Get rid of capital woes; Here’s how you can raise capital for your business

One of the greatest challenges for any business is to raise capital. Finance is the blood of every company and it becomes even more critical when you are just starting up.

It is important to keep the finance supply uninterrupted, especially for the MSME sector as they are the backbone of the Indian economy and the largest employers in the country.

In this backdrop, the State Bank of India (SBI), country’s largest lender, decided to back these small and micro businesses and launched its MSME Loan Finance Umbrella in 2016.

Under its umbrella, SBI launched two unique schemes- the SBI Fleet Finance Scheme and the SBI Import and Export Finance Scheme.

The SBI Fleet Finance Scheme has benefitted many in the transport business. For instance, it helped Umed Jain immensely when he needed to expand his fleet of buses and trucks. SBI sanctioned a loan of Rs 9.60 crore and helped him complete his tender.

Umed Jain, Partner, Shri Maruti Travels, said, “In 2005, I took finance from seven financers for 55 buses. In 2006, we got a contract for 25 local buses and SBI helped us. In 2017, we bagged a contract for running 45 more buses and SBI sanctioned a loan of Rs 9.60 crore.”

Jain now has a fleet of 105 buses plying in Gujarat and is continuing to strengthen the local transport in many cities. He is not only growing his business but providing employment to hundreds.

The Fleet Finance Scheme provides term loan of up to Rs 10 crore to existing transport operators owning a minimum of 10 commercial vehicles like trucks, trailers, tankers, buses, etc.

The loan amount includes the cost of body and insurance and registration and road tax. An optional collateral free security is also available in select cases.

Jain has huge expansion plans and said he wants to continue his relationship with SBI.

Meanwhile, another business that took a big leap with the help of SBI and has even opened up in East Africa is Mercury Industries.

Kanpur-based Mercury Industries has grown into one of India’s best general line can manufacturers. It received funding under SBI’s Import/Export Finance Scheme.

They extend pre-shipment finance both in Indian and foreign currency. When they give loan in foreign currency, it is linked to LIBOR, which is cost competitive for the customer. And the Indian rupee loan is also very cost competitive and some of the segment of these customers are eligible for interest equalisation, which is subsidy which they get back from the government so the cost to the customer comes below or around 7%. Post-shipment finance can also be done in foreign currency which is very cost competitive for the customer.

Mercury Industries is associated with some top brands and its exports have grown multi-fold.

Niharika Malik, Executive Director, Mercury Industries, said, “We have grown over a period of time. Turnover has increased. We may be an MSME in business but in thought process and quality, we would like to compare ourselves with the best of the world.”

Mercury Industries now employs 400 people across half a dozen location in India and Africa.

Mercury Industries faced a financial crisis in 2008 and after contacting SBI, they got financing for machines, investments, etc.

SBI continues to provide a big leap to the MSME sector. Watch the episode here to get inspired.

This is a partnered post.