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Tag: MSME loan

  • Everything about Mudra Loans | How to Apply for Mudra Loan?

    The increase of startups and the interest of young entrepreneurs to start their businesses has led to many schemes introduced by the Government of the country. Several opportunities are given, to pursue the dream of being an entrepreneur to the interested people. Out of so many schemes, one of them is Mudra Loan.

    Mudra loan or the Pradhan Mantri Mudra Yojana (PMMY) scheme was launched in 2015 by the Prime Minister of India. MUDRA, which is short for Micro Units Development and Refinance Agency, provides loans up to Rs. 10 Lakh to the non-corporate and non-farming small and micro-enterprises. This also includes enterprises involving allied agricultural activities.

    It is known globally that Indians have a great creative and innovative mind, however the majority of them are unable to convert these ideas into profitable businesses due to financial reasons. This is common in almost all the different sections of society. PMMY was mainly to encourage everyone to try and implement their ideas.

    What is Mudra Loan?

    In 2013, it was found that there were around 5.77 crore micro and small enterprises in India and about 60% of these were owned by backward classes. These units cannot be covered by the formal loan lending sectors. This means that they might have to depend on informal lending sectors which can lead to a lot of issues or manage with their own funds. The Mudra Loan scheme is to support young, budding entrepreneurs and also existing businesses to expand and experiment with their ideas. This is much more secure and the rate of interest is not very high.

    The Schemes Under Mudra Loans

    Mudra loans have several schemes under them and they are:

    Shishu

    This is when the amount required by the borrower is less than INR 50,000. This is usually given to entrepreneurs in their early stages. This is basically a working capital term loan. There are a few things that are checked in this case. The checklist here includes the Machinery quotations and the details. The machine details have to be provided perfectly well. The borrower should also provide all the details that the banks ask for. This might include the details of the supplier. This is basically for startups.

    Kishor

    This covers loans from INR 50,001 to 5,00,000. This is not for beginners but already established businesses when they want to expand their business operations. In this case, they might require tax returns. The lender needs to know all the details of the company. It is also required to submit the balance sheet for the last 2 years, the estimated balance sheet for 1 year, MOA and AOA, and the sales made before the company applied for the loan in the Financial year.

    Tarun

    This is another scheme that covers loans from INR 5,00,001 to 10,00,000. This is when the business owner meets certain preset conditions. The required documents and details are similar to that of Kishor but there are a few other proofs that are to be included. This includes the caste certificate, Address proof, Identity proof, and other essential documents. The loans are approved only if all the documents are perfect and none of the documents is missing or faked.

    Who Can Borrow Mudra Loans?

    Mudra Loan Schemes encourage women
    Mudra Loan Schemes encourage women

    There are various enterprises that can borrow under the Mudra loans scheme. This includes individual business entities, partnership firms, public companies, private companies, Proprietary firms and so on. Also, to be eligible to borrow this, the applicant should have a proper credit track record. The proposed activity is properly studied and based on that, the lender might ask for educational qualifications and other basic requirements.

    The borrower will be eligible if he submits all the documents and has all the basic requirements listed by this scheme.

    Sectors Covered Under Mudra Loans

    • Food product sectors
    • Textile
    • Transport and transport activities
    • Community, personal service and social activities.
    • Activities allied to farming and agriculture.
    • Finance for the equipment in micro-units.
    • Business loans for shopkeepers.

    Features and Benefits of Mudra Loans

    The key benefit of this scheme for borrowers is that they do not need to show collateral or security. Also, there is no processing fee for this. Also, there is no minimum amount that you need to borrow. It can be used for various purposes like expansion, modernization, machine purchase, renovation, etc. There is no processing fee involved. Only in the case of the Tarun loan, 0.5% of the loan amount is charged as the processing fee. Mudra loan can also be availed online and the repayment period lies between 3 and 5 years, depending on various factors. The interest percentage for Shishu is nil and for the other 2, it is 10%. Also, the age of the borrower must be above 18 and below 65 years to avail of Mudra loans.

    Steps To Apply For Mudra Loans

    It is very easy to apply for Mudra loans. You have to have all the necessary documents.

    • Step 1: Check what are the documents necessary for the amount you need and keep all the documents ready.
    • Step 2: Approach a financial institution. This loan is available in almost all renowned financial institutions. You can approach any one of them or even check their website out for details. Make sure to check if the financial institution is registered under the Mudra scheme.
    • Step 3: The next step is to fill out the application form carefully. Almost all the details like personal and business details. The documents have to be attached. Mention the amount you might need. There are different forms for Shishu, Kishore and Tarun. Choose the right form and keep the documents in hand while filling out the form.
    • Step 4: Wait for approval. Once the loan is approved, you will receive the Mudra card. You can use the card to draw the money you need.

    This is the set process in almost all approved financial institutions. It is safe and secure.

    Conclusion

    Small businesses and entrepreneurs can go for a Mudra loan as it is easy to get approved and also it will help them get the first capital for their company. Since there is no collateral or security required, it can be availed by anyone satisfying the criteria. This serves as an encouragement for youngsters with an idea to get basic funding for their business idea and hence they will be able to put their idea into practice. This is available in various institutions and also can be dealt with online. This makes the entire process much easier than it is. The only major criteria are that all the documents to be submitted must be perfect and the borrower should be within the specified age limit.

    FAQs

    Who introduced Mudra Loan?

    Prime Minister Narendra Modi introduced the Mudra loan.

    When was Mudra Yojana announced?

    The Mudra Yojana was announced on 8th April 2015.

    How much loan is provided by Mudra Yojana?

    Mudra Yojana provides loans of up to INR 10 Lakhs to borrowers.

  • Top 9 Profitable MSME Business Ideas in India 2022

    Countries across the globe are doing their best to improve the condition of MSME and hence, the economy. Small and medium businesses or companies are corporations whose staff and outputs aren’t huge. The abbreviation SME (Small and Medium Enterprises) is used by societies, organizations, and institutions worldwide. Some examples include the United Nations, IMF, etc. SMEs are now challenging big corporations in their domains and taking value creation to new heights.

    In July 2011, the EU Commission announced it’d unlock a gathering on the outline of SMEs in 2012. And it identified three parameters to define the eligibility of an SME:

    • Micro commodities are corporations with up to 10 workers.
    • Small corporations employ up to 50 labourers.
    • Medium-sized investments have up to 250 employees.

    Here are 9 business ideas to start out as a micro, small, or medium enterprise:

    1. Jute Shopping Bags
    2. High-Temperature Aluminum Established Paint
    3. Pan Masala, Meetha, And Sartha
    4. Turmeric, Dhania, and Chilli Powder
    5. Neem Oil
    6. Cow Urine Processing And Packaging
    7. Sanitary Napkins
    8. Cashew Nut Shell Oil
    9. Corrugated Galvanized Sheet

    What is MSME?

    The EU explanation of SME is, “The classification of micro, small, and medium-sized investments comprises companies which assign rarer than 250 employees and which retain an annual turnover not surpassing 50 million euro. And/or an annual proportion sheet entire not outweighing 43 million euros.” The explanation in Germany gave birth to a threshold of 255 workers, while in Belgium it could amass 100.

    MSMEs take advantage of a major position in economic and social improvement, thereby empowering flip to entrepreneurship, as they need intrinsic factors of being creative and conscious of altering market dynamics.

    The Micro, small and medium enterprises (MSME) sector has emerged as a highly active and emotional area of the Indian thrift. It is widely celebrated as a machine of economic development, particularly within the context of Make in India by the Government.

    List of MSME Business Ideas in India:

    1. Jute Shopping Bags

    Jute Bags
    Jute Bags

    Jute fabrics are tough, reliable, light, desirable, and more inexpensive than most of the textures earned from fibres. There is an extremely easy sewing appliance/device available for creating jute bags. There is a reasonable need for jute bags in India which makes it one of the best MSME businesses in India.

    Jute bags retain decent export potentiality. Raw materials expected for preparing Jute bags are cotton strings and Jute fibre fabric. It can be stored in a grassland carton and shipped. The common jute bag model attained a significance of US$ 1.4 Billion in 2016 and showed a CAGR of over 11% during the period 2009-16.

    The demand is propelled to attain the importance of US$ 2.6 Billion by 2022. Indian jute carry and shopping purses exporters are exporting millions of backpacks every year.

    2. High-Temperature Aluminum Established Paint

    Heat-resistant aluminium paint and dyes can withstand sickness, blazes, oil, rust and fumes, making them an excellent choice for particular petitions. The paint is instructed by stirring a special binder or binder mixture, solution or solvent mixture, and additions.

