Small businesses are gaining momentum in Pakistan. The entrepreneurial activity is boosting in Pakistan which is evident from the recent start-ups in the country and their success journey. To promote this activity, different Microfinance Banks have offered small business loans in Pakistan. Karandaaz [a non profit organization] has also stepped in Pakistan to play its vital role to promote the financial inclusion among masses to be supported by the small businesses and SMEs and creating right venue for them to have easy access to finance.
Small business loans are available from multiple sources which includes microfinance institutions and banks. The impact of small business loan is extensive. It not only empowers the individual but also by helping him/her in establishing its business, it can further be a source of income for someone else by working over there as an employee. It builds the chain of employment and giving many people the source of income to raise their families.
In this realm, small business loans are very crucial in Pakistan. On one side it is helping the masses to turn into human resource and on the other hand it is directly participating in the GDP of Pakistan by generating revenue from that business. Here are the key best practices for getting small business loans in Pakistan:
Understanding Different Categories of Small Business Loans Available
Before availing small business loan, first make yourself aware of all the different type of small business loan available in the market. Then, identify your need and the type of business you want to avail. The specific terms of the loan and the length of the loan that can be made available to you
Identify and Research on Available Lenders
After identifying the type of small business loan, you need in depth research for your business. Then identify and research the lenders, who can provide you loan at the cheapest interest rate or at time interest free depending upon the type of loan and the nature of your business.
Critically Review Your Credit and Risk Profile
Critically review your credit and risk profile if you are applying for small business loan. It is advisable that you review your profile from the perspective of the lender. When you review, take care of the following decisive factors:
- Review your credit history, to know about your dealings in terms of payment of money
- Review your outstanding loans and cash flows
- Asset involved in the business
- Investor, if any
- Financial statements (if the business is in running position)
Know the Ins and Outs of Your Small Business Loan Application
It is advisable that you must have complete knowledge about the ins and outs of the small business loan application, and the documents required. So that in any phase of processing your application can not be rejected because of the vacuum visible in your application filling and the required documents. If there is anything you are unable to comprehend, ask the lender, they always have customer care department to help out the people. Always go through the small print that is provided in the application papers.
As the small business is already targeted towards the unserved people, so special desks are arranged for them to help them out in complying with the procedure and providing them with what they need.
Specify the Usage of Your Loan
Specify the usage of your loan to the lender. It makes the financial picture easy to comprehend for the lender as well. mentioned on the application that you need that loan for the capital expense or for equipment purchase. It also gives an idea about the future needs of your business and help you in arranging line of credit for your business in times of business crunch.
Picking Up Collateral or Going for Clean Financing
A lender is primarily concerned for the repayment of the loan in the end. It is advisable to apply for loan against security collateral, it will ease the process of loan sanctioning. As the lender has the hope of getting his money back in the event of winding up of the company. But this scenario is for the medium level enterprises. However, for small business, the amount of loan is usually not significant, so at time bank can do clean financing as well.
List of Small Business Loan Providers in Pakistan
The list o small business loan providers in Pakistan are as follows:
- FINCA Microfinance Bank
- Tameer Microfinance
- Khushali Microfinance Bank
- First Microfinance Bank Ltd.
- Pak-Oman Microfinance Bank Ltd.
- U-Microfinance Bank Ltd.
- Mobilink Microfinance Bank Ltd.
- NRSP Microfinance Bank Ltd.
- Apna Bank Ltd.
And other leading banking institutions are also providing small business loans but under stringent conditions and high collateral security for the repayment of the loan.
Conclusion
In a nutshell, small business loans are the base of the future monetary growth in Pakistan. As it empowers people and also contributing in the GDP of the country. Visit Mawazna.com now to know more about the SMEs and compare different loan providers in Pakistan.
“Mawazna Karein Apne Liye, Apno key Liye”
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