Raw materials are an essential part of every trading, production and manufacturing business. These are unprocessed or unmodified materials that get processed by machines to produce the desired product. It is essential for all companies to purchase raw materials to operate their business.
However, many businesses struggle to get raw materials due to monetary challenges. This is especially true for micro-small-and-medium enterprises (MSME), which might have limited liquidity. But the good news is that raw material purchase loans have been made available by various Non-banking Financial Companies (NBFCs) like Kinara Capital, with minimal documentation requirements. This has made it easy for businesses to access capital to procure raw materials and keep their business growing.
If you are a business owner, you might experience a financial crunch in your business related to the procurement of raw material. Suppliers may insist on purchasing in large quantities or even expect upfront payment. In such a situation, availing of a raw material purchase loan might be extremely beneficial for your business. Let’s have a look at the benefits of these loans:
- Raw material purchase loans can help MSMEs by providing financial assistance to procure raw materials (both local and imported).
- Ease of acquiring raw materials means MSMEs can focus more on producing high-quality products.
- Being able to access capital to purchase raw materials quickly allows MSMEs to complete orders in time.
How to get a raw material purchase loan?
Step 1: Eligibility check
The first step is to take an eligibility check. This ensures your basic loan eligibility and that you pass the basic criteria for availing of the loan.
Step 2: KYC verification
This step consists of verifying your KYC details as well as that of your business. This includes your education certifications, PAN card, Aadhaar card, address proof; and business KYC includes your business registration type, bank statement and Udyam registration.
Step 3: Income verification
This step consists of uploading various business documents. There are alternatives you can provide if certain documents are unavailable. Below are the most requested documents:
– GST certificate
– Bank account with 12 months statement (applicant, co-applicant and business)
– Machinery details (only for the manufacturing sector)
– Property details (no documents required, only information)
-Number of Employees
Step 4: Loan application and approval
This step is mostly about completing the final stage of loan formalities such as providing signatures on documents, and nominee and loan sanction details. NBFCs like Kinara Capital allow small business entrepreneurs to initiate the loan process online. Business owners can check their eligibility instantly by filling in their details on the company’s website After this, a loan officer will contact them if they have passed the eligibility check. The loan officer will then follow up and process the rest of the application.
How NBFCs are helping MSMEs through raw material purchase loans
In the post-pandemic world order, the role of NBFCs in empowering small businesses goes far beyond usual financing. Here are some ways NBFCs are helping MSMEs stay on track:
- The emergence of fintech and digitisation is redefining the role of financial institutions by making them accessible to a wider customer base who need funds to buy raw materials.
- NBFCs are supporting and steering post-pandemic creativity, flexibility, and entrepreneurial development by making capital, and therefore raw materials,
- NBFCs are cutting out the long loan process and paperwork that banks impose, and instead allowing for easy disbursement of funds due to their minimal documentation requirements.
Reputed NBFCs like Kinara Capital provide various fast and flexible lending solutions, including raw material purchase loans and asset purchase loans. They do not collect any mortgage or rental documents as collateral. You can get your loan in just 1 day without the need for a lengthy process or extensive paperwork. Their personalised customer service also helps you with the loan process. So, if you are having trouble coming up with the funds to buy raw materials to run your business smoothly, you can look into raw materials purchase loans from trusted NBFCs and keep your business running!