    Perhaps, a tint or group of tints concurrently is the same way to generate a particular formulation that, when fixed will retain specific properties. The global need for colour and coverings is predicted to surge 3.7 per cent per year to 54.7 million metric tons in 2020, esteemed at $193 billion.

    The market has examined a rise in the demand for high-temperature coverings from the automotive enterprise. High-temperature coatings are greatly expended as cookware, stoves, grills, and bakeware since they furnish outstanding opposition against warmness.

    3. Pan Masala, Meetha, And Sartha

    Pan masala is a proportional recipe of betel layer with lime areca loon, clove, cardamom, mint, tobacco, essence and other components. It generally works as a mouth freshener and is way better than the Western unnatural pan masala (created using artificial ingredients).

    As a result, India outperforms the schedule of smokeless tobacco addicts in the world with almost 83% of buyers. Indians are so obsessed with flavoured tobacco pan masala and gutkha despite the ban on its trade and sale in 11 governments to date.

    Shoppers are however buying grip of their everyday fix, courtesy contraband sales. Among the several categories of pan masala functional within the Indian market, pan masala containing tobacco depicts the dominating category analysis for over 50% of the entire demand. As an amount, there’s a good expanse for a replacement entrepreneur to subsidize in this industry.

    4. Turmeric, Dhania, and Chilli Powder

    Turmeric, Dhaniya and Chilli Powder
    Turmeric, Dhaniya and Chilli Powder

    Seasonings affect odour, colour, and flavour to a large extent. The unstable oils from seasonings give the odour and the oleoresin imparts the flavour. Spices are a non-leafy portion of grains utilized as a flavouring or sauce, although several also can be utilized as a herbal treatment.

    The Indian spices demand is propelled and reached nearly USD 18 billion in 2020, and expansion within the area is anticipated to be overseen by branded spices and spice combinations. The Indian government is aggressively stimulating spice exports through several enterprises.

    Spice gardens offer widespread processing capabilities to both makers and exporters. This is one of the top MSME business ideas and there’s a good extent for an early age entrepreneur to invest in this business.

    5. Neem Oil

    Neem Oil
    Neem Oil

    Neem oil is attained from the cereals of the Azadirachta indica. Utilization of the neem plant is to be established with the crisis of institution of standardized exhibition and crushing of grains. Neem oil extractive, the residue from the neem oil refining process, is a beneficial mosquito larvicide. The substance acts as an immediate assassin of the first instar larvae of culex fatigans at 0.04% attention whereas, at deeper attention, it had halted toxicity.

    Azadirachtin, a full-of-life compound obtained from neem seeds and different portions, has insecticidal properties. It’s an alternative to artificial pesticides. Projected development within the common biopesticide demand at a CAGR of 15.8 percent from 2012 to 2017 may be a standpoint development driver for neem as a commodity.

    6. Cow Urine Processing And Packaging

    Gomutra is not a harmful waste substance. 95% of it is gas, 2.5% comprises urea, and the remaining 2.5% is a variety of minerals, salts, hormones and enzymes. Gomutra is urine from cows and is employed for remedial bases in informal Indian therapy, Ayurveda, and also for cleansing in Vaastu Sastra.

    Cow urine has a bio enhancing trait for Rifampicin, the beginning line anti-tubercular medication used against tuberculosis, and boosts its action up to sevenfold against Escherichia coli, and up to 11 crumples against Gram-positive bacteria.

    Cow urine is in demand not only in India but around the world. An excellent SME business idea is given that cow urine is getting even more recognition now for its benefits.

    7. Sanitary Napkins

    Sanitary Napkins appear under nonwoven textures, which as a good come under specialized material. In expansion to sanitary napkins, the non-woven cloth is furthermore obtained in various other commodities like cigarette filters, leads, airlines disposables, surgical disposables, and non-woven wipes.

    The Indian Kotex market attained a significance of about US$ 414 million in 2016. The popularity and need for eco-friendly, bio-degradable feminine hygiene products are growing tremendously. The market is expected to exceed US$ 596 million by 2022, rising at a CAGR of over 6%.

    By taking up this initiative, you’ll be empowering millions of girls and women to practice and achieve the right hygiene standards.

    8. Cashew Nut Shell Oil

    Cashew
    Cashew

    Cashew Nut Shell Liquid (CNSL) is an adaptable by-product of the cashew fruit. The nut has a husk of nearly 1/8 inch density inside which is a delicate honeycomb configuration comprising an opaque reddish-brown viscous fluid. It’s named cashew nutshell fluid and is the pericarp liquid of the loon.

    It’s often contemplated as an inexpensive component for unsaturated phenols. CNSL and polishes brought about from it are widely utilized for laminations, brake linings, electrical insulation, ground membranes, publishing inks, etc. Indian cashew nut commerce gives birth to an oil demand for CNSL.

    CNSL Oil is expended in enterprises. Thus, there is a decent need for industrially expanded nations. The straight and quadratic direction criteria rated India’s cashew nutshell fluid export to be 19,044.47 tonnes and 23,483.48 tonnes for the year 2020 respectively. India is the biggest customer and also the second-largest builder of cashew nutshell fluid in the world.

    9. Corrugated Galvanized Sheet

    Metal sheets
    Metal sheets

    The corrugated atomic number 26 panes are the most effective, widely recognized, and vastly usable low-cost shelter enclosing entity. Metal sheets are categorized consistent with their density and ground region. These are twirls constructed by roll shaping tools; the density and colour will therefore be unique.

    These boards are emphasized with simple structures, high stability, and economical costs. The requirement for sheet metal covering is fulfilled through both regional safety and implication. It was 1,418,399 tons in 2017 and is expected to reach 2,852,906 tons by 2022.

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    MSME in Different Countries

    Here is the variation of Micro, small and medium enterprises (MSME) in different countries:

    India

    The Administration of India authorized the Micro, Small and Medium Enterprises Development Act, 2006 encompassing explanations of micro, small, and medium enterprises as follows:

    • A standard business is an industry where the enterprise in factory and machinery is more than Rs. 5 crores but doesn’t exceed Rs. 10 crore.
    • The articles were restricted by the Ministry of Small Scale industries vide an announcement dated October 5, 2006.
    • Investments committed to giving employment are distinguished by their status of enterprise within the appliance as follows: A microenterprise is an investment where the enterprise in the appliance doesn’t outperform Rs. 10 lakh. A small business is an industry where the involvement within the material is more than Rs. 10 lakhs but accomplishments don’t exceed Rs. 2 crores. The medium investment could be a business where the undertaking within the appliance is around Rs. 2 crores but performance doesn’t exceed Rs. 5 crores.

    Nigeria

    The prominent bank of Nigeria distinguishes small and medium investments based on the investment and the amount of faculty assigned. The standards are a bargain basis between N5 million and N500 million, and an act of personnel courage between 20 and 300 workers.

    Israel

    In Israel, an industry is contemplated minor if it remembers not further than 50 workers. A normal industry clenches between 51 to 250 employees.

    New Zealand

    In New Zealand, 99% of businesses assign 50 or smaller faculty, and the accepted description of an SME is one with 19 or fewer workers.

    Australia

    In Australia, an SME encompasses 200 or fewer workers. Microbusiness consist of 1-2 workers. A small industry ranges from 3 to 15, a medium one has 16-200 resources, while a large enterprise has 201-500 workers.

    Poland

    The SME locality in Poland produces nearly 50% of the GDP, and out of that, for instance, micro-companies contributed 29.6%, minor corporations 7.7%, and fair firms 10.4% to the GDP in 2011.

    Canada

    The Canadian defines a minor industry to have occasionally 100 workers or more. In rare cases, less than 50 labourers qualify as a minor segment. A medium-sized business has around 500 hands.

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    FAQs

    How do I start an MSME business?

    Choose a product you want to sell, arrange finance, fill out the required documents, set up your store and start selling.

    Which industries are included in MSME?

    Leather products, Natural Fragrance and Flavours, Training and Educational Institutes, and Beauty Parlours are some of the top industries included in MSME.

    Which business is best for MSME?

    Gold and Diamond Jewellery, Ladies’ Undergarments, A4 and A3 Size Paper, and Production of Jute Bags are some of the best MSME businesses.

  • How to Get a Government Loan for Startup? | List of Government Business Loans

    The entrepreneurial dreams of Indians have given the country over 94 Unicorns in recent years. This number is expected to cross a century by the end of 2022. Startups across the MSME sector have been at the heart of the Indian economy and generated millions of jobs for people across the country.

