Business Loans from Small Finance Banks
Different business loan schemes offered by Small Finance Banks in India
Small Finance Banks are niche banks and usually form a part of the financial backbone of any country’s economy. They have specialised products for their customers and cater to the underserved sections of the population, the customers who are not being served by major banks in the country. It is mandatory for these banks to use the words “Small Finance Bank” in their name to differentiate them from other banks.
The 10 Small Finance Banks in India as of October 2020 are:
- AU Small Finance Bank
- Capital Small Finance Bank
- Equitas Small Finance Bank
- ESAF Small Finance Bank
- Fincare Small Finance Bank
- Jana Small Finance Bank
- North East Small Finance Bank
- Suryoday Small Finance Bank
- Ujjivan Small Finance Bank
- Utkarsh Small Finance Bank
Small businesses, farmers and unorganised sector entities are a few of the customer categories served by them. These banks can offer basic banking services such as deposits and loan schemes in addition to non-risk sharing simple financial services. Business loans are one of them.
The different types of business loans offered by Small Finance Banks in India include:
Working Capital Loans
These loan schemes help borrowers meet their day-to-day needs to run the business smoothly. Borrowers can use funds from the loan to purchase machinery/equipment, make salary payments to staff, make bill payments, etc. These are short-term loans that can renewed on an annual basis subject to terms.
Some Working Capital Loans from Small Finance Banks in India:
- AU Small Finance Bank Working Capital Loan
- ESAF Small Finance Bank Business Loan
- North East Small Finance Bank (NESFB) Micro Business Loan
- Ujjivan Small Finance Bank Business Edge Overdraft
Term Loans
These loan schemes are designed to help businesses meet their capital expenditure and even working capital needs. The capital expenditure needs include acquisition of fixed assets such as land, property, machinery, equipment, etc. while working capital needs, as discussed above, means the funds required to run day-to-day business operations. These loans can also be availed for upgrading machinery/equipment. Compared to other loan schemes, these are long-term loans.
Some Term Loans from Small Finance Banks in India:
- AU Small Finance Bank Term Loan
- ESAF Small Finance Bank Business Loan
- Fincare Small Finance Bank Institutional Finance
- Jana Small Finance Bank Secured Business Loan
- Jana Small Finance Bank Secured Plus Business Loan
- Suryoday Small Finance Bank Small Business Loan
- Ujjivan Small Finance Bank Business Edge Term Loan
Loan Against Assets (for Business)
These loans are designed to help businesses get funds by pledging an asset such as residential / commercial property, commercial vehicle, construction equipment, leased property, etc. The loan to value ratio may go up to 85%. The quantum of the loan depends on the repayment capacity of the borrower.
Some Asset-Backed Loans from Small Finance Banks in India:
- AU Small Finance Bank Loan Against Commercial Vehicle
- AU Small Finance Bank Loan Against Construction Equipment
- AU Small Finance Bank Lease Rental Discounting
- Capital Small Finance Bank Mortgage Loan
- Capital Small Finance Bank Business Loan Against Rent Receivables
- Capital Small Finance Bank Pre-owned Vehicle Loan
- ESAF Small Finance Bank Loan Against Property
- Suryoday Small Finance Bank Loan Against Property
- Ujjivan Small Finance Bank Overdraft Against Property
- Ujjivan Small Finance Bank Loan Against Property
Industry-Specific Business Loans
Small Finance Banks also offer some industry-specific loans to help businesses in those sectors get the financial assistance they need to carry out their activities smoothly. These are similar to term loans with the difference being that only businesses in a particular sector can avail these loans.
Industry-Specific Business Loans from Small Finance Banks in India:
- AU Small Finance Bank Real Estate Project Loans
- AU Small Finance Bank Commercial Vehicle Loans
- AU Small Finance Bank NBFC Funding
- ESAF Small Finance Bank Clean Energy Project Loan
- North East Small Finance Bank Entrepreneurship Development Loan (for Small Traders and Service Providers)
- North East Small Finance Bank Micro Business Loan (for Small Traders)
- Suryoday Small Finance Bank Commercial Vehicle Loan
Group Loans
Many small finance banks also offer group loans to help specific sections of the society get funds for income-generating activities. The loan amount offered under these loan schemes is relatively low and may be capped at Rs. 1.5 lakh or so for the whole group. However, do not let it undermine the importance of these loans since they are unique loan products meant to promote entrepreneurship and self-sufficiency in the underserved sections of the society, especially women in remote areas of the country.
Group Loans from Small Finance Banks in India:
- Jana Small Finance Bank Group Loan
- North East Small Finance Bank Joint Liability Group Loan
- Suryoday Small Finance Bank Joint Liability Group Loan
- Utkarsh Small Finance Bank Joint Liability Group Business Loan
- Utkarsh Small Finance Bank Pragati Loan
- Utkarsh Small Finance Bank Kiran Loan
- Utkarsh Small Finance Bank Asha Loan
A Final Word
Now that you know about the different types of business loans offered by small finance banks in India, you might want to know the right loan option for your needs. Please go to our business loans page where we have provided links to pages where we have summarised the information on small business loans from these Small Finance Banks in detail. We have also talked about business loans offered by other major Indian banks which you may check out if you are interested.