Business Loans
What is a Business Loan?
Business Loans are funds available to all types of businesses from banks, non-banking financial companies (NBFCs), or other financial institutions. Business Loans can be tailor-made to meet the specific needs of growing small and large businesses. These loans offer your business the opportunity to scale up and give it the cutting-edge necessary for success in today’s competitive world.
Business Loans for the micro-small-medium enterprise (MSME) sector in India are particularly important as MSMEs are important economic drivers of growth, and job creation, which directly impacts local economies. Lack of access to formal finance, the requirement of property collateral for loans, and the lack of affordability for modern technology solutions are some of the impediments hampering the growth of the MSME sector.
Although the Government of India has introduced several MSME loans and MSME funding schemes to resolve the financing gap for MSMEs, the need outweighs the solution. India has the second largest MSME sector in the world with 63 million MSMEs, of which, many are still informal. Nearly 80% of the MSMEs (more than 50 million enterprises) lack access to formal lending channels, according to a report from the Association of Chartered Certified Accountants (ACCA).
Providing access to formal credit is where many NBFCs such as Kinara Capital support entrepreneurs in their growth journey. Therefore, unsecured business loans from Kinara are a very good source of financing for MSMEs.
Types of Business Loans
Business finances may seem very tricky at times, especially in today’s competitive environment. As a business entrepreneur, you may wonder about the best possible option to fund your various business needs including purchasing assets such as land, leasing a shop or factory, purchasing new machinery, working capital requirements, or basic operations expenses such as overheads and salaries. However, Business Loans can be broadly divided into 2 types, which are explained below.