Explain: 5 Reasons Why you Need a Small Business Loan in India

Small Business Loans

With the advent of small business loans in India, small business owners are now able to meet their business requirements without putting any burden on their cash reserves. Getting a loan enables them to maintain a steady cash flow even during times such as the COVID-19. So, if you also need funds to ensure the continuation of your business operations and boost profitability, a small business loan can take care of it for you. 

Small business loan in India? 

A small business loan in India is an unsecured type of loan provided by banks and non-banking financial companies. It especially helps startups, small business owners, and women entrepreneurs to cater to their small business needs and manage their finances without pledging their assets as collateral. Most lenders offer up to Rs. 50,00,000/- as a loan. With affordable interest rates and flexible repayment options, making timely repayments is easy and convenient.  

It is worth noting that the interest rate and loan amount depend on factors, such as income, business profile, business history, etc. Whether you are running a salon, medical store, or kirana shop, a small business loan in India can reduce your financial burden in times of cash crunches.  

Reasons to opt for a small business loan in India

A small business loan comes with several benefits helpful in meeting your business requirements. With access to the required loan, you can cater to almost every need. Also, the process of getting a loan is quick, due to which you can get funds within 24 hours of approval. 

  • Meet working capital needs: Fund your working capital needs and ensure the smooth running of your business.  A small business loan can look after all your working capital needs, such as buying new stock, purchasing equipment, expanding office space, or paying for new staff. The best part is that you can maintain the cash flow during times like the current COVID-19 pandemic.
  • Easy to apply: There are several types of small business loans in India that you can get based on your needs. Depending on the required loan amount and the loan tenure,  you can choose a short-term or long-term loan. Keep in mind that a short-term loan does not exceed more than one year, whereas a long-term loan can range between one year and five years.

Before submitting the application to get a small business loan, it is imperative to assess your needs and repayment capacity. You must choose a loan that you can afford to repay within the stipulated EMIS.  

  • Collateral-free: Small business loans in India are best known for being collateral-free. It means that you do not need to pledge an asset with considerable value to access funds for your business. However, it is crucial to have a good credit score. You must convince the lender that your business is a profit-earning one, and you can repay the loan within stipulated EMIs.
  • Affordable interest rates: Much of small business loans’ popularity stems from the fact that they come with affordable interest rates. You can secure an interest rate as low as 5%. However, it is worth pointing out that the interest rate depends on factors such as loan tenure, collateral, income, credit score,  etc. If you offer an asset as collateral, you will get a lower interest rate. Your credit score also plays a crucial role in the loan approval. The higher your credit score, the greater are your chances of securing better interest rates.

Interest rate is not the only cost associated with a small business loan in India. You will also have to incur a nominal process fee to get a loan and a payment penalty for delaying your payment. With lower interest rates and nominal processing fees, you can significantly reduce the total cost of borrowing.   

  • Easy repayment options: Another benefit of getting a small business in India is that it comes with easy repayment options. It allows you to repay the loan with interest within the stipulated EMIs and without any burden on your monthly budget.  To get a repayment option that works best for you, you need to sit with the lender and work out a plan. Based on your affordability, you can lower the repayment tenure or increase them.

Besides that, the lender may offer several options to repay your loan. For instance, you can choose an auto-debit facility through Electronic Fund Transfer (EFT).   


If you have a small business and are going through a cash crunch, getting a small business loan in India is the best way to manage finances without touching your savings. Get a loan amount based on your needs and with low-interest rates and convenient repayments.

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Nirupama Verma is a self passionate blogger, managing a bunch of informational blogs. She has written a lot of informational content for several popular blogs.

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