Assume you are running a small Kirana store and need funds to expand operations. If you have not managed to attract investors, the other option you could consider is to apply for business loan. The same can also be applicable if you are facing a liquidity crunch or shortage of funds. Here is how you can go about it.             

What are the Requirements for getting a Business Loan?

Whether you apply for small loans for your business or Quick Business Loans, here are the requirements to keep in mind:

1. Credit score: A high credit score increases the chances of securing a loan with favourable terms.
2. Purpose of a loan: Some loans are specifically given for certain purposes. So, if you have applied for equipment financing, then the loan can only be used for that purpose.
3. 3.       Cash flows and financials:  To secure a business loan, you need to have a healthy and consistent cash flow. To showcase this, you will need to provide bank statements to the lender.

Additionally, note that GST registration is not be mandatory to secure a loan for your small business.

Also read: 6 Factors That Keep You from Getting a Business Loan

Benefits of Small Business Loans

Here are the pros of small or startup business loans:

1. Inherent safety nets: Quick business loans taken from a bank are likely less risky with lower interest rates than borrowing from unconventional lenders.
2. May offer longer terms: Possibly, you can repay a bank loan over a longer period as compared to other forms of loans.
3. Better experience: With the advent of the digitisation of banking processes, the time taken to get the services needed and complete your buying journey has become much lesser, assuring more satisfaction.

Risks of Small Business Loans

Small business loans come with their fair share of risks:

1. Choosing the wrong loan: It’s important to be clear about the type of loan right for your business otherwise, you will end up burdened with sunk costs, lost time, and other pain points.
2. Too long a wait for funding: If your funding needs are urgent, then small business loans might not always work because the time taken for disbursement could be longer.
3. Failure to repay: If your business does not grow as planned despite getting the funding you need, then the possibility of defaulting on your business loan could increase.

Steps to Apply for a Bank Loan for Your Business

1. Research lenders: Begin by conducting a comprehensive analysis of potential lenders for your loan application. Focus on key parameters such as interest rates, required credit scores, collateral, additional paperwork, and funding time frame.
2. Focus on financials: Ensure you have the last three to five years’ tax returns, both personal and business. You will also need to submit updated profit and loss statements, balance sheets, cash flow statements, account receivable reports, and inventory break-ups.
3. Create a business plan: Make sure you have a well-carved-out business plan which includes details of how you plan to go about growing the business and how the funds borrowed will be used to achieve this wisely.
4. Amount of funds needed: Be clear about the amount of funds you will need for the business, as well as some details on future projections for growth.
5. Complete and submit your application: After you complete and file the application, conduct periodic follow-ups to check on the status of your application.
6. Review the final loan offer: After securing your loan, carefully review the tailored contract provided by the bank. Ensure it aligns with your discussed terms and looks satisfactory before proceeding.

Conclusion –

Small business loans can help you meet your ambition of taking your business growth to the next level. If you have a well-thought-out business plan, then these loans can help you grow your business rather than weigh it down.  Know more about applying for a Quick business loan, if your business is more than 2 years old.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Filing an Income Tax Return (ITR) is not easy and with the fear that any mistake or omission may lead to severe penalties by the Income Tax authorities, a lot of new entrepreneurs and start-up owners do not file their ITRs. Therefore, these people wonder how to get a business loan without an ITR.

If you have not filed an ITR as a new business or a startup, it does not make you ineligible for availing a business loan in India. However, if you are an existing business, you must have filed ITR for at least 1 year.

In case you are offered a traditional bank loan for business at higher interest rates, as a new entrepreneur or start-up owner, you have several other options, for example, an online business loan.

Eligibility for Business Loan without ITR

Who do you think would be eligible to avail a Business Loan even though they do not have one of the most important documents to be eligible for one – the ITR?  How to get a business loan without ITR? What documents are required? Read further to find out about this.

Eligible Entities

The following entities are eligible for Business Loans without ITR:

1. First Time Entrepreneurs
2. Start-ups
3. Self-employed professionals

Also read: Reasons Why Unsecured Business Loans Are Gaining Popularity Among Businesses

Eligibility Criteria

The following eligibility criteria are applicable for an IndusInd Bank business loan:

1. Minimum and Maximum Age of Applicant:
   You should be minimum 25 years old to apply for the loan and the loan must be completely paid off maximum within 70 years of age. This varies for different lending institutions.
   
2. Credit Score:
   Credit Score is a major determining factor for your loan approval as you do not have an ITR. Your CIBIL score should be at a minimum of 680.
   
