May 28, 2024

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Easy Steps to get Capital Finance in India

business finance

In a country like India, where there are millions employed in MSME businesses, funding plays an important deciding role in the future of these businesses. Small and medium-sized MSME businesses need funds on a regular basis to carry on with their operational needs like procuring raw materials, production costs, payment of salaries and debts. A lot of times these businesses face financial issues due to a shortage of working capital, these situations can put the future of these businesses at risk and hinder their growth. 

Luckily, there are a lot of options available today to get capital finance for business owners to fund their working capital. Let’s have a look at some of the ways in which business owners can business finance:

  1. Business Loan from Private Lenders: Getting business loans from third-party lenders is still one of the most popular options to avail capital finance in India. This is because these lenders give loans without much documentation. While these loans can be both collateral-based or collateral-free, the high-interest rates on these loans make them a big liability for the business owners and it becomes a big financial headache for them. 
  1. Loan from Family: This is another popular method of availing of business finance in the country. Taking loans from family members while allowing for low-interest rates and easy repayment terms with no eligibility criteria or documentation, usually doesn’t allow business owners to raise large amounts of capital, and is usually suitable for micro or cottage industries. 
  1. Loans from Banks & Financial Institutions: Banks and financial institutions such as NBFCs and MFI are the best options for taking business finance as they offer better terms and flexibility along with the option to avail loans without any collateral. These loans allow business owners to continue running their business operations and focus on growing their business. These factors make working capital loans an efficient method of capital finance for small business owners. However, to avail of these loans, business owners need to meet a few eligibility criteria, let’s have a quick look at some of them: 

– Business owners taking the loan must be between the age of 25-65 years

– Business owners taking the loan must be a citizen of India

– The business for which the loan is being taken should be operational for a period of a minimum of three years

– Proof of ownership such as registration documents of the business must be with the business owners

The above-mentioned eligibility criteria are the general eligibility parameters and they might differ from lender to lender. Hence, it is important to go through the required eligibility criteria of the lender of their choice and make sure that the business owner who needs a loan meets all of them to avoid rejection.

Another important thing to keep in mind before availing of these loans is to make sure they have calculated their required working capital the right way, and have the financial ability to pay the installments on the loan taken without hurting the operations and growth of the business.

Financial institutions like Bajaj Finserv offer collateral-free business loans of up to Rs. 45 lakhs at attractive rates of interest. Since these loans are offered for a flexible tenor of up to 84 months, the monthly installments don’t become a financial burden for business owners.