    It is anticipated that MSMEs alone contribute 8% of the overall GDP, and startups play a huge role in it. But unfortunately, not every entrepreneurial dream gets the chance to take off due to a lack of funds. Keeping this in mind, the Indian government offers various government loans to help passionate entrepreneurs make through.

    Budding entrepreneur with a revolutionary idea in mind should use the government loan schemes to transform their ideas into action. For further assistance of all entrepreneurs, we’ve curated this epic guide that has all the information on how to avail of a government loan for a startup.

    Who Can Avail Business Government Loans for Startups?
    Documents Required to Avail the Government Loan
    List of Government Loans for Startups

    How to Choose the Best Loan Ideal for Your Business?

    Who Can Avail Business Government Loans for Startups?

    How to get Government business loans for startups
    How to get Government business Loans for Startups

    Although the precise eligibility criteria would vary depending on the government loan people take, the general criteria common across all loans are:

    • The applicant must be an Indian citizen
    • The applicant must have a robust business plan
    • The applicant should be more than 21 years of age; the maximum age is capped at 65
    • The startup must be registered as a partnership firm, sole proprietorship, Limited Liability Partnership (LLP), Private Limited company, etc
    • The applicant and startup must have a good credit score

    Documents Required to Avail the Government Loan

    People willing to avail government loan for a startup should be ready with the following documents:

    • KYC documents, including Aadhar card, passport, voter’s ID card, PAN card, etc
    • Past 12 month’s bank statement
    • Self-drafted, sound Business Plan
    • Previous year’s ITR
    • Credit Rating/CIBIL documents
    • GST Documents
    • Business establishment certificate
    • Business address proof
    • Any other document asked by the lending institution

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    List of Government Loans for Startups

    Government business loans have always provided the necessary financial backing to startups. If a startup requires some financial help, the founders might want to apply for any one of the following government loans for a startup.

    Pradhan Mantri MUDRA Yojana (PMMY)

    Pradhan Mantri MUDRA Yojana (PMMY) – Government Business Loans for Startups

    Launched in 2015, this government loan scheme offers business loans to non-corporate & non-farm small and micro-enterprises. Under this scheme, startups can avail of a loan amount of up to Rs. 10,00,000. The tenure for repayment for this collateral-free loan ranges from one year to five years. Startups can avail of this loan by visiting any nearest small finance bank, microfinance institution, commercial bank, and non-banking financial company.

    The Pradhan Mantri MUDRA Yojana provides loans depending on the development stage of the startup. Hence, the applicants can find the following three segregation under this loan:

    Loan Type Coverage Yearly Rate of Interest
    Shishu Up to Rs. 50,000 1% to 12%
    Kishore Above Rs. 50,000 to up to Rs. 5,00,000 8.60% to 11.15%
    Tarun Above Rs. 5,00,000 to up to Rs. 10,00,000 11.15% to 20%

    Startup founders can apply for this loan if they’re a trader, shopkeeper, vendor, etc. Just visit any lending institution mentioned above or login to a PSB or 59 minutes portal and do the needful. They will guide further. Startups can utilize this loan as a working capital loan through the offered MUDRA card.

    Pradhan Mantri MUDRA Yojana (PMMY) – Government Business Loans for Startups

    MSME Loan in 59 Minutes

    MSME Loan for Startups Approved in 59 minutes
    MSME Loan for Startups Approved in 59 minutes

    As the name suggests, this loan offered by the government is approved in 59 minutes flat. Launched by SIDBI, this loan is ideal for small and medium-size startups that need capital assistance of under Rs. 10, 00,00,000 at a somewhat lesser interest rate. In some cases, the interest rate is as low as 8%.

    To avail of this Public Sector Banks (PSB) loan scheme, startup founders can visit the Central Bank of India, Canara Bank, Bank of Baroda, Bank of India, SBI, etc., for a hassle-free loan application process. Once the loan application is processed and approved, the applicants can get the amount within 8-10 working days. Startup founders can also visit the PSB loan in 59 minutes portal to get more details about this loan scheme and apply.

    Credit Guarantee Fund Trust Scheme for Micro & Small Enterprises

    CGTMSE for starting new Business
    CGTMSE for starting new Business

    Also known as CGTMSE, this government business loan provides collateral-free loans to startups. Launched by the SIDBI and MSME ministry, this loan scheme offers a loan amount of up to Rs. 2,00,00,000 to both new and existing startups. A special preference is given to women entrepreneurs under this loan scheme. Under the CGTMSE, startups can get a collateral-free loan of up to Rs. 10,00,000. But for any amount above this value, startups will have to provide collateral in the form of any building or land attached to the primary business.

    Those who want to avail of the CGTMSE loan can approach a scheduled commercial bank or select a regional rural bank classified by NABARD for loan approval. Both new and existing startups can apply for this loan engaged in manufacturing activity, retail trade, and service activity.

    Credit Facilitation Through Bank by NSIC

    NSIC Launched by the MSME ministry for business loans
    NSIC Launched by the MSME ministry for business loans

    The NSIC has signed an MoU with various banks to provide super-fast and hassle-free loans to different startups. Launched by the MSME ministry, this one-of-a-kind loan facility is provided by NSIC under the central government. The best part of this government loan is that NSIC also helps complete the full documentation and legal formalities to quickly avail of the loan.

    Small or medium startups needing a short-term loan for maintaining working capital or other operations should consider applying for this loan. It is a reasonably low-interest loan and can be availed by visiting any well-known banking institution like the HDFC bank, ICICI bank, Axis bank, YES bank, etc.

    Also known as CCLCSS, it is a loan provided by the MSME ministry and the government of India to startups for technology upgradation. Startup founders that own a manufacturing enterprise, textile startup, fabrication unit, or any business that uses machines and equipment should avail of this loan of up to Rs. 15 lakh to upgrade to the latest technology. This loan helps startups stay up-to-date regarding technology to withstand the competition at local and global levels.

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    How to Choose the Best Loan Ideal for Your Business?

    Now that the information related to top business loans offered by the government to startups is made available, some entrepreneurs might be confused about which one to proceed with. The answer is pretty simple. Every loan discussed above has a different purpose, interest rate, credit limit, etc. The startup founders should go ahead with the one that helps the business stay afloat and even scale in the best way possible.

    To apply for any of the above-discussed government business loans, startup founders can head to the respective website of the financial institution providing the loan, fill out the application, and wait for someone from the organization to contact them. Business loans offered by Government are sure to help you accelerate your business growth, so they should be applied for.

    FAQs

    What are the Government loans for startups?

    List of Government Loans for Startups are:

    • Pradhan Mantri MUDRA Yojana (PMMY)
    • MSME Loan in 59 Minutes
    • Credit Guarantee Fund Scheme for Micro & Small Enterprises
    • Credit Facilitation through Bank by NSIC
    • Credit Link Capital Subsidy Scheme

    How much loan can you get under the MSME government business loan scheme?

    Under the MSME government business loan scheme, as an MSME, a startup/business can get a loan sanction of up to Rs. 1 crore within just 59 minutes.

    What is the eligibility for a startup business loan?

    Eligibility Criteria for Startup Business Loan are:

    • Resident citizen of India
    • Minimum CIBIL score of 700
    • Business should at least 2 years old
    • Annual income of business should be at least INR 2 lakhs
    • Applicant Should be between 21 years to 65 years of age

  • Top Companies that made lending easy in 2021

    This article is contributed by Sanjay Sharma, MD, Aye Finance.

    Getting a loan is something that bothers everyone with all the formalities and paperwork. But 2021 being the FY that has seen a financial crisis for various sectors, has been some or the other way boosted by various fintech companies that have helped them to manage and survive their businesses. Amongst various fintech companies, there are a few companies that made lending easy and hassle-free.

    Top Lending Companies in India –

    1. LendingKart
    2. Aye Finance
    3. Zip Loans
    4. Satya MicroCapital
    5. NeoGrowth Credit
    6. Save Solutions Pvt. Ltd.
    7. InCred

    LendingKart

    Lending Companies in India
    LendingKart – Lending Company

    With $1 billion of loans disbursed to around 1.3 lakh MSMEs across India since its inception, Lendingkart has been growing rapidly in MSME financing and one of the major reasons for this is its credit intelligence platform. Lendingkart’s proprietary underwriting model has been instrumental in providing credit sanctioned loans to 250k loans over the past 6 years but it is important to understand how it is being utilized by the firm itself.

    Aye Finance

    Lending Companies in India
    Aye Finance – Lending Institution

    Aye Finance founded by Sanjay Sharma MD is a commercial institution built around the mission to solve these challenges of funding MSMEs and enabling their inclusion into the mainstream of the economy. Aye Finance is equity-funded by three reputed Venture Capital Funds – Accion International, SAIF Partners, and LGT Impact ventures. It also has over a dozen providers who extend their debt funds for its MSME finance business. Aye offers Rs 1-3 lakhs line of credit for working capital to microenterprise owners who typically have sales of INR25-50 lakhs annually.

