Small Business Loan: Quick Funding with Low Interest Rate

Did you know small businesses are going through unmet financial needs on a global level? 40% of micro, small, and medium companies face this issue. The financing gap is deepening year by year and can reach as high as $8 trillion annually. To top it all off, the market is projected to grow to $7.2 trillion by 2032. Business loans for small businesses is the fastest solution that you can use if you want to get out with a fruitful solution at this hour when the market is dramatically swelling! So, now a question arises — how to get a small business loan? 

Read the blog post further to get a clear-cut answer to this question and also further details regarding the topic.

Do Small Businesses Get Loans?

Absolutely, small businesses can get loans as they have access to various loan options from many different sources. An important thing to mark here is that all loans are similar to any other type of loan. You apply — get approval — receive funding, and repay the loan according to the promised schedule. So, any small business that wishes to upscale its reach can look into different options, which include the following:

• Banks
• Online Lenders
• Peer-to-peer (P2P) lending platforms
• Government Schemes (e.g., Pradhan Mantri MUDRA Yojana - PMMY)

At this point, it is important to do proper research on the requirements, interest rates, tenure, etc., before applying for a small business loan.

How to Get a Small Business Loan?

This section will guide you through the steps and special tips that will increase your chances of securing a small business loan. 

1. Develop a Strong Business Plan

You can flaunt a well-crafted business plan to your lenders. This will show them that you understand your market, have a solid business model, and have a perfect plan to repay the loan.

What to include:

• A clear description of your business and its goals
• Market analysis to showcase demand and competition
• Financial projections (income statements, balance sheets, cash flow)
• A repayment strategy for the loan 

With MyMudra, your business plan should align with our eligibility criteria

• Showing consistent profits for the last two years
• Revenue over ₹40 lakhs
• Readiness to repay within 4-5 years

2. Gather Necessary Documents Required for Small Business Loan

The right documents make you ever-ready to apply whenever you want to. MyMudra requires these documents upfront:

• Aadhar Card and PAN Card
• Business proof and GST registration
• Income proof and financial statements
• Bank statements and tax returns
• Proof of address and photo identity

So, keep your documents valid and authorized to avoid delays in loan processing. 

3. Compare Lenders and Loan Options

Don't rush — explore multiple lenders to find the best loan terms suited to your business needs.

Factors to compare:

• Interest rates (look for lenders with low-interest rates starting from 10% p.a.)

• Repayment terms and flexibility (consider lenders offering a decent tenure)

• Fees and charges (processing, legal, pre-payment, etc.)

MyMudra offers:

• Competitive processing fees (0.5% to 4%)

• No pre-payment charges for floating-rate loans

• Flexible repayment over 4 to 5 years

4. Demonstrate Financial Strength and Creditworthiness

Maintain the eligibility criteria for small business loans to earn your lenders' confidence. 

Key pointers to understand:

• Maintain a strong credit score
• Show a history of solid cash flow and profitability
• Offer collateral if required (or choose a lender that focuses on unsecured loans for eligible applicants)
• Present a realistic repayment plan matching the plan of your lender

If you want to qualify for a MyMudra business loan, you need to show at least 

• ₹1.5 lakhs in minimum total revenue
• 5 years of business experience
• Age within the eligible age range of 21-65 years

Therefore, these details are important to demonstrate for both financial stability and creditworthiness.

Also read: Reasons Why Your Business Loan Rejected

5. Be Prepared for the Application Process

A smooth application process increases small business loan approval chances.

A few necessary tips:

• Fill out applications thoroughly and accurately
• Be honest and transparent about your financial situation
• Follow up regularly to stay informed about your application status

MyMudra has a 6-step online application that makes it easy. You just have to register with a mobile number to get contacted by the financial advisors. If you present the right documents, you can get a loan disbursal within 3-4 business days.

Interest Rate on Small Business Loan

Small businesses need to focus on growth without worrying about heavy financial burdens. The interest rate ideally has to be low to ease the repayment process. MyMudra eases the tension by offering competitive and affordable interest rates for small and medium enterprises:

• Interest Rate: Starting from 10% p.a.(based on business profile and creditworthiness)
• Processing Fees: 0.5% to 4% of the loan amount (one-time)
• No Pre-payment Charges on floating rate loans (subject to terms)
• Flexible Tenure: 4 to 5 years, allowing easy monthly instalments
• Loan Amount: Up to ₹10 lakhs (depending on business eligibility)

How to Apply for Loan for Small Business in India

MyMudra has made the application process very simple and transparent for small businesses in India. Follow the easy steps below for a loan to fund your small business needs:

Check Your Eligibility

• Age: Between 21 to 65 years
• Business Revenue: Minimum total revenue of ₹1.5 lakhs
• Experience: At least 5 years of business operation
• Eligible Entities: Self-employed individuals, partnership firms, and private limited companies in the manufacturing sector

Get Necessary Documents

• KYC documents (Aadhar Card, PAN Card)
• GST registration and business proof
• Income proof (financial statements, ITRs, bank statements)
• Address proof and ID proof

Apply Online via My Mudra

• Register on MyMudra’s platform using a valid mobile number
• Fill in your business and financial details accurately
• Upload scanned copies of required documents

Quick Loan Processing

• Verification and approval by MyMudra’s financial experts
• Loan disbursal within 3-4 business days if eligible

Also read: Business Loans for Women Entrepreneurs

Conclusion

So, now you need not search for 'how to get a small business loan', as you know the gist of it. The final interest rate depends on factors such as your credit score, business performance, loan amount, and tenure. A strong business profile with a stable income can help you negotiate lower rates. MyMudra offers a low interest rate and a flexible repayment period, which is especially helpful for small businesses. 

You can also check your monthly interests by using the Business Loan EMI Calculator on our website. Plan a loan for your business and escape the unmet financial needs.