Which Types Of Businesses Are Eligible To Opt For A Business Loan?

It is quite easy to conceive a business idea and set up a company. But what’s difficult is to manage finances, healthy working capital, and sufficient cash flow to fund business operations and day-to-day transient requirements smoothly. Acquiring capital has always been a challenge for business owners. What’s even more difficult is maintaining proper working capital flow. At times of unprecedented financial crunches, you can opt for suitable business loans to keep your company up and running comfortably. It will thus help to know if your business is eligible for a loan. Elucidated below are the types of businesses and enterprises that can apply for a business loan. There are several types of businesses that can avail a loan. Few of these are:

• Small Home-Based Product Ventures
• Small Service Ventures
• Small Sole Proprietorship Concerns
• MSME Enterprises

According to a Q1 2020 report by MSME Ministry, India has 6.33 crore MSMEs, largely dominated by micro industries. Business loans play a major part to fuel the accelerated development of this sector, thus contributing to the nation’s GDP. Let’s now talk about businesses that are eligible to avail a loan.

• Small Home-Based Product Ventures

Even if you run a small-scale home-based venture, you are eligible to avail a business loan. On top of that, holding a GST certificate can further fast-track the loan application and approval processes. Small Home-Based Product Ventures include candle making, baking services, gift items, pickle making, etc.  Although operational costs for such ventures are not staggeringly high, healthy cash flow is still crucial to purchase raw materials and cover delivery charges. Hence, business loans can be of great help to such vendors.

• Small Service Ventures

As opposed to the preceding category, small service ventures require low running expenses but a significantly high set up cost. Such businesses include social media management services, website development etc. Business owners who are GST-compliant are eligible to apply for business loans from financial lenders who offer attractive interest rates to make repayment affordable as well as convenient. If you hold the license or corresponding certificates, you can still apply for a business loan.

• Small Sole Proprietorship Concerns

In contrast to the previous two categories, these businesses are operated from a commercial property. Hence, the set-up, as well as running costs, are significantly higher. These are inclusive of service-based businesses, including professions like doctors, spa owners, technicians and tax consultants, among others.  If you hold a Shop and Establishment or Gumasta license, you are eligible to apply for business loans to ensure healthy cash flow and comfortable business operations. 

• MSMEs

This business category includes all micro, small and medium companies such as software firms, distributors, manufacturers etc. Undoubtedly, these are labour-intensive and cost-intensive businesses that require high operational costs. Business owners in this category can apply for loans from lenders to fund and streamline multiple business processes and thus avoid unforeseen financial troubles. They can also leverage their unpaid invoices to avail bill discounting services to keep operations up and running.

Bottom Line

It is challenging to streamline business operations, especially in the face of financial troubles. However, if you are eligible, you can quickly avail business loans to meet all operational requirements without any hassle.