3. Annual Turnover:
   This is also an important factor as the credit institution will need to understand your business turnover to calculate your repayment capacity. Again, the minimum turnover differs for different lending companies.
   
4. Collateral:
   Collateral is the security against which the company providing the credit facility sanctions loans. In the case of small ticket business loans up to INR 20 lakhs no collateral is required.
   
5. GST:
   GST is compulsory for a loan higher than Rs 5 lakhs.

Documents Required:

Specified Application Form along with the following:

1. Govt. document/license which proves that business is 24 months old
2. KYC Documents of entrepreneur – ID and Address Proof
3. Trade License and business address proof (optional)
4. Bank Statement for the previous 6 months of the business entity
5. PAN Card
6. Aadhaar Card
7. GST Registration (GST is mandatory only for amount more than 5 lacs)

Note: This is not an exhaustive list of documents and every lending institution will have its specific requirement.

A simpler and more popular alternative is applying for an online business loan.

Click here to apply for IndusInd Bank’s Quick Business Loans , if your business is at least 2 years old.

Most of these are collateral-free loans. You need to visit the official websites to check for your eligibility.

Conclusion

As you can see there are quite a few options available if you wish to avail a Business Loan without an ITR provided you belong to the eligible segment. Please do note that your CIBIL score is of paramount importance for you to be eligible for such loans with favourable terms. So please work towards maintaining a high CIBIL score.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Scrap business means buying, processing, and selling scrap materials like plastic, paper, metals and other such recyclable elements. With the global move towards sustainability, there is an increase in the demand for recycled materials and this presents scrap merchants and scrap metal dealers with increasing opportunities.

India presents to those in the scrap business an opportunity to make handsome profits, provided you are planning your business well and executing your business as planned. Recycled scrap materials have a high demand in the Indian market and your aim as a scrap dealer would be to purchase cheap, process them as per the extant guidelines, and sell them for a profit.

How to Start a Scrap Business in India?

You need to plan very carefully to start a scrap business in India and keep in mind the following:

From metals to plastics, and even e-waste, the scrap sector offers a lot of scope for aspiring entrepreneurs. Here’s a step-by-step guide to help you get started.

1.    Identify the Type of Scrap to Deal In

The first decision is selecting the type of scrap you want to handle. Each type of scrap comes with its own market demands and profit potential.

• Metal Scrap: Includes aluminum, iron, steel, and copper.
• Plastic Scrap: Sourced from households, industries, and retail outlets.
• E-Waste: Includes old computers, mobile phones, and electronic equipment.
• Paper and Cardboard Scrap: Includes newspapers, magazines, and packaging materials.

Tip: Conduct a market analysis in your area to identify the most abundant and in-demand scrap materials.

2.    Assess Processing Requirements

Some types of scrap require additional processing to increase their value or prepare them for recycling or resale. For example, metal scrap may need sorting, cleaning, or cutting into smaller pieces.

For this purpose, you may need to set up a small unit with equipment like crushers, shredders, or separators. Consider taking a small business loan to cover the costs of setting up a processing unit if your business has been running for at least 2 years. IndusInd Bank offers business loans with competitive interest rates and quick disbursal to help you get started.

3.    Apply for and Procure Permits and License

You need to liaise with the authorities and arrange to procure all essential permits and licenses for the scrap business. The requirements may vary for different parts of India. However, the following are normally required:

• Trade License
• PAN
• GST Registration
• Scrap Dealers License
• MSTC License for Scrap
• Clearance from the Pollution Control Board (PCB), etc.

4.    Arrange Collection and Transportation

Collection and transportation are crucial for running a successful scrap business.

• Collection Points: Set up collection centres near residential or industrial areas. Here, you can source scrap directly from households, factories, or retailers.
• Transportation: Invest in trucks, loaders, or smaller vehicles to move materials from collection points to your processing or storage facility.
• Partnerships: Build relationships with local waste collectors, scrap dealers, and recycling plants to streamline your supply chain.

5.    Arrange for Funding

The scrap business is capital intensive. Purchasing scrap materials requires a lot of funds and the processing requires specialised equipment as well as staff. All of these carry substantial costs. If your business is more than 2 years old, you should apply for a Quick Business Loan or raise capital by taking on partners or investors. In case your gap in the funds required is less, you must choose the former. The Government also has schemes offering financial assistance to Micro, Small and Medium Enterprises (MSME).

Click Here to Apply for an IndusInd Bank Business Loan

Also read: Difference Between Secured and Unsecured Loans

6.    Build a Customer Base

Identify buyers for your scrap materials to ensure steady cash flow. Your buyers can be:

• Recycling plants, who recycle it into raw materials.
• Manufacturing units, who may purchase scrap directly for reuse.
• Exporters who tend to purchase some types of scrap, such as metals, to cater to high demand in international markets.

