A little while back, the sector of Small and Medium Enterprises has witnessed an average growth rate of 18% – 34% per year*. In today’s date, apparently 48mn SMEs exist across India. This sector is key to India’s growth rate. Most of the SMEs are startup in nature whose founding members infuse their own money to bring the company on ground. Although in trying times, they seek help from banks and other financial institutions for additional support. Here’s a sneak peek at SME Business Loan in India and tips to avail it in the lowest interest rate.

*Source: KPMG’s report in an article about the impact of e-Commerce on SMEs

What does SME Loan stand for? Full Form and Meaning

SME loan meaning – SME is better known as Small and Medium Enterprises. As per Section 7 of Micro, Small & Medium Enterprises Development Act – 2006, the definition of SME in India depends on the investment amount according to the sectors they cater to.

The classification –

Company TypeSmall EnterpriseMedium Enterprise
Investment RangeBetween Rs. 1 crore to
Rs. 10 crore
Between Rs. 10 crore to
Rs. 20 crore
Turnover RangeBetween Rs. 5 crore to
Rs. 50 crore
Between Rs. 50 crore to
Rs. 100 crore

What is an SME business loan?

An SME business loan is a financial solution especially designed for the small and medium sized Enterprises in India in order to cushion their monetary requirements for business. These kinds of loans are granted by various kinds of money lenders. An SME business loan could come with or without security. The secured one is granted with collateral. On the contrary, an unsecured SME loan for business comes without security.

There are various types of SME loan such as term loan, capital loan, Flexi loan, and Machinery Loan. A Machinery Loan is a type of financing where you borrow money to purchase and install new or used equipment. A machine-loan can be helpful if your company needs more machines but doesn’t have the cash on hand, which is usually needed for this kind of investment so that customers continue coming in while waiting out their own turnaround. Machinery loans are often given at low rates because they offer lots of collateral–in other words: If something goes wrong with the project, then it’s possible to repossess all these expensive items (machines) from you without having lost too much capital first!

Every loan lender has varied eligibility criteria, necessary document check, and interest rate. The eligibility criteria, documents requirement and check remains the same for every borrower but the SME loan interest rates may vary from one borrower to the other, subjected to few factors.

You can avail an SME business loan at the lowest interest rate by adhering to the following tips:

  1. The loan lenders generally grant the SME loan to business owners who have a high credit score. So, by improving your credit score you can get a SME business loan at a lower interest rate.
  2. You can score better in the eyes of money lenders, in case you have paid your previous debts on time. So, try to make the pay-offs within the said time.

Since we understand your challenges better, we aspire to bring financial solutions that make us your preferred financial partner. Should you be in need of a smart financing option like a personal loan and match our transparent eligibility criteria, Money View is there to support you with the money in 24 hrs of approval.

Author Bio: Surya Patra is a qualified webmaster by profession and Marathon Runner/Cyclist by passion with more than 6+ years of expertise in the financial domain. Surya is also an entrepreneur, enthusiastic in storytelling, content writing, and digital marketing professional.