Finance

How SMEs Can Raise Finance for Growth

Small business owners have a lot of requirement when it comes to raising funds for business because they do not have a lot of cash reserve by themselves. SMEs are Small and Medium loan schemes that are perfect for raising money for a small business and can help in covering all the important aspects that are required for them to grow. In fact, now there are many government policies and schemes in place that are encouraging financers to provide SMEs to small businesses and this has resulted in their growth, especially in the semi- rural areas of India.

Here is How SME Loan can be Used to Raise Finance:

  • Various types of Loans: Not all business requirements are the same and the nature of loan required by one business is very much different from that of another. There are government schemes like CGTMSE where small and mid- sized companies can apply for SME loans without collateral or security to avail these loans and many new entrepreneurs have been able to realize their dreams.
  • Convenient Repayment: For small and medium businesses, it is not always possible to make an immediate profit and they cannot pay off the money of their business loans at the very beginning. Hence, there are many banks and NBFCs like Bajaj Finserv which have very convenient repayment options on SME finance and they are fixed in keeping with the complexities that a new business might go through. The repayment options are fixed upon based on the cash flow of the business and thanks to periodic loan repayment facilities, the borrower can pay off the money gradually and the creditor gets back his money eventually. In the mean time, the small or medium business is up and running smoothly.
  • Lower interest rates: SME loans India are convenient for small and medium businesses because they offer very low rates of interest and it makes it easier for the businessmen to finance their venture without feeling burdened or pressurized by the loan. In fact, rather than becoming a liability, the loan becomes a stepping stone to success as the reasonable business loan interest rate are quite easy to pay off in the long run once the company starts to make a profit. It becomes easier for the businessman to have good repayment option in place and they can pay off the loan without affecting the credit score in any way. Moreover, with flexi- loan facilities from NBFCs like Bajaj Finserv, the loan can be repaid according to convenience over time and some lenders also have interest only repayment options, with the principal repayable at the end of the tenure.
  • Business Expansion: Thanks to SME loans, it now possible to expand one’s business more conveniently than ever before. The small business loans can be utilized not just for setting up a business, but also to expand and upgrade one’s business after a point of time. The money can be used for renting new premises, buy new and advanced equipments, buying better quality of raw materials, hiring more skilled labor, invest in a marketing strategy and to carry on the day to day operations in a more efficient manner, which will eventually result in the growth of the company in the long run.

Tax Exemptions: An SME can be used to save taxes because there are specific sections in the IT Act that allows exemptions to small business owners under specific circumstances. The IT Act states that the percentage of profit that is utilized for paying off the loan is exempted from tax and the small businesses actually make money till the loan is repaid. Tax exemptions are definitely a huge boost for small companies because they look forward to utilizing the profit next year for the betterment of their business.

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