a loan at a nominal interest rate.
- High loan limit
Your credit score shows how capable you are of meeting your financial obligations. Hence, if you have a high CIBIL score, it is possible to get a higher loan value.
When looking for SME finance, ensure that you choose a reputed lender. Mahindra Finance offers the loan with a flexible tenure, easy submission of SME loan documents, fast approval, and many other benefits. Visit its website now to apply for a SME loan.