    Aye has successfully enabled the inclusion of 3 lakh micro enterprises having disbursed over Rs 4,000 crore to them.

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    ZipLoan

    Lending Companies in India
    Ziploan – Lending Company

    Ziploan is a tech-enabled RBI registered NBFC that provides loans to small businesses. The platform addresses the need of the SME sector, which has been ignored by financial institutions. The platform generates a unique ZipScore for each loan applicant by developing an automated underwriting algorithm.

    Satya MicroCapital

    Lending Companies in India
    Satya MicroCapital – Lending Company

    Satya MicroCapital Limited is an NBFC-MFI that serves low-income entrepreneurs in rural and urban areas. The company provides prompt, convenient, and affordable collateral-free credit to unbanked and underserved people through a strong credit assessment and centralized approval system. Satya MicroCapital’s firm belief in modern technology and its potential to increase efficiency, reduce risks, and enhance the overall customer experience is apparent in its adoption of cutting-edge innovations to power its operations.

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    NeoGrowth Credit

    Lending Companies in India
    NeoGrowth – SME Lending Platform

    NeoGrowth is an SME lending platform, registered with the Reserve Bank of India (RBI). The NBFC’s approach includes innovative technology and a digital payment ecosystem along with flexible repayment options. NeoGrowth aims to bridge the credit gap for MSMEs by offering customized products to address customers’ multiple business needs.

    Save Solutions Pvt. Ltd.

    Lending Companies in India
    Save Solutions – Lending Company

    Save Solutions Pvt. Ltd. is one of the country’s largest Business Correspondent Networks. The Bihar-based company is focusing on giving access to Financial Products via kiosk banking and customer service points (CSPs) to rural and semi-urban unbanked citizens. Expanding rapidly, the SSPL group has roots across India in 488 districts, with over 12,000 kiosks in rural areas. The company employs over 25,000 people across these locations at its Customer Service Points (CSPs) and Kiosks. All the employees are provided training in computer and cash management systems to improve client enrolment and service delivery, thereby helping improve Save Solutions’ overall service performance.

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    InCred

    Lending Companies in India
    InCred – Lending Company

    InCred is a new-age financial services group founded with the vision of providing credit to Incredible India and thus, furthering financial inclusion in the country. The company endeavors to disrupt the status quo in traditional lending that seems to exclude those most in need of credit, due to outdated, rigid, and often inefficient processes. The company has designed its products with a razor-sharp focus on serving the unique needs of these under-served segments of customers and leverages technology and data science to make lending quick, simple, and hassle-free. It aspires to be the key partner for all financial requirements of an Indian family.

    Founded in the year 2016 by Bhupinder Singh, former head of Investment Banking Deutsche Bank Asia-Pacific, the company launched market operations in January 2017. InCred offers a broad portfolio of products that cut across key categories such as Personal Loans, SME Loans & Education Loans.

  • What are Microloans and Which Indian companies are providing Microloans?

    Over the most recent few years, the microfinance area has seen promising development on the rear of the quickly developing Indian economy. The area has been instrumental in offering formal credit to underserved low-pay families and miniature, little also, medium endeavors (MSMEs), consequently expanding the commitment of these fragments to India’s general GDP.

    In FY19, the microfinance area showed 40% development as far as advance portfolio. With progressions in innovation, advancement of administrative approaches, new associations and dispatch of different items, the area is required to keep up the current level of development soon. Let’s look at what exactly is a microloan and the Indian companies providing microloans.

    What are Micro Loans?
    Companies providing Microloans in India
    FAQ

    What are Micro Loans?

    Microloans also known as Microlending are short term loans that are generally smaller in amount. The micro loans can be availed by Self-employed, startups, micro entrepreneurs, small businesses and individuals who have a low capital requirement.

    It is a type of small finance which is provided to low-income group or entrepreneurs who have very limited access or no access to lending institutions.

    The RBI with the help of the Government of India has partnered with private limited companies and Micro Finance companies in order to provide micro loans to unbanked and underbanked people to provide them with loans.

    The major purpose of microloans is for various business-related activities, meeting working capital requirements, starting a new business, maintaining cash flow, paying salaries to staff, managing day to day expenses, debt consolidation, etc.

    Average Loan amount Borrowed in India as per the Age Group
    Average Loan amount Borrowed in India as per the Age Group

    Companies providing Microfinance loans in India

    Bandhan Bank

    Bandhan Bank provides microloans of a minimum of INR 1000 to a maximum amount of INR 25,000. The interest rate charged by the bank is 17.95 % onwards as of 2021 and there is no processing fee charged by the bank. The repayment tenure of the microloan is up to 12 months and the bank provides a doorstep delivery of the loan.

    BSS Microfinance

    BSS Microfinance provides microloans for a minimum amount of INR 12,000 to a maximum amount of INR 50,000. The interest rate charged by the company is 25 % onwards as of 2021 and a 1% processing fee is charged with the loan amount of above INR 25,000. There is no collateral required for availing of the loan.

    Annapurna Microfinance

    Annapurna Microfinance provides microloans for a minimum amount of INR 10,000 to a maximum amount of INR 80,000. The interest rate charged by the company is 21.90 % onwards as of 2021 and a 1% processing fee + GST is charged with the loan amount that is borrowed. The repayment can be done monthly, weekly or fortnightly according to the preference of the borrower.

    SKS Microfinance

    SKS Microfinance provides microloans for a minimum amount of INR 7,591 and a maximum amount of INR 11, 610 for the first time and for the next time onwards depending on the credit score the company provides an increased set of INR 14, 959. The interest rate charged by the company is around 23.55% onwards as of 2021 and a 1% processing fee is charged on the loan amount.

    Equitas Small Finance Bank

    The Equitas Small Finance Bank provides microloans for a minimum amount of INR 2000 to a maximum amount of INR 35,000. The interest rate that is charged by the bank is 23 % onwards for the year 2021 and a processing fee of up to 1% on the loan amount is charged. The loan is provided only to Low-income groups and economically weaker section categories.

    Ujjivan Small Finance Bank

    Ujjivan Small Finance Bank provides microloans for a minimum amount of INR 2000 to a maximum amount of INR 60,000. The interest rate that is charged by the bank is 22 % onwards for the year 2021 and a processing fee of 1.2 % of the loan amount is charged for the loans above INR 25,000. The repayment tenure for the loans varies from 6 months, 1 year, 1.5 years and 2 years.

    ESAF Microfinance and Investments P Ltd

    ESAF provides microloans for a minimum amount of INR 1,000 to a maximum amount of INR 1 lakh. The interest rate charged by the company varies between 22 % to 26 % p.a based on diminishing charges and also a processing fee is charged with around 1 % to 2 % of the loan amount + GST. The tenure for repayment of the loan is around 3 months to 60 months.

    Fusion Microfinance

    Fusion Microfinance provides microloans for a minimum of INR 3000 to a maximum amount of INR 60,000. The interest rate charged by the company varies between 21 % to 21.50 % p.a based on the reducing balance method and a processing fee of 0 to 1% + GST is charged. The repayment tenure of the loan amount varies from 8 months to 2 years.

    Arohan Finance Services Limited

    Arohan Finance Services provides microloans for a minimum of INR 1,100 to a maximum amount of INR 50,000. The interest rate charged by the company is between 20.70 % to 21.25 % p.a. The repayment tenure of the loan amount varies from 3 months to 24 months.

    Casphor Micro Credit

    Casphor generally provides micro loans for activities such as the construction of toilets, women empowerment, and procurement of gas connections. They provide loans for improving the health and social status of the beneficiaries.

    The micro loans provided by the company would be for a minimum of INR 2000 to a maximum amount of INR 14,000. The interest rate charged would be around 23.94 % to 24.53 % and also a processing fee of 1 % on the loan amount if charged by the company. The repayment tenure varies from 52 weeks, fortnights or months.

    Asirvad Microfinance Limited

    Asirvad Microfinance provides micro loans for a minimum amount of INR 2,498 to a maximum amount of INR 45,000. The interest rate charged by the company is around 21.70 % p.a. and the loan repayment tenure varies between 12 months to 24 months.

    Conclusion

    The objectives of microloans are to promote the socio-economic development among the low income group, to reinforce self help groups and develop the economy of the country and also to support and promote women entrepreneurship and startups across the country.

    FAQ

    What are microloans used for?

