In most developing nations, Small and Medium-sized enterprises (SMEs) make up the vast majority of businesses globally and are critical contributors to employment creation and global economic development. They account for around 90% of enterprises and more than half of all jobs around the globe. In emerging economies, formal SMEs account for up to 40% of national income (GDP).
SMEs account for seven out of ten jobs in emerging markets, making working capital finance a top priority for many governments around the world. Access to capital is a major stumbling block to SME expansion in emerging markets and developing countries, ranking as the second most cited barrier.
Small and Medium enterprises have a variety of business demands, including purchasing inventory, paying staff, paying dues, and so on. At this juncture, business loans emerge to be the best possible bet for these businesses.
SME loans are typically granted on a short-term basis to expand business and manage day-to-day expenses.
Getting a loan from a traditional lender can be time-consuming. Approvals can be difficult to come by, and money is only released after weeks of waiting. Delays like these can lead to major work flow disruptions for SMEs.
Traditional banking institutions’ lengthy processes and stringent eligibility standards make business financing extremely difficult.
This is the point where Oxyzo makes things easy for SME financing.
With specialized loan solutions for SMEs, Oxyzo is offering financial products that assist the businesses with constant growth. Working capital finance requirements are fulfilled in a jiffy.
With Secured Loans, you are required to provide sufficient collateral or a guarantee from the bank. You might not get a secured business loan if your company doesn’t have much in the way of assets. You should go for secured loans for the low interest rates. With a consistent income, considerable assets, and a strong credit history, secured loans should be the choice for your business. Secured loans typically provide more favourable repayment terms, allowing borrowers to spread their payments out over a longer time.
Unsecured or collateral-free loans, up to ₹ 5 crores, can be obtained with no hassle in almost 3 days with help from Oxyzo’s frequent service. There are certain outlooks attached to an unsecured bank loan–
- Unsecured loans don’t need the borrower to put up any collateral as a guarantee to the lender. Borrowers who take out unsecured loans don’t have to worry about losing their assets if they miss a payment or fail. When one chooses unsecured loans, the risk of losing assets is eliminated. This is especially helpful for small business owners who are strapped for cash and can’t afford to put up pricey assets as collateral.
- Most unsecured loan providers provide flexible repayment choices. For many reasons, such as irregular client payment schedules or outstanding invoices, SMEs may find it difficult to meet the early monthly repayment due dates applicable to most secured loans. Unsecured loans provide some repayment flexibility, making them perfect for a variety of situations.
Also Read:- Term Loans: Things to Check While Applying for It
SME financing is commonly used by small enterprises to fund their operations. They could use the loan to buy equipment, a commercial vehicle, market their firm, raw materials, or handle day-to-day operations. Established enterprises typically take out business loans to fund expansion, growth, or diversification.
When applying for a SME loan, one should have done some preliminary research into the sort of loan, the amount needed, the eligibility requirements, and so on.
The following steps are frequently included in the procedure:
1. Detailed description of the company and the loan’s purpose.
2. Supporting documents to prove the value of your business concept or establishment.
3. Brief description of the benefits you intend to get from the loan.
4. Completion of the application form as soon as possible
In most institutions, getting a SME loan is a simple process. It would be processed faster, and the monies disbursed to your account if you have sufficient paperwork to justify the purpose of your loan. While processing your SME loan, NBFCs like Oxyzo look at a few eligibility factors.
- What is the firm’s status? Is it a proprietorship–Sole proprietorship or partnership?
- It is checked upon whether the interests are as a private limited company or a public limited company, which depends heavily on the holdings.
- Existing business profitability — a two-year or longer period of consistent profits is important to estimate the viability of the business.
- New business monetization elements are an important factor for loan clearance duty.
- Under government regulations, the SME must be registered and recognized for loan clarification.
The above elements assist NBFCs in determining the creditworthiness of a firm and, as a result, the loan approval.
