0 hidden charges. 0 forex

Unlocking Success: Navigating the Landscape of Small Business Loans

Reviewed by
Created on
March 21, 2023


What’s Inside

India houses 63 million MSMEs, contributing 30% to GDP and offering millions of jobs. Small business loans transform financing for this sector, aiding expansion, cash flow, and inventory with up to Rs. 75 Lakhs and 60-month repayment.

This blog offers a roadmap through the maze of small business loans.

Common Types of Small Business Loans

1. Government Small Business Loans

Government-backed loans boost SME capacity. MUDRA, Stand-Up India, and CGTMSE are some collateral-free initiatives from India's small business loans wing.

2. Working Capital Loans

Working capital loans provide funds for day-to-day business operations, such as paying salaries, buying inventory, and covering overhead costs, ensuring smooth cash flow cycles.

3. Micro-loans

Microloans are small, short-term loans offered by microfinance institutions (MFIs) and NBFCs to SMEs that lack access to traditional banking services. MFI business loans under Rs. 1 Lakh in India qualify as microloans.

4. Equipment Loans

Simply put, equipment loans offer funding for purchasing or leasing new equipment for the business unit.

5. Personal Business Loans

A business loan works like a regular unsecured personal loan, where you can borrow up to Rs. 25 Lakhs with relatively high interest rates. Since these loans don’t have end-use restrictions, you can use the funds to meet any business requirements.

What to Consider When Choosing a Small Business Loan?

Applying for a small business loan can be complicated when there are so many options. Here’s how you can simply do this:

  • Evaluate Your Business Goals

The type of small business loan you choose should align with your business needs and goals. If you need funds to hire more personnel, a working capital loan is your best option. But if you wish to upgrade your offices, get new inventory, and install better tech, a personal business loan would be better.

  • Eligibility

Small business loans have eligibility criteria, including annual turnover requirements. Some government loan schemes, like MUDRA, are only for non-corporate firms. Checking eligibility helps you make an informed choice.

  • EMIs

Remember that paying EMIs for the loan will be an added expense to your business ledger. Thus, using online EMI calculators and ensuring EMIs are within your affordability threshold is always prudent.

How to Apply for a Small Business Loan Online?

  1. Visit the lender’s website.
  2. Scroll to the ‘Small Business Loan’ section.
  3. Click on the ‘Apply Now’ banner and complete the application form.
  4. Upload the required KYC documents, like your PAN and Aadhaar Card copies.
  5. If eligible, your application will be approved.
  6. Sign the approval letter, and the loan amount will be disbursed to your account.

Grow Your Business with a Small Business Loan

Small business loans provide accessible credit to help businesses fund various expenses, such as inventory, renovations, hiring, and tech upgrades. Assessing your business needs and funding requirements can help you choose the right loan to support growth.

Or, Choose Fi for Instant Loans!

For no hassle, pre-approved instant loans, you can rely on Fi. Fi Money provides instant loans that arrive directly in your savings account. These are pre-approved personal loans made available to select users with good credit scores. On Fi, this process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our licensed partner bank assigns an eligible loan amount to each user (up to ₹5 lakh).

Frequently Asked Questions

1. What Are Small Business Loans and How Do They Work?

Small business loans are small-ticket loans issued to mainly SME ventures for various uses like generating working capital, equipment purchases, salary payments, etc. Generally, lenders can issue up to Rs. 70 Lakhs that must be repaid in EMIs over a maximum tenure of 60 months.

2. How Can Small Businesses Qualify for and Secure the Right Loan?

Checking the eligibility criteria for a small business loan can help businesses know the turnover cut-off requirement for the loan. Similarly, evaluating the business’s immediate funding needs can help entrepreneurs determine the right loan amount.

3. What Are the Pros and Cons of Different Small Business Loan Options?

Business growth, multipurpose use, increased cash flow, and equity maintenance are some pros of small business loans. However, some drawbacks of small business loans include strict eligibility criteria and the possibility of asset loss (in loans that need collateral).

4. What Strategies Can Small Businesses Use to Repay Loans Successfully?

Managing business expenses frugally, making part-payments, and documenting the loan payment plan can help businesses repay these loans successfully.

5. How Can Small Businesses Leverage Small Business Loans for Growth?

Small business loans can be used to invest in new technology, lease or buy new office space, invest in new equipment, and initiate marketing campaigns to fuel growth and expansion.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
Share this article
Copied Link!
Loans and Lending
Unlocking Success: Navigating the Landscape of Small Business Loans


View similar articles in
Loans and Lending
Get the Fi app