    Microloans are used by Startups or Entrepreneurs who may have trouble getting financing from other sources, such as banks.

    What is micro loan?

    Microloans are loans that are provided to small business owners and entrepreneurs who may have trouble getting financing from other sources, such as banks.

    Who is eligible for micro loan?

    To be eligible for micro loans You must be between 25 years and 65 years of age, Your business should have a vintage of at least 3 years and You should have filed income tax returns for your business for at least one year.

  • SIDBI – Addressing Both Financial And Developmental gaps In The MSME Ecosystem

    Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by SIDBI.

    Small business owners and entrepreneurs in India’s underdeveloped areas can get loans, credit, insurance, access to savings accounts, and money transfers via microfinance. Many who do not have conventional financial capital profit from microfinance.

    Small Industries Development Bank of India (SIDBI) is a non-profit financial institution dedicated to assisting India’s micro, small, and medium-sized businesses in their growth and development.

    SIDBI – Company Highlights

    Startup Name Small Industries Development Bank of India
    Headquarters Lucknow, Uttar Pradesh, India
    Industry Commercial Bank, Regulatory Body
    Jurisdiction Ministry of Finance, Government of India
    Formed April 1990
    Agency Executive Siva S Ramann
    Website www.sidbi.in

    Sidbi – Latest News
    About Sidbi and How it Works?
    Sidbi – Mission and Vision
    Sidbi – Name, Logo and Tagline
    Sidbi – Founder and History
    Sidbi – Products and Services
    Sidbi – Revenue and Growth
    Sidbi – Investments
    Sidbi – Competitors
    Sidbi – Awards and Achievements
    Sidbi – Future Plans
    Sidbi – FAQs

    Sidbi – Latest News

    As of May 2021, SIDBI is hiring IT experts, including a Chief Technology Officer.

    SIDBI, which panders to the funding needs of micro, small, and medium enterprises, stated that it aims to promote and improve the flow of credit to such businesses and resolve both economic and technological gaps in the MSME ecosystem. The Small Industries Development Bank of India (SIDBI) will employ information technology professionals on a contract basis, including a chief technology officer (CTO), to improve customer service in the face of technology’s growing importance.

    About Sidbi and How it Works?

    The Small Industries Development Bank of India (SIDBI) is India’s apex regulatory authority for microfinance institution regulation and certification. It is governed by the Ministry of Finance of the Government of India, which is based in Lucknow and has offices around the country. SIDBI is a commercial bank established in Lucknow, Uttar Pradesh, India.

    Small Industries Development Bank of India is a wholly-owned subsidiary of the Industrial Development Bank of India, which was founded under a special Act of Parliament in 1988 and went into effect on April 2, 1990. The bank provides services such as promoting, financing, and developing the micro, small, and medium-sized firm sector, as well as coordinating the functions of institutions involved in similar activities.

    Its objective is to provide refinancing and short-term lending to businesses, and it is the MSME sector’s primary financial institution. SIDBI also manages the functioning of organizations that do similar tasks. The bank provides debt funding to small and medium-sized businesses in the form of loans. Beverages, meals, banking institutions, financial institutions, industrial, mechanical, and electrical parts, database software, cloud computing, E-commerce, and many more industries are served by the bank.

    Through the SIDBI Foundation for Micro Credit, SIDBI is actively involved in the creation of Micro Finance Institutions and assists in the extension of microfinance through the MFI method. Its promotion and development program focuses on the promotion of rural businesses and the development of entrepreneurship.

    It runs a refinance program called Institutional Finance with the aim to expand and support money supply to the MSE sector. SIDBI assists Banks, Small Finance Banks, and Non-Banking Financial Companies with Term Loans through this program. SIDBI lends directly to MSMEs, in addition to refinancing operations.

    Functions of SIDBI :

    • The SIDBI refinances loans made to small businesses by banking institutions.
    • Assists in the expansion of marketing channels for Small Scale Industries’ products.
    • It provides small-scale businesses with services like factoring and leasing.
    • In semi-urban areas, promotes employment prospects in small-scale industries.
    • Starts the process of upgrading technology.
    • Allows credit to flow to Small Scale Industries as working capital or term loans.

    Sidbi – Mission and Vision

    SIDBI’s mission statement says “To facilitate and strengthen credit flow to MSMEs and address both financial and developmental gaps in the MSME eco-system”

    SIDBI’s vision statement says, “To emerge as a single window for meeting the financial and developmental needs of the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI Brand as the preferred and customer – friendly institution and for enhancement of share – holder wealth and highest corporate values through modern technology platform.”

    Sidbi – Name, Logo and Tagline

    SIDBI stands for Small Industries Development Bank of India.

    Sidbi' s Company Logo
    Sidbi’ s Company Logo

    Sidbi – Founder and History

    The Small Industries Development Bank of India (SIDBI), established on April 2, 1990, by an Act of the Indian Parliament, serves as the primary financial institution for the promotion, financing, and development of the Micro, Small, and Medium Enterprise (MSME) sector, as well as for the coordination of functions of institutions engaged in similar activities.  

    SIDBI’s activities have stayed committed to the national goals of poverty reduction, job creation, and entrepreneurial development in the MSME sector. The following are significant landmarks in SIDBI’s history:

    • Founded in 1990;
    • Microfinance foundation built-in 1994;
    • Technology bureau for small enterprise (TBSE) established in 1995, which later became India SME technology services.
    • SIDBI venture capital limited;
    • Credit guarantee fund trust for micro and small enterprises;
    • SMERA rating ltd.
    • India SME Asset Reconstruction Company Ltd., founded in 2008. (ISARC)
    • Setup MUDRA in 2015
    • 2016 – Trade receivables discounting system (TReDS)
    • In 2017, a certified credit counselor was established (CCC)
    • Launch of MSME pulse and CriSidEx in 2018

    Sidbi – Products and Services

    SIDBI is a non-profit organization that manages and finances the different organizations involved in the development of small businesses. SIDBI runs a refinance program in which it provides term loan assistance to banks, small finance banks, and non-banking financial firms in order to sustain the money supply.

    SIDBI’s 16.73 percent holding, which is the largest individual holding, is held by the State Bank of India. The following are some of SIDBI’s additional services:

    • Small-scale industry refinancing (SSI)
    • It provides aid with SSI import and export.
    • It offers SSI with seed cash and low-interest loans.
    • SIDBI assists with factoring, leasing, and HP financing, among other things.

    Sidbi – Revenue and Growth

    Sidbi, increased its net profit by 9% to INR 630 crore in the quarter ended December 20 from INR 578 crore the year before.

    SIDBI received a liquidity support of INR 15000 crore from the Reserve Bank of India in April as a special refinance facility at the repo rate in April 2021 to deal with MSME funding during the pandemic, in addition to the government’s drive for MSME financing. From INR 816 crore in Q3’FY’20 to INR 840 crore in Q3’FY’21, the company’s net interest income increased by 3% .

    “The credit growth to the MSME sector has been strong despite the impact of the COVID-19 pandemic and this has helped us to achieve encouraging financial performance with a boost to our loan book” said, V Satya Venkata Rao, deputy managing director, Sidbi. “We have also managed to keep our asset quality under check by. Our focus will be on sustaining the growth and scalability with various measures targeted towards recovery and strengthening of the MSME ecosystem.”

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    Sidbi – Investments

    Date Organization Name Round Amount
    Mar 30, 2021 Annapurna Microfinace Private Equity Round $30M
    Jul 10, 2019 Capital Small Finance Bank Private Equity Round ₹430M
    Aug 24, 2018 Fincare Private Equity Round ₹950M
    Oct 18, 2017 Capital Small Finance Bank Venture Round ₹243.5M
    Aug 28, 2017 FieldAssist Debt Financing –
    Aug 1, 2017 Clusterzap Seed Round $150K
    Mar 7, 2017 Fincare Private Equity Round ₹5B
    Sep 30, 2016 Utkarsh Micro Finance Venture Round ₹4B
    Dec 22, 2015 RCI Cash Management Series A –
    Jul 30, 2015 Pragmatix Services Venture Round $2.4M

    Sidbi – Competitors

    The top 10 competitors in SIDBI’s competitive set are moolya, LetsVenture, ah! Ventures, Startups.co, GREX Alternative Investments Market Pvt. Ltd., BitGiving, Applyifi , Equity Crest, TermSheet, Smergers, Startify, Catapooolt and Gust.

    Sidbi – Awards and Achievements

    From time to time, SIDBI has received a number of international prizes and honors. Several of SIDBI’s models are being copied more and more these days (i.e. MFI led inclusive growth, community linked financing model, Industry Association-BMO- led financing model, participatory development approach, cluster development – both hard infrastructure development support as also Making Market Work For MSMEs through business development service).