7.    Market Your Business

Promote your scrap business to attract suppliers and buyers. You can do this through local ads, social media, and eco-friendly campaigns to appeal to eco-conscious customers.

Ideas for Scrap Business in India –

The scrap business in India is mainly based on the recycling of the following materials:

• Scrap Metal
• Paper
• Plastic
• E-waste

Also read: Where can I Get an Unsecured Small Business Loan?

Conclusion –

The scrap business in India is potentially extremely profitable. India’s share at USD 11 billion in 2022 was only 2.2 per cent of the global figure. India will consume 60 million tons of metal scrap by the end of this decade. This, aided by readily available Online Business Loan products will fuel the growth story of the industry. Please note, the business needs to be a minimum of two years old before applying for a Quick Business Loan with us.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.

Micro, Small, and Medium Enterprises, generally known as MSMEs, play a significant role in shaping the country’s economy. MSMEs are considered to be the backbone of the Indian economy as they contribute over 29% to India’s GDP (Gross Domestic Product) and are accountable for nearly 46% of the country’s exports. They also play a crucial role in generating employment and introducing innovative products and trends to the market. MSMEs mainly span across both the services and manufacturing sectors. This includes businesses like Information technology services, education, financial services, retail shops, pharmaceuticals, textiles, food processing, etc.

To promote MSMEs’ growth and enhance competitiveness, the Government of India has introduced many schemes and initiatives under the governance of the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. The act defines small-scale industry, micro, as well as medium enterprises based on their annual turnover and investment in plant and machinery. The Act also has provisions for registration and credit facilities, such as collateral-free credit facilities, capital subsidies, etc., initiated by the Government.

This article aims to provide a clear understanding of the difference between micro, small, and medium enterprises. Understanding the difference between micro and small-scale industries and medium enterprises is important to access support, incentives, and financial assistance effectively. IndusInd bank also offers quick business loans curated to the specific needs of MSMEs, provided your business is at least 2 years old.

Difference between Micro, Small and Medium Scale Enterprises

Right from the tailoring shop next door to a state-level logistics company, businesses vary in size and are classified accordingly. Depending on the business’ (manufacturing enterprise/enterprise rendering services) investment in equipment (plant and machinery) and the annual turnover, you can define small-scale industry, micro, and medium enterprises. Eligibility to seek quick business loans and access government schemes also depends on this classification. The following are the key differences between micro, small and medium enterprises.

Micro enterprises

Micro enterprises are the smallest category of businesses in the MSME segment that operate on a small scale and with limited assets. These businesses have investments not exceeding ₹ 1 crore in equipment and an annual turnover not exceeding ₹ 5 crores. Micro enterprises include food stalls, home-based business units, street vendors, and more.

Depending on the eligibility, micro-enterprises can benefit from IndusInd Bank small business loans with favourable terms for their business operations and growth.

Small enterprises

Small enterprises are slightly larger than micro-enterprises on the business scale. These businesses have investments in equipment that not exceeding ₹ 10 crore and an annual turnover not over ₹ 50 crore. Small enterprises include retail stores, small-scale family-owned businesses, and small-scale manufacturing units.

If the small enterprise has been in business for at least 2 years and the owner has plans to expand, they can opt for a quick business loan. This loan allows them to grow and expand without disrupting their small-scale enterprise’s daily operations. With the right use of business loan funds, you can transform your small enterprise into a medium-scale one.

Also read MSME guide: which businesses fall under MSME, which don’t. See the full list!

Medium enterprises

Medium enterprises are relatively large in scale and usually have a more formalised business structure. These businesses have investments in equipment not exceeding ₹ 50 crore and a substantial annual turnover of ₹250 crore or less.

Medium enterprises, too, are eligible for quick business loans from IndusInd Bank given that the business has been in operation for at least 2 years.

MSMEs are eligible to avail business loans up to ₹ 50 lakhs depending on various factors such as turnover, profitability, business vintage, etc. that are considered for eligibility. 

Also read: Eligibility criteria for MSME business loan

Conclusion

To sum up, knowing the difference between micro, small and medium enterprises and the basis of classification helps in understanding the eligibility for government schemes and subsidies like PMEGP, CGTMSE, & more, getting financial assistance, and making an informed decision. Access to tailored loans help MSMEs expand, grow, and continue to contribute to India’s growth story.

Disclaimer: 

The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.