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What is the difference between large and SME business loan?

By Finserv MARKETS - Feb 5,2019
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Large and SME Business Loan

While looking for a loan for your business, you might come across two broad types of a business loan i.e. large and SME business loans. These are business loans which are aimed at helping small & medium as well as large enterprises avail capital to boost their business growth.

What is an SME Loan?

In recent years, there has been a significant rise in the number of Small and Medium Enterprises (SMEs) across the country. These SMEs have contributed significantly to the economic growth of the country. Therefore, in order to encourage the development of these SMEs, the government has launched several initiatives such as Credit Guarantee Scheme, Micro & Small Enterprises Cluster Development, etc. Moreover, to cater to the financial requirements of SMEs, lending institutions offer different credit products to entrepreneurs. Business loans and SME loans are two of the most popular credit products availed by entrepreneurs. Let us have a look at both of these credit product and understand the basic differences between them.

SME loans

SMEs loans are primarily availed by Small and Medium Scale Enterprises to arrange funds for the growth and expansion of their business. The prime objective of the SME loan is to meet the business needs such purchasing raw material, machinery, managing working capital, marketing, etc.

What is Large Business Loan

Large business loans

Large business loans are usually availed by established businesses to fund their growth and expansion strategies. The loan amount is high in case of large business loan and it can be used for various purposes such as upgrading infrastructure, acquiring new business, etc.

It is to be noted that the eligibility criteria of SME loans and large business loans may differ from one financial institution to another. Therefore, it is always advisable to research the financial institution carefully before applying for either of these loans.

Now that you have a better understanding of both these loans, let us have a look at some of the major differences between Large Business Loans and SME loans.

Difference Between SME & Large Business

Parameter Large business loans SME loans
Loan amount The loan amount is higher in case of large business loans The loan amount is comparatively lower in case of SME loans
Loan Tenure Long loan tenure Short loan tenure
Interest rate Low interest rate High interest rate
Documentation Rigid and heavy documentation process Flexible and minimal documentation
Credit history Credit history plays a significant role in the loan approval Credit history might not play such a crucial role in the case of SME loans.
Collateral Lenders usually demand adequate security in the form of collaterals SME loans are collateral-free.
Disbursal time The approval and disbursement process of large business loans is a time-consuming process. Instant approval and swift disbursal of the loan amount.

When availing a business loan, it is recommended to compare various loan products offered by different financial institutions. This will help you avail a business loan that best suits your needs. While availing a small business loan, it is essential that you make a note of the interest rate levied by the lender. You can avail business loan at a competitive interest rate if you have a high credit score and good repayment history. A competitive interest rate will not only reduce the overall cost of borrowing but also reduce the repayment burden significantly in the long run.

A Bajaj Finserv Small business Loan available at Finserv MARKETS comes with competitive interest rate and other attractive features such as less processing fees, no hidden charges, quick approval, and instant disbursal. You can also calculate your monthly EMIs with the help of an online business loan calculator. This will help you plan your monthly budget wisely and make timely repayment of your business loan.

Also know how you can avail for the new MSME Loan scheme announced by our finance minister easily only at Finserv MARKETS

What is an SME and Large Business loan?

A large business loan is a credit availed by large enterprises to increase their working capital, upgrade infrastructure, expand their operation or even acquire new business. Whereas, a business loan for a small and medium enterprise (SME), is an initial financial aid that small businesses avail to either start their business, purchase inventory or machinery or for expansion and scale.

Though these loans are categorized on the basis of the scale of business, the essential features of a large business loan and an SME business loan is essentially the same.

Let’s look into the features of a business loan

High-value loan

You never know how much capital your business might need in order for it to grow, stay competitive and create its own niche in the market. Therefore, it is necessary that you infuse enough funds into the business to finance all its needs and requirements. The amount of loan that you can avail depends upon the business’ credibility, eligibility, repayment capacity, etc. With us at Finserv MARKETS, you can avail a business loan of up to Rs. 25 lakh.

Quick disbursal

It is crucial that you invest adequate capital in your business at the right time. Naturally, you would not want to wait for days to receive the loan you have applied for. With a quick online process, the loan disbursal process is easy, convenient and hassle-free. This helps you can take full advantage of business loan. Once you fulfill all the formalities and submit the required documents, you can get your loan application approved in 3 minutes. Moreover, your loan amount will be credited to the bank account within 24 hours!

Flexible tenure

Whether you want to avail a loan to expand your business or start an SME (Small or medium scale enterprise), you might be uncertain about the top line/revenue growth. With Finserv MARKETS, you do not need to worry about all this. You can choose a tenure ranging between 12 to 60 months and repay the loan amount as per your convenience and repayment capability. Use Business Loan Calculator at Finserv MARKETS to understand your accurate monthly outflow.

No collateral

As a business loan is an unsecured loan, lenders do not ask for collateral when you apply for a business loan. Your creditworthiness and repayment capacity is enough for the lender to give you a loan. So, while you are waiting for your business ideas to take shape, you need to worry about arranging collateral to avail a loan.

The different types of business loans that an enterprise can opt for include:

  • Working Capital Loan
  • Term Loan
  • Equipment Financing Loan
  • Invoice Financing etc.

The SME sector is essentially the backbone of the Indian economy, contributing ~45% on a yearly basis to the overall industrial output. Hence, business in this category can also avail loans under the PMMY (Pradhan Mantri Mudra Yojna) as well as Stand Up India schemes.

While you are busy in preparing strategies to reach your business targets, you need not stress on the complex procedure of availing a business loan. With Finserv MARKETS you can avail a Bajaj Finserv Business Loan with easy eligibility criteria and minimum documentation.

Whether you are applying for a large business loan or an SME business loan, all you have to do is fill the application form, mention your preferences and receive the loan amount in your bank account within few hours.

Get personalized choices for Loans, Cards, Insurance, Investments & UPI Payments and much more on Finserv MARKETS – Bajaj Finance App.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522