    SIDBI was named the winner of the SABERA – Social and Business Enterprise Responsible Award 2020 in two categories: “Most Innovative Development Sector Project” and “Responsible Business of the Year.”

    SIDBI’s responsive, inclusive, and impact-oriented activities for instilling entrepreneurship culture under Mission Swavalamban were recognized with this award. It also looked at creative approaches/initiatives that enhance the enterprise ecosystem and ease access to financial and non-financial services for entrepreneurs in India via digital bouquet offers.

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    Sidbi – Future Plans

    In light of the growing role of technology, the Small Industries Development Bank of India would engage information technology specialists on a contract basis, including a chief technology officer (CTO). SIDBI, which provides funding for micro, small, and medium-sized businesses (MSMEs), stated that its goal is to improve and enhance credit flow to MSMEs while also addressing financial and developmental gaps in the MSME ecosystem.

    Sidbi – FAQs

    What does SIDBI do?

    The bank provides services such as promoting, financing, and developing the micro, small, and medium-sized firm sector, as well as coordinating the functions of institutions involved in similar activities.

    When was SIDBI founded?

    The Small Industries Development Bank of India (SIDBI) was established on April 2, 1990.

    What are the objectives of SIDBI?

    To boost the marketing of small-scale industry products. Upgrade technologies while also doing small-scale unit upgrading. To provide additional financial help to the ancillary and smaller industry on a small scale. To promote sectors that provide jobs.

    What companies do SIDBI compete with?

    The top 10 competitors in SIDBI’s competitive set are moolya, LetsVenture, ah! Ventures, Startups.co, GREX Alternative Investments Market Pvt. Ltd., BitGiving, Applyifi , Equity Crest, TermSheet, Smergers, Startify, Catapooolt and Gust.

    Is SIDBI a subsidiary of IDBI?

    Yes, SIDBI is a subsidiary of IDBI.

  • What is Loan Restructuring and Why RBI reopened One Time Loan Restructuring Scheme

    The Reserve Bank of India on 5 April 2021 had announced it has reopened the one-time loan restructuring programme for individual borrowers. Let’s look at what exactly is loan restructuring and the details of the loan restructuring programme reopened by RBI.

    Loan Restructuring Programme
    RBI Restructuring Programme
    Types of Loans included in this restructuring programme
    Eligibility
    Bank Guidelines
    FAQ

    Loan Restructuring Programme

    Loan restructuring is a feature that will allow the banks to change or modify the terms and conditions of the loan provided to an individual when they are facing a financial crisis. Banks do these in order to avoid classifying the loans as Non-performing assets and to avoid declaring the borrower as a defaulter.

    If the customer will be classified as a defaulter, then the bank will have to keep aside the loan amount which will reduce the profits of the bank.

    The restructuring programme may be done by the bank in different ways such as changing the interest rate, repayment period, extending the time, changing the installment amounts, etc.

    RBI restructuring programme
    RBI restructuring programme

    RBI Restructuring Programme

    The RBI had re-opened a one-time restructuring programme under which the bank will be able to let their borrowers to reschedule the payments they need to make or to extend the moratorium period to a maximum of two years.

    This moratorium will not be like the last year’s blanket moratorium. The banks will have an option to choose or pick the borrowers who will be eligible to be part of the restructuring programme and based on the bank’s internal appraisal the period of the moratorium will vary.

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    Types of Loans included in this restructuring programme

    Some of the types of loans included in this restructuring programme would include credit card receivables, consumer durables, personal loans and auto loans. The banks also can include a resolution plans for loans such as educational loans, home loans and loans given for the investment in financial assets.

    Eligibility

    The eligibility criteria for the loan restructuring programme are that the loan account should be classified according to the standards which means that there shouldn’t be any default or pending payments on the installments as of 31 March 2021.

    For the individuals who had opted for a loan restructuring programme under the scheme will be provided some relief as well. The RBI has given the freedom for the banks to modify the plans and the moratorium period by 2 years.

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    Bank Guidelines

    The banks will be allowed to reschedule the payments which can be through reducing EMI payment amount which will extend the time period. The banks have also been provided with an option where they can convert interest accrued or the interest which should be accrued into another credit facility.

    According to the assessment of the borrower’s income streams the bank will be able to provide a moratorium for a certain period of time. The RBI had conveyed in a notification that there will be no permission provided for compromise settlements.

    If the banks are planning to grant the moratorium then it would be for a maximum of 2 years and the moratorium will come into force immediately upon the resolution of the plan.

    FAQ

    What does RBI mean in banking?

    The Reserve Bank of India (RBI) is the central bank of India.

    Why is RBI called Bankers Bank?

    In India, Reserve Bank Of India is known as the banker’s bank because it acts as a bank for all the commercial banks in India.

    Is RBI Public or private?

    Reserve Bank is fully owned by the Government of India.

    Conclusion

    The economic activities in various parts of the countries have come to a stand still as there has been an implementation of the lockdown. Most of the individuals have lost their income streams where the others would have lost their jobs. This will make it harder to repay their loans and this initiative from RBI will reduce the losses of the banks and the financial stress of the individuals.

  • How to get Government Loan for Startups

    The new year brings fresh and innovative business prospects to your creative minds. Granting start-ups will make those innovations feasible.

    Yet it’s not always straightforward to address the issue of how to get funding for a startup. You must know where you are going to look and get ready to do the job you need to make your dream come true.

    It is time you took a near dive into your investment opportunities if you really want to get a startup off the ground and see it become a profitable venture.

    The first stage anytime you need money to start up a company is to report the initial costs. Take out all needless or unsustainable costs in order to detect the critical criteria of the startup.

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    Government Loans For Startups

    MSME Business Loans in 59 Minutes

    The loans are currently provided for value of ₹1 Lakh to ₹1 cr with the rate of interest more than 8%. MSME Business loan in 59 minutes initiative aims at loan appraisal process automation ultimately resulting into getting eligibility letter , in-principal approval in lees than an hour. post the in-principle approval, the loan is expected to be sanction/disbursed in 7-8 working days.

    To be eligible for this loan as a borrower you should be GST, IT compliant and must have six months bank statement facility. The business loan eligibility is determined by a company’s, income/ revenue, repayment capacity, existing credit facilities, any other factors as set by lenders (banks)

    The Credit Guarantee Scheme (CGS)

    Stand Up India Scheme
    Coir Udyami Yojana
    National Bank for Agriculture and Rural Development (NABARD)
    Credit Link Capital Subsidy Scheme
    National Small Industries Corporation Subsidy
    Pradhan Mantri Mudra Yojana
    Sustainable Finance Scheme
    SIDBI Make In India Soft Loan Fund For MSME

    Startup loans for budding entrepreneurs

    Startup Loan Initiated by the Government
    Startup Loan Initiated by the Government

    In order to collect funds to launch your own company or extend your existing business, you can secure a start-up business loan from any bank or financial institution. The interest rate paid to the bank depends on the amount of the loan you earn and the tenure of repayment.

    What To Consider While Requesting A Loan?

    The borrowers shall execute the paperwork required and send documentation for the use of these credits. As the government funds the projects, some of the loans are free of collateral. In the following you will notice some points to review before applying for the loan:

    1. Personal record: background information is reviewed. Crimes performed or criminal history will disqualify or postpone the loan sanction phase.

    2. Based on resume or company background: information of the company and applicant’s skills in developing the business will be asked.      

    3. Business proposal: the borrower has to bring into the loan document a well-considered business plan.

    4. Business and personal tax return: for a period of three years, candidates must submit personal and corporate tax returns.

    5. Financial reports: the claimant shall apply the statement of benefit and loss, the bank statement, the balance sheets, and the cash flow forecasting.

    6. Legal documents: the requester must ensure that the company works legally.

    7. Collateral: collateral strengthens your profile and will assist you to receive a greater amount of loan.

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    Eligibility:

    The qualifying conditions for the use of start-up corporate loans can vary from borrower to creditors but are generic and therefore been listen below:

    1. The candidate must not be under age 21 or must not be above the legal age of 65 years.

    Age Group who can Apply for the Loan
    Age Group who can Apply for the Loan

    2. The nominee must be an Indian resident.

    3. Candidates should include a corporate strategy.

    4. The firm will need an incubation letter

    5. The organization must deliver a framework and product for innovation purposes.

    6. A patron assurance from the Indian Patent and Trademark Office should be secured by the company.

    7. It must be a young firm and not more than 5 years old.

    Interest Rate For Startup In India

    The interest rate and maturity tenure differ between banks. The interest rate, though, varies between 10.99% and 21% a year. The sum lent shall also be subject to a transaction fee. The tenure is up to five years.

