MSMEs are a crucial component of the growing Indian economy. There are several Indian MSMEs, and they are present in both the products and services sectors. However, like other businesses, MSME enterprises require capital to grow and run their operations.
The Indian government has initiated several options for MSMEs to get the funding required for their sustenance. MSME Business Loan is one program you may use after obtaining Udyam Registration or MSME Registration. So, if you’re an entrepreneur looking to raise money for your business, you can apply for an MSME loan.
But, before applying for an MSME business loan, you must confirm that you meet the requirements for qualifying for MSME loans. After reading this article, you will comprehend the entire application procedure for an MSME loan.
MSME Loan: A Summary
A business loan known as an MSME loan is explicitly created with the needs of a small business in mind. The MSME loans are low-rate business loans that can be used as working capital, startup capital, business loans for women, or any other need in a small and medium business venture. MSME loans are small company loans that can aid you in starting or growing your organization in its early stages because they are provided without any collateral and offer lower interest rates.
Under the CGTMSE program, the government guarantees loans to MSMEs. The Indian government, RBI, and SIDBI developed this program to encourage MSME loans in India. Under this plan, many lending institutions offer small business loans without requiring the borrower to put up collateral.
According to the terms of this program, the business owner must prioritize the project’s viability and meet all eligibility requirements to get the benefits. The eligibility criteria for personal loans are the same for all lenders, but please refer to your lender for detailed guidelines on their website. Personal loan applications are submitted online, typically via a portal website or mobile app. In most cases there is an application form that can be filled up online. There may also be a requirement of supporting documents such as proof of identity and address, proof of employment (where applicable), proof of income and so forth.
The eligibility criteria and documents required
- Any individual who comes under the SC/ST/OBC category, women entrepreneurs, business owners, MSMEs, and self-employed professionals, can benefit from MSME loans.
- Additionally, private or public limited companies, partnership firms, sole proprietorships, and limited liability partnerships only operate in the manufacturing, service, and trading sectors can also apply for an MSME loan.
- The requirement for an MSME loan is to have a minimum credit score of 750.
- A one-year business operation proof is required.
- Businesses should generate a minimum of Rs. 12 lakh per year income.
- Should have a solid financial history and a good payback record.
- Should never have a lending institution default on a loan.
The documents required are:
- Completed application form and two passport-size photos.
- KYC records of the applicant and co-applicants may include:
- A PAN card.
- An aadhar card.
- A passport.
- A voter ID card.
- A utility bill.
- A driving license.
- Business and residence address proof.
- Bank information and the last six months’ bank statement.
- Certificate of Business Establishment or Letter of Incorporation
Apply for MSME loan: the essential steps
Step #1: Find the MSME business loan application form on the lender’s official website.
Step #2: Complete a form with some fundamental data—the PAN card details. The first stage of your application is complete once you have filled out these details.
Step #3: Fill in the details about your company and income.
Step #4: The lender will need your business PAN and pertinent information.
Step #5: Examine the offers for MSME loans. After filling out the details mentioned above, you will be given the maximum loan amount from the lending institution as an MSME business loan.
Step #6: Complete the MSME business loan by deciding on the low-rate business loan package or proposal from your lender and setting the payback schedule.
Step #7: You have submitted an application for an MSME business loan after getting acknowledgment and verification. Discuss the loan’s size, period, and details with the lending institution. Once you receive an online confirmation that your application was approved, you may anticipate the loan funds in your account within a few working days.
Conclusion
Now that you know how to apply for an MSME loan with the simple instructions mentioned above, grow your business without hassles.
Furthermore, financial institutions provide MSME loans at competitive rates using an entirely online process designed to make the procedure quick and simple. Simple eligibility requirements, quick approval, and disbursement, and flexible tenure options are some characteristics that are anticipated to free up your time so you can concentrate on expanding your business while they handle the finance requirements.
