Running a small business comes with financial challenges, from managing cash flow to tasks of business expansion. Whether you want to purchase new equipment, hire employees, or scale operations, the right business loan can be a game-changer.

In India, as per the Ministry of Statistics & Programme Implementation, MSMEs contribute nearly 30% to the GDP and employ over 110 million people. However, access to the right business loan options remains difficult for many. This blog will walk you through the best business loans available for small business owners.

Why Small Business Owners Need Business Loans?

• Managing Cash Flow: Business loans provide working capital support, ensuring smooth day-to-day operations even during slow business periods.
• Business Expansion & Growth: Funds can be used to hire staff, upgrade infrastructure, or expand into new locations.
• Purchasing Equipment & Inventory: Business loans help buy essential machinery, tools, vehicles, or bulk inventory to meet demand.
• Marketing & Advertising: Small businesses need marketing funds to increase visibility and customer reach through advertising and promotions.
• Emergency Fund: A business loan can manage unexpected expenses such as sudden repairs, raw material shortages, or unforeseen disruptions.

Types of Business Loans for Small Business Owners

There are several loan options tailored to different business needs. Below are the most common business loan options for small business owners in India.

Term Loans

A business term loan is a lump sum loan provided to businesses for a fixed period (term) that must be repaid in regular instalments (EMIs). DMI Finance offers business loans to individuals with flexible options, like: 

• Loan Amount: Up to  ₹1 crore
• Tenure: Up to 4 years
• End Use: operating expenses, stock / raw material purchases, business expansion, revenue generation, etc.
• Minimum Yearly Income: ₹3lakhs
• No collateral is required

Supply Chain Finance

In Supply Chain Finance, a supplier delivers goods to a buyer and the buyer issues an invoice with a future payment date (e.g., 30, 60 or 90 days). Instead of waiting for the payment, the supplier approaches a lender for early funds against the invoice. The lender pays the supplier a significant portion of the invoice amount upfront. The buyer pays the full amount directly to the lender at the due date. This helps businesses manage cash flow.

DMI Finance provides short-term funding to businesses through supply chain finance. Details are below:

• Loan Amount: ₹1 lakh to ₹10 crore
• Tenure: Up to 180 days
• Purpose: Invoice discounting, dealer/channel financing, purchase order financing.

Pradhan Mantri Mudra Yojana (PMMY)

It is a government-backed business loan scheme. It provides funding under the following categories:

• Shishu (₹ 50,000), Kishor (₹ 5 lakh), Tarun (₹ 10 lakh), and Tarun Plus (₹ 20 lakh).
• Eligibility: Startups, MSMEs, women entrepreneurs, traders, artisans.
• Purpose: Expansion, inventory purchase, machinery financing.
• No collateral is required.

Udyogini Scheme

Udyogini is a government-backed initiative to empower women entrepreneurs in India. It is designed to support women-led businesses.

• Loan Amount: ₹ 3 lakh.
• Eligibility for Applicants: Applicants’ age must be between 18 and 55, and their family income must not exceed Rs. 1.5 lakh per year.
• Eligible businesses: Small-scale industry sectors, such as retailers, manufacturers, traders, independent contractors, and other relevant categories.
• No collateral is required.

A small business loan can help you grow, expand, and manage operations efficiently. Choosing the right loan is important, whether you need funds for daily expenses, raw materials, equipment, or expansion.

If you’re looking for business loans, DMI Finance offers flexible, collateral-free loans with hassle-free approvals.

Frequently Asked Questions (FAQs)

1. Which Banks and NBFCs offer the best small business loans?

Several lenders, including DMI Finance, offer small business loans with attractive interest rates, flexible repayment options, a wide range of loan amounts and tenure options, and a hassle-free loan process.

2. Can I get a business loan without collateral?

 DMI Finance offers unsecured business loans, meaning no collateral is required. These loans are ideal for small business owners, startups, and MSMEs who may not have assets to pledge.

3. How to apply for a business loan online?

Applying for a business loan online is easy and takes just a few steps. DMI Finance offers a hassle-free online loan application process for easy approvals.

4. How much loan can I get for my small business?

The loan amount you can get depends on your business size, revenue, and creditworthiness. DMI Finance offers loans up to ₹1 crore for businesses with a minimum annual income of ₹3 lakhs.

5. Can I use a business loan for working capital needs?

Yes, business loans can be used for working capital needs, helping businesses manage cash flow, pay salaries, restock inventory, and cover operational expenses. DMI Finance provides business term loans and supply chain finance to businesses, meeting their working capital needs.

6. What is the minimum CIBIL score for a business loan?

DMI Finance requires a minimum CIBIL score of 700 for a business loan.