Make Your Goals A Reality With Business Expansion Loan
India is a land of possibilities. It has more than 76 million registered entrepreneurs. More than 28000 micro-enterprises and 3500+ small enterprises registered with the Udyam portal, under the aegis of the Ministry of Micro, Small, and Medium Enterprises (MSME) have upgraded to small and medium businesses, respectively, till the financial year ended on March 31st, 2022.
This is the farsighted vision of Indian think tanks that we are emerging as one of the best venues for ease of business. Indian government schemes such as the “Udyog Aadhaar Memorandum (UAM),” “Atamnirbhar Bharat,” and “Production Linked Incentive (PLI) Schemes” etc. have been the critical driving force behind business expansions. Registration under UAM provides many financial benefits to small and medium businesses. Availing of a collateral-free, instant business expansion loan becomes convenient, along with many tax advantages. Let us take a deep dive into the small business growth loan available in India.
Types of Business Expansion Loan in India
A business expansion loan may be desired for a variety of purposes. These requirements are classified into the following four categories:
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1. Term Loans
Term loans are the most popular kind of business expansion loan, where you can avail of a lump sum amount for a customized tenure. You can utilize the amount for any legal activity necessary for business scale-up.
2. Line of Credit
It is an arrangement where your requested loan amount is disbursed. However, you can utilize it in parts as and when needed. Thus, you pay interest only on the amount that you withdraw.
3. Equipment Financing
This kind of loan is granted explicitly for equipment purchasing. It is easier to qualify for as the purchased equipment can serve as collateral.
4. Invoice Financing
Invoice financing allows business operations to avail of loans on the invoices or accounts receivables. Thus, businesses can carry out their scale-up plans with the borrowed money instead of waiting for the payments to be fully cleared.
Small Business Expansion Loan
Depending upon the size of your business, you can avail of an instant, collateral-free term loan for business expansion. Size here refers to the capital investment and the annual turnover. Any manufacturing and service enterprise having a capital investment of less than Rs 4 crore and an annual turnover which is less than Rs 40 crore qualifies as a small-scale business, according to the Ministry of Corporate Affairs, Government of India.
Small businesses are capable of many-fold growth; however, they lack adequate resources. Most small businesses need financial aid to grow their scale of operation. A business expansion loan may be utilized for expanding your customer base, inventory, equipment, land, workforce, digitization, etc.
L&T Finance (LTF) is a trusted name that has been disbursing loans for small businesses in India with transparency and ease for over a decade. You can instantly avail of an unsecured loan of up to 50 Lakhs for a maximum tenure of 60 months with a carefully curated business proposal.
You can easily customize your loan EMI and tenure using an online EMI calculator based on your profit projections. In addition, our interest rates starting from 15.5%, are the best in the industry giving you a competitive edge over your peers.
Additionally, LTF charges minimum processing and pre-payment charges of up to 2% (+GST) of the principal loan amount. Additionally, our bounce charges are minimum (Rs. 500/- per bounce) in an unfortunate event of a missed EMI payment. Such other charges can contribute significantly to the total loan amount and often gets unnoticed while applying for a business growth loan.
Once you have crosschecked your eligibility for a small business expansion loan, you must collect the documents required for submission. You need to submit your self-attested Pan Card, Aadhaar Card, GST registration, and Property documents like an electricity bill, tax receipts, or rent agreement in the name of the proprietor or the business. In the case of a partnership firm, you will additionally need to attach a registered partnership deed by a competent authority.
Thereafter, you will need to submit eligible income proof. These include the last 2 years’ filed income tax returns, profit and loss statements, and audited balance sheets by a registered chartered accountant. Additionally, you will need to submit proof of filed GST returns and current bank account statements. The documents should be error-free to ensure a speedy application process.
A carefully prepared business expansion loan proposal strengthens your application. A business plan is a document providing details of your business and your goals for expansion. It is a step-by-step guide on how and where you expect to spend the borrowed money for the lender.
Based on your proposal, the lender quantifies the earning potential of your expansion plan. The feasibility of your proposal also ensures the lender’s trust in loan recovery from your end. Needless to say, a business proposal is the most important document of your loan application. Most lenders have their Performa for a business plan to ensure you check their eligibility criteria. It is a good practice to invest considerable time and thought in formalizing your expansion plan document.
With the government’s increasing focus on strengthening micro, small, and medium enterprises, we have seen a surge in business expansion loan applications. This is a welcoming change as a country’s GDP and the growth of job creators measure progress. LTF has been a pioneer lender for business expansion loans under its flagship SME program. Availing of a business loan has never been so convenient, instant, and transparent.