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    How To Request A Government Loan?

    Here are few ways to apply for a start-up business loan are:

    • Visit the official website of the lender to order the loan by completing the form and submitting the required paperwork.
    • Visit the closest lender’s branch to have the form and documentation for the loan application.
    • You may also contact the customer service of the loan company to offer help for a start-up loan application.

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    Conclusion

    A huge number of start-up firms live in India. The number of cottage industries and small units is increasing. However, start-ups and micro-industries need capital to grow, manage, and succeed in the global giant market. Since these units lack access to price raising, the Government has taken the lead to fund these small scale enterprises and facilitate them.

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  • U GRO Capital: A Financial Immunity Booster For MSMEs To Bounce Back!

    Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by the organization it is based on.

    Micro, Small and Medium Enterprise (MSME) Sector has emerged as a very important sector of the Indian Economy, contributing significantly to employment generation, innovation, exports, and inclusive growth of the economy. Micro, Small and Medium Enterprises (MSME) are the backbone of the socio-economic development of our country.

    It also accounts for 45% of the total industrial production, 40% of total exports and contributes very significantly to the GDP. Manufacturing segment within the MSME contributes to 7.09% of GDP. MSMEs also contribute to 30.5% of services. The total contribution of MSMEs to the GDP is 37.54.

    U GRO has created a range of Sector Specific Loan Products, using a combination of industry data and advanced analytics to unlock the true potential of business. Using sectoral knowledge from financial and non-financial sources. U GRO deep-dive into the ecosystem various business operates into understand the growth of the business venture.

    U GRO- Company Highlights

    Company Name U GRO Capital Limited
    Headquarter Mumbai
    Founder Shachindra Nath
    Sector Financial Services (NBFC/ Fintech)
    Founded 2017
    Website ugrocapital.com
    Registered Entity Name U GRO Capital Limited

    U GRO Capital- About and How It Works
    U GRO Capital- Founders and Team
    How Was U GRO Capital Founded
    U GRO Capital- Name, Logo and Tagline
    U GRO Capital- Vision and Mission
    U GRO Capital- Target Market Size
    U GRO Capital- Products/ Services
    U GRO Capital- Business Model and Revenue Model
    U GRO Capital- Startup Launch
    U GRO Capital- Marketing Strategy
    U GRO Capital- Challenges
    U GRO Capital- Funding
    U GRO Capital- Advisors
    U GRO Capital- Acquisitions and Mergers
    U GRO Capital- Recognitions and Achievements
    U GRO Capital- Future Plans

    U GRO Capital- About and How It Works

    U GRO Capital has developed a sophisticated and self-sufficient underwriting process, which is capable of approving principal loan to customer in less than 60 minutes. Their constant efforts towards bettering their existing processes have enabled them to launch an end to end digital platform – Sanjeevani, which is built upon a deep digital architecture, towards easing the borrowing experience and quickening the disbursals as the entire process, from filling the application form, sharing documents and getting disbursal of the loan can be completed from customer’s workplace within 3 – 5 business days.

    U GRO Capital was the first organisation to adopt a sector specific strategy; the company realised that the cash flows of an electrical equipment manufacturer will be very different than that of an education institution or a pharmacy store – which implies that these entities need to be assessed in very different ways. U GRO deep-dive into the ecosystem various business operates into understand the growth of the business venture. Their statistical predictive models, augmented with external data sources, power assess business and create super-customized sustainable solutions that offer better prospects for long term growth.

    They have solved for this using their proprietary solution “GRO Score”, which was implemented from day one of business operations. GRO Score utilizes a wide range of sector-specific parameters to estimate default rates. It has a Gini co-efficient of over 60%, indicating a high degree of stratification, and thus allowed them to remove 70% of ‘bads’ by removing the bottom 20% by GRO score.

    U GRO Capital- Founders

    U GRO Capital is founded by Shachindra Nath.

    U GRO Capital founder | Shachindra Nath
    U GRO Capital founder | Shachindra Nath

    Mr. Shachindra Nath has over two decades of experience in the Indian Financial Services industry, with a proven track record of building and scaling large financial institutions. He was formerly the Group Chief Executive Officer of Religare, where he successfully led the IPO process and established multiple successful new business lines. He began his entrepreneurial journey with U GRO Capital, where he seeks to build an institution that will provide real value to society and stand the test of time. He is a qualified lawyer and a University Rank holder from the Banaras Hindu University (India).

    Abhijit Ghosh – Whole Time Director and CEO, is a passionate and visionary leader who brings more than two decades of experience to the company from his key roles across Banking & Financial Services, Consumer Appliances, Hospitality, Telecom & Healthcare. Prior to coming aboard, Abhijit served as the President and Chief Business Officer at Religare Finvest Limited. He has also worked at ABN Amro, Future Capital and ICICI Bank. He is a Science Graduate from the University of Calcutta and an alumnus of Kellogg Executive Education & XLRI Jamshedpur.

    Anuj Pandey – Chief Operating Officer, is a founding team member who leads the Product, Strategy, Marketing, Technology, Analytics and Process functions at U GRO. Anuj brings 20 years of experience across firms such as Barclays Bank, ABN AMRO Bank, GSK Consumer & Religare Finvest. Anuj holds a Bachelor’s degree in Engineering (Mechanical) from Thapar University & PGDM from IIM Lucknow.

    J. Sathiayan – Chief Business Officer, is a finance and banking professional who brings over two decades of experience in the domains of SME and Business Finance, Retail Liabilities and Assets, Third Party Products Distribution and other financial services at Religare Finvest and ABN Amro.

    Manish Agarwal – Chief Risk Officer, is a member of The Institute of Chartered Accountants India, The Institute of Company Secretaries of India, and the Institute of Cost and Works Accountants of India. He has previously held roles including Chief Credit Officer at YES Bank and Head of Policy for Retail, Agri and SME at ICICI Bank.

    The Company currently has nearly 200 employees and a loan portfolio of approximately INR 1,000 crores. U GRO has had a culture of innovation since inception, which has allowed for the many developments made. The organization has a relatively flat hierarchy, and senior management consistently interacts with employees of all levels within the firm.

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    How Was U GRO Capital Founded

    The trigger behind instituting U GRO Capital could be traced back to the reflection on the state of MSMEs. It is really hard to acknowledge the fact that despite the MSME segment contributing to 30+% of India’s GDP, a vast majority of it lacks access to formal credit. U GRO was hence, instituted to ‘bridge’ this credit gap by utilizing our deep knowledge of the sectors, to build products optimized to the MSME needs, technology driven underwriting process for comprehensive assessment of MSMEs, critical to cater to thin file customers and also to achieve scale and enabling watertight corporate governance to eliminate possibility of egregious breaches in other market players. NBFCs are generally more nimble and able to specialize than banks, making them ideal for lending to the MSME segment, where a degree of specialization is requisite for good underwriting

    U GRO was instituted with the buyout of Chokhani Securities Ltd, followed by its capitalization and rebranding with new management and business model to U GRO Capital. The technology architecture started with the building out of internal core processing platforms – LOS and LMS. Post this, the focus has been on developing tech modules for facilitation of each distribution channel viz. GRO Xstream for BFSI, GRO+ for Traditional Branch-led, GRO Chain for Ecosystem and GRO Direct for Direct Digital.

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    U GRO Capital- Name, Logo and Tagline

    The company’s name was derived from the mission statement. U GRO was founded with the vision of ‘Solving the unsolved: India’s $300B MSME Credit Gap’, and their name speaks to their commitment to their MSME customers – they want to see “U GRO”, or they grow.

    U GRO Logo
    U GRO Logo

    Shachindra grew up in a small town and in his early experiences in the carpet industry, he noted just how difficult it was to scale businesses as a result of insufficient financing availability. U GRO Capital is the manifestation of his dream of providing adequate financing to all fundamentally strong MSMEs, such that those entrepreneurs can achieve their own dreams.

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    U GRO Capital- Vision and Mission

    U GRO caters to specific SME sectors by using their advanced knowledge of 8 sectors to create insightful loan products for each sub-sector. They use a unique combination of intelligence & technology using statistical predictive modelling to understand a prospective customer’s potential for growth. Their sub-sector level knowledge is derived from over 25 financial & non-financial sources to understand the ecosystem which the customer operates in.

    U GRO Capital’s mission is to ‘Solve the Unsolved’ – the US$ 600Bn Small Business Credit Need. U GRO Capital believes that the problem of small businesses can be solved by building deep expertise around core sectors of MSMEs in India coupled with a data centric, technology-enabled approach.

