How to Apply for an MSME Loan?
At some point, any small business will need financial assistance. When expanding horizontally or vertically, the majority of Micro, Small, and Medium Enterprises (MSME) require financial support which can be availed from lenders such as banks and NBFCs.
If your frequent search topics are ‘MSME Loan Apply’ or ‘How to Apply MSME Loan Online’, then this article is for you.
MSME loans are unsecured loans provided by a variety of financial institutions to cover credit-related business expenses. It should be noted that MSME loans have clear eligibility requirements in place to reduce the lenders' risk ratio.
These loans are described by the RBI and the Indian government as loans given to businesses for infrastructure, finance, and other purposes.
How to Apply for MSME Loan Online
Here’s how to apply for MSME loans easily -
Filling the Online Application Form
Applicants who want to get an MSME loan must fill out an online application form from the respective bank or lending institution and provide necessary information
Upload KYC Documents & Business Registration Certificate
The next step is to upload related documents such as copies of your PAN card, Aadhaar card, