MSME loans make it easier for small business owners to finance business requirements. This will not only improve theproductivity of the business, but it also makes entrepreneurs concentrate on growing their business rather than facing insufficient liquidity. More than 50% of the country’s GDP (Gross Domestic Product) is contributed by the MSME and the SME sector. To raise these sectors and give importance, the government has initiated numerous schemes, offers and set up NBFCs. Offered under government schemes, the 59 minutesMSME loan is a business capital loan that a lot of MSME businesses can use for financial assistance. The interest rates on this loan will vary depending on the credit profile of the individual applying for it.
Benefits Of Getting A Business Loan For MSME
- Accessible and Convenient: Some banks and financial institutions provide a customized repayment plan as per the business cash flows to avoid facing financial difficulties while servicing the loan. Monthly instalment can be lower or increased by owners as per the profitability or choose a bullet payment option to repay the loan amount.
- Flexibility: Business owners have numerous options available for loans based on their current requirements. An overdraft facility whereby borrowers may overdraw the current accounts as per the agreed terms and conditions. The flexibility makes it easier for borrowers to avail a loan for the business facility.
- No Collateral Required: When getting a loan for business, you are not required to pledge any collateral to avail of the loan. For a small business start-up, these loans can help you meet your business requirements and grow your business.
- Business Loan Tenure: Business loans are unsecured loans this means it is given for a shorter period. Generally, the loan tenure for this loan is between 12 months to 60 months. You can choose between short term and long term loans based on your business requirements.
- Business Loan Interest Rates: Most banks, NBFCs and other lending companies offer loans for business at competitive interest rates. The interest rate loan depends upon your business, the loan amount you have applied for and your past relationship with the bank.
Business Loan Eligibility Criteria
The following are the eligibility criteria for Business loan for MSME
- To be able to avail a loan with ease you need to fulfil the eligibility criteria only then you are eligible for a loan for your business.
- Must be an Indian citizen to be eligible for a business loan.
- The applicant must be a self-employed individual.
- Self-employed individuals between 26 – 66 years are eligible for a Loan.
- The MSME business vintage must be at least 3 years long.
Business Documents Required For MSME
The documents required from prospects applying for an MSME loan are:
- Business Plan
- Duly filled Application form
- Proof of Identity: Passport, driving licence, PAN card, Voter’s identity card
- Residence Proof: Passport, lease agreement, electricity bills, and sales tax certificate
- Documents for Age Proof such as Passport, Voter’s identity card, Photo PAN card
Financial Documents Required:
- Last 12 months’ bank statement
- Business registration proof
- Proprietor(s) PAN Card Copy
- Partnership deed copy
- Company PAN card copy
- Profit & Loss statement along with balance sheet copy of last 2 years
- Sales tax documents
- Municipal tax document
Business Loan Application Process for MSME loan
The following are the steps involved to apply for the loan:
Step 1: To apply for a business loan visit the official website and register. Complete the sign-up process by entering the name, email, and other such details.
Step 2: Verify the credentials, an OTP is sent on your mobile number. Enter the OTP received on the phone and click on the ‘Proceed’ button.
Step 3: Enter your GST details – the GST number and password, along with income tax information. Fill in the tax details in XML format or log in with ITR, PAN and date of incorporation.
Step 4: Upload the bank statements or provide the net banking credentials for the bank to access the financial statements.
Step 5: Select the purpose of the loan and provide details of existing loans, if any.
Step 6: Pay a convenience fee of ₹1000 plus taxes to proceed and download the approval letter.