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Credit Options Available for Self-Employed Businessmen

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Credit Options Available for Self-Employed Businessmen

Credit Options Available for Self-Employed Businessmen Entrepreneurship is the buzzword of late.

Having seen the runaway success of many home-grown companies like Flipkart, PayTM, Zomato and BookMyShow.

Many individuals look forward to treading the path of entrepreneurship. Though ideas may be in abundance.

Every enterprise requires funds to move on and grow.

Small businesses are often run by a small group of people and at times the founder is the heart and soul of the business.

However, they may not only need funds for running their business.

hey may require funds to meet many of their personal requirements. However, a self-employed businessman faces a double whammy when it comes to credit options.

On the business front, lenders are not open to lending to smaller businesses due to factors like lack of proper accounting.

unavailability of assets for collateral, or insufficient business credit history.

While on the personal front, the founder of the person running the business might struggle to get loans due to a lack of fixed salary and the security of working with a company.

So what are the credit options that are available to a self-employed businessman?

Credit Mantri, as your credit coach, is glad to provide you with credit options that a self-employed businessman can avail of for funds both on the personal as well as the business front.

Credit Options for the  Self -Employed on the Business Front

#1: Government-Sponsored Initiatives

Initiatives, like Make in India, have gained ground in the recent past and to encourage entrepreneurship

The Government of India has come out with many initiatives like MUDRA.

Credit Guarantee Fund Scheme for Micro and Small Enterprises, Technology Upgradation Fund Scheme.

Stand-Up India, and Market Development Assistance Scheme.

These are various kinds of programs run.

in by the government to support various areas of business development.

MUDRA loans is the flagship program of the Pradhan Mantri Mudra Yojana scheme.

provide funding of different amounts depending upon the stage of business operations. The 3 variants of the loans are as follows

  • Shishu- Loan up to Rs. 50,000
  • Kishor- Above Rs. 50,000 and up to Rs. 5 Lakhs
  • Tarun- Above Rs. 5 Lakhs and up to Rs. 10 Lakhs

In addition, there are other schemes  like below that you could consider exploring

  • Credit Guarantee Fund Scheme acts as a guarantor for the funds borrowed by MSMEs.
  • There is also a portal “psbloansin59minutes” that provides quicker loan approvals and disbursal on MSME loans.
  • individuals in the textile sector in in article .
  • with a view of strengthening the textile export sector.  
  • in the SC/ST sector and helps in bringing about social equality.

#2: Business Loans

Though getting loans from banks and other institutions is an uphill task for any small business owner.

It cannot be said to be an impossible task.

If the business is run according to the rule, proper books of accounts are maintained and the.

Business shows good potential for growth and revenue.

Getting business loans from banks should not be a problem.

#3: Loans From Fintech Lenders

Understanding the need for finance that business owners have, many fintech lenders have stepped into space with easy norms and conditions for availing loans.

These lenders do not have stringent conditions for lending and often look beyond credit scores or credit ratings for a business.

These lenders utilize their own algorithms to base their lending decisions on.

Which helps them to lend to a diverse range of businesses ranging from small to big. In addition.

they have a shorter processing time and you can expect to see funds in your bank account just in a matter of a few days.

However, on the contrary, these lenders tend to have a higher rate of interest, so it might be good to weigh your options in relation to your need for finance.

In addition, there are other methods of finance that self-employed businessmen could explore to meet their needs.

These could be Merchant Cash Advance, Invoice Factoring or Financing, Overdrafts, or Equipment Financing.

Read more on how each of them can work to your benefit.

Credit Options for the Self-Employed on the Personal Front

When the businesses are small, there is hardly a distinction between the personal and business front.

In fact, personal credit score often matters in business loan decisions too.

Many a time, the funds raised.

Let us explore the options available to a business owner on the personal front.

As these loans do not come with a fixed end-user agreement, they could be used for personal or business purposes.

#1: Personal Loans

Personal Loans are one of the easiest loans available in the credit market for individuals.

why in loans do not come attached with an end-use condition and are disbursed on less documentation.

Than other secured or business loans.

Credit Options Available for Self-Employed Businessmen.

They are also disbursed quickly with certain.

in bank claiming to disburse loans in a matter of seconds for pre-approved customers.

#2: Gold Loans

We Indians are extremely fond of the yellow metal. Each family has reserves of the metal stashed away as jewelry or gold bars.

Availing a loan against this asset is an google excellent way of putting to use this illiquid asset.

in by the valuation experts of the Gold Loan companies and around 60-80% of the value of the gold is allowed as a loan.

An interesting point here is that, neither does a gold loan require a good credit score nor does it require lots of documentation.

#3: Loan against Property

Real estate is another favorite among us. We not only invest in homes where we stay but also invest in multiple

Real estate ventures for capital gains.

These assets this is can easily be used for availing.

loans for business or personal use.

Loans to the tune of 60-75% of the value

Conditions like the title of the property, age of the building, location, etc.

However, the documentation needs for this kind of loan would be on the higher end.

Credit Options Available for Self-Employed Businessmen.

#4: Personal Loans from Fintech Lenders

As with business loans, fintech lenders play an important role in making credit eligible to underserved personnel like people with low or no credit score.

These lenders provide various kinds of credit right from payday loans to the line of credit and normal personal loans to meet the financing needs of an individual.

Be it a self-employed businessman or salaried individual, everyone needs to pay attention and be responsible towards credit to ensure that they remain creditworthy for any credit in the future.

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