For small scale industries obtaining SME finance can turn out to be a major roadblock for more than one reason. When it comes to traditional lending by banks, lack of collaterals that can be used as security or not having enough returns on the business can prove to be major deterrents.
This is a situation that most small and medium sized business owners are privy to and there have been major conversations in the market around SME finance gaps. The struggle is real and acknowledged by more than a few.
That being said, all is not lost for a small business owner. While traditional lending methods can be hard to cultivate and get success out of there are a number of alternative funding options that can be explored. Here’s a list:
Ways to obtain SME loans for small-scale industries:
Non-banking financial institutions: Where mainstream methods fail, its non-banking financial institutions to the rescue. These are organizations that are willing to help small scale industries raise business loans and while they do have their own set of requirements, the eligibility criterion is not as stringent and tight as that of banks. Because they are open to more risks, they do sometimes charge an interest rate that is higher than traditional lender, but given the flexibility on other things and the probability of being able to secure a loan, the rates are something to live with.
Lendingkart.com is one such platform and one of the ways to obtain SME loans for small-scale industries is to go via them. Specializing in fast and easy to obtain short-term loans for smaller and medium sized businesses, the platform also makesthe process very simple by allowing the entire application to be processes online. Once the basic requirements are met, the decision comes through rather quickly and the interest rates charged are keeping in mind the loan amount and the capacity of the applicant.
The advantage that non-banking financial institutions offer is that they tend to understand the challenges of small-scale industries. The issue with not having enough security deposits or being able to show few years’ worth of profit statements is something that is taken into account and yet an applicant can be considered for funding.
Peer-to-Peer lending: Peer to peer is considered to be another effective method when it comes to looking for ways to obtain SME loans for small-scale industries. The name explains itself rather effectively. Peer to peer also known as P2P is a method where people can loan and borrow money without the involvement of a financial institution. There are P2P platforms online that connect the two sides, borrowers and investors directly and the reason why this method is popular with small scale industries is because it is more economical, quicker and has a higher success rate as compared to traditional methods. There is an advantage for both sides as from the borrower point of view the fund raising becomes less complex and rather affordable and from the lender side, the investment option comes with good returns making it a lucrative proposition combined with a process that is quite seamless.
Crowdfunding: Crowdfunding is a more new age method that some small scale-industries and newer businesses are exploring to raise money. In this case, a crowdfunding platform gives the business owner a space to put their idea online, explaining the details of their business, along with whatever other information they want to add on for credibility. The investors and lenders are usually individuals who are taken in with the idea and business proposition and decide to lend money accordingly. For the business owner, crowd funding offers a number of advantages as it gives them access to capital and also serves as a marketing tool in addition to being a rather effective source of money if played well.