Business Loan After And Before Covid
What to open a small business but barely have assets to open it? No worries. Because now you can apply for small size loans for business. Yes, you heard me correct. So many small finance companies have been set up in India that are ready to fund your business or organization. So you don’t need to save lakhs to start a business.
Business loans are typically given to small businesses, self-employed individuals, and services (hotel industry, machines, garages) that have an immediate need for capital to improve their operational and working capital capacities.
Business loan after Covid19
The outbreak of the coronavirus pandemic has caused a decline in the Indian economy and businesses and is responsible for the slump in GDP worldwide. Huge losses have hampered many businesses and firms except for some digital agency, during this pandemic. Many small companies have been shut down due to a huge number of losses and being unable to repay the loans.
Entrepreneurs and MSMEs can take out business loans to help them deal with the tough situation of the financial crisis and reduce their losses.
People all over India have been bracing themselves for the economic crisis caused due to the outbreak of this pandemic which has unleashed a worldwide public health crisis. The government is attempting to assist small businesses with limited cash flows in order for them to survive in this Covid-19 situation.
However, it has been more than a year since the pandemic began, and the economy is slowly reopening. Consumers are regaining control over their finances and expenditures. People in this situation are applying for small-ticket loans only for emergencies or to finance immediate needs.
Despite the high demand for business loans, lenders are becoming more cautious and tightening their standards. Before approving loans, they thoroughly investigate the customer’s background.
Despite the demand for credit from both institutional and retail customers such as SMEs and MSMEs, lenders have become more hidebound in the post-pandemic era.
RBI has been suggested by the Confederation of Indian Industry (CII) to reduce repo rates up to 50 basis points and 50 basis points on the cash reserve ratio.
In this Covid19 era, India’s banking sector’s performance has declined, and effecting deferment of EMI by the respective banks may take several days, so you need to be patient and kindly cooperate with them.
The Finance Minister, Nirmala Sitharaman announced a special package for Micro, Small, and Medium Enterprises (MSMEs) that would provide MSMEs with equity support and enable the provision of Rs. 20,000 crores as subordinate debt.
A relief in the form of collateral-free loans, subordinated debts, and equity infusion through its Fund of Funds scheme is being offered by the Government.
Business loan before Covid-19
India’s economy is heavily reliant on MSMEs to drive the country’s GDP growth. However, because of the outbreak of this pandemic, the country’s GDP is declining, which was not the case prior to Covid19. Before the pandemic hit India, everything was normal, and the economy was stable.
Prior to the pandemic, it was very simple to obtain a loan in India. The lenders were not particularly interested in the borrowers’ backgrounds. But things have changed dramatically since then.
Ways to apply for a loan to fund your business
You can procure loans for your business via government schemes, banks, and non-banking financial companies.
Government schemes include-
- Pradhan Mantri MUDRA Yojana (PMMY) – You can avail of loans up to Rs.10 lakh.
- Credit Guarantee Fund Scheme for Micro and Small Enterprises- An eligible borrower can borrow up to Rs.200 lakh.
- National Small Industries Corporation Subsidy- You can borrow up to Rs.5 lakh.
- SIDBI Make in India Soft Loan Fund For Micro, Small, and Medium Enterprises (SMILE)- Borrowers who have valid UAM numbers can avail of loans from Rs.25 lakh.
Apply for a loan via their respective websites. You will be granted a quick loan if your Udyam Registration Number is available.
Non-banking financial companies-
- Pre-approved loan where you have to pay only interest on the amounts of funds used.
- Flexi-business loan where you pay monthly interest and principal at the end of the tenure.
Seek out those companies like Vistaar Financial Services if you want to start your own business who provides quick and hassle-free funding for your business.