    U GRO Capital- Target Market Size

    U GRO Capital is a pureplay MSME lender. The total addressable demand for financing from Indian MSMEs is ~INR 45 trillion, as estimated by IFC. Of this demand, only INR 23.7 trillion is met through formal sources – largely banks, NBFCs and other FIs. This leaves a gap of INR 21.3 trillion, which is estimated to be growing at over 7% per annum. U GRO’s vision is to cater to this gap.

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    U GRO Capital- Products/ Services

    MSMEs can avail capital through U GRO’s operational four-pronged distribution model-

    • Traditional branch-led channel: Sourcing through GRO-Partners (DSAs) – secured and unsecured business loans
    • Partnerships & Alliances channel: Sourcing through our fintech, machinery and BFSI partners to provide both secured and unsecured term loans with a range of tenures and rates basis security and collateral type
    • Ecosystem channel: Vendors, dealers and distributors of our partner Anchor corporates can avail supply chain financing from them with invoice collateral
    • Direct Digital channel: SMEs can directly apply for financing through their website, or through their fintech partnerships

    While they have maintained a keen focus on their initial prime/near-prime target segment, they have also worked towards addressing a broader demographic as per their efforts to solve India’s MSME credit gap. This has seen them already cater to the working capital needs of vendors associated with their ecosystem anchors. Additionally, U GRO has built out a 9th statistical scorecard for microenterprises. Microenterprises behave as a homogenous group by size rather than by sector, making it ideal to build a separate scorecard to address all enterprises of a certain size and below rather than to try and underwrite them using their extant sector scorecards.

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    The coming months will also see the company launch their direct distribution branches. Until now, U GRO has 9 branches in Tier I metro cities, and these largely cater to the aforementioned prime/near-prime segment through an intermediated mode of distribution. In order to cater to MSMEs in Tier II/III metros and sub-urban locations, they will open branches in such locations and reach out directly to MSMEs. This will also see them foray into a higher yield segment.

    U GRO Capital- Business Model and Revenue Model

    The core revenue model is raising liability at low rates and disbursing loans at higher rates, thus earning spreads – riskier segments will have larger spreads, but this is counteracted by higher rates of bad loans Additional fee-based income sources come from upstream co-lending and other assignments. Incremental revenue sources include cross-selling, particularly insurance.

    MSME loan requirements range from INR 1 lakh to INR 5 crores depending on sector in which they operate and their respective turnovers and business needs, and they step in to cater to the varying requirement, via their corresponding tailored services. In terms of pricing, their average yield on book for secured loans was 11.7% in June 2020, 18.5% for unsecured loans and 13.3% for supply chain financing.

    On a blended portfolio level, U GRO’s yield was 14.1%. This is as compared to their weighted average on-book borrowing rate of 10.5% as of June 2020 – a figure that has come down significantly, and thus increased their spreads. The commissions to their U GRO Partners (DSAs) are in line with market norms.

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    U GRO Capital- Startup Launch

    U GRO’s first customers were achieved through a mix of their branch network and the BFSI partners, although largely the former. Their initial investment in branches and human capital infrastructure really increased the ease in building up their customer base, and U GRO reached 100 customers very shortly after commencing lending operations.

    U GRO Capital- Marketing Strategy

    Analytics and technology have been significant parts of U GRO’s organization structure from day one – it is a core strategic focus area for them, and they have invested in requisite manpower and infrastructure to enable advanced applications. This has resulted in their early success stories – their loan origination platform which connects to 24 external APIs and can produce an in-principle decision within 60 minutes, and their customized business rules engine which hosts all the credit policies and credit scores. U GRO has crossed Rs.1000 crore of disbursal and turned profitable in the first year and 100% of the loans have been processed through the system using their policies and analytical models.

    U GRO is a fast maturing analytics practice with vertical competencies on data engineering, portfolio analytics and on-boarding science/ predictive modelling. They are making rapid strides in taking advance data science and ML/AI based applications to the market. They have developed an in-house ML deployment engine and are in final stages of implementing our home-grown alternative data model for credit assessment. Work has progressed to a great extent in their bid to digitize processes that have always been physical – such as location assessment, alternate data-based fraud checks, facial recognition and object identification.

    They have also forged key partnerships across a number of channels, which are critical to their forward strategy as they allow for low opex methods of scaling up their book. The company has over 35 partners in their partnerships and alliances channel, ranging from partner BFSIs to fintechs to machinery partners. They also have 26 ecosystem anchors, through whom they lend to vendors. Notably, they have 5 marquee upstream co-lending partners – including SBI, Bank of Baroda and ICICI Bank.

    For India’s largest public and private sector banks to be willing to co-lend with them at such an early stage is a huge indication of their trust in our abilities, especially as it pertains to being able to source and underwrite high quality MSME loans. Co-lending represents a highly value accretive channel as it comes with a combination of income on interest spread and also fee income.

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    U GRO Capital- Challenges

    It goes beyond saying that the COVID-19 was the most devastating thing happening to not only our economy but the entire world. It also posed as the biggest challenge to U GRO, too.

    The pandemic induced lockdown was responsible for short term impact of non-disbursals from March to May 2020. The asset side goals being pushed back, they shifted their focus towards strategic improvements in order to make up for the lost time. They were to a great degree able to increase its capabilities on technological and governance fronts, towards their long-term goal of achieving an entirely digitalized underwriting process.

    This included the integration of video KYC and digitalization of the personal discussion process and customer loyalty framework, and the development of an in-house rule engine. With a highly self-sufficient underwriting process and their strong liquidity base, they were able to resume our potential operations pretty strongly as their July disbursals bounced back to a staggering 80% of pre-Covid levels. As of September, they have fully re-achieved pre-Covid levels of disbursements despite the many limitations still in place as a result of social distancing. U GRO fully expect to be able to build on this and further scale their asset engine in the coming months and years.

    U GRO Capital- Funding

    Date Stage Amount Investors Name
    Dec 2017 NA, demerger of lending business of Asia Pragati 175 Cr. PAG and Others
    Dec 2017 Preferential Allotment 435 Cr. ADV Partners, NewQuest, Indgrowth, Samena
    May 2018 Preferential Allotment 192 Cr. Large family offices and high net worth individuals
    August 2018 QIP 112 Cr. PNB, Samena

    U GRO Capital- Advisors

    One of the key advisors to U GRO is:

    • Global Value Creation Partners – led by Sanjeev Goel, ex-Head of Equity Investments FIG for EMENA and Asia at IFC.

    U GRO Capital- Acquisitions and Mergers

    U GRO Capital was formed through the acquisition of Chokhani Securities Ltd, there have been no further acquisitions till date.

    U GRO Capital- Recognitions and Achievements

    • World BFSI Congress Awards by ET NOW in the categories – Financial Services, FinTech & Loan
    • ‘Finnoviti Award 2020’ by Banking Frontiers, partnered by Deloitte in the category ‘Business Model – Innovation’
    • 4th Edition of IBGL Awards 2018-19: ‘India’s Greatest Leader 2018-19, India’s Greatest Brand 2018-19’
    • India NBFC Summit 2019 Awards by Perfios: ‘Rising Star of the Year’
    • Companies & Education Awards 2019: ‘The Most Trusted Company Emerging NBFC’

    U GRO Capital- Future Plans

    U GRO operates through their nine branches: Mumbai (Head Office), Delhi, Kolkata, Bangalore, Chennai, Hyderabad, Ahmedabad, Jaipur and Pune. The Company’s total income stands at Rs. 30.79 crores for Q1 FY21 with a PAT of Rs. 3.73 crores and CRAR of 99.42%. The net worth of the Company stands at Rs. 926.1 crores as of June 30, 2020 with book value per share being INR 131.31.

    The Company’s AUM at the end of June 30, 2020 stood at INR 847.4 crores across 7,343 customers. Of the total loan book, 69% is secured. Sectors including Education, Light Engineering and Electrical Equipment & Components constitute 54% of the total loan book whereas geographical concentration at a state-level is at a maximum of 21%. Notable partnerships include co-lending partnerships with SBI, Bank of Baroda, ICICI Bank

    While it is not possible to predict the trajectory of the pandemic and the subjectivity of the future, assuming a gradual remission, the company can positively expect to be normalized by the end of FY21.

    For lending in post-Covid times, they have created an evolved loan program Sanjeevani which aims to boost the capital starved MSME sector. Already a pivoting platform, we continuously strive towards enhancing its self-sufficiency, as they commit to reach out to 500,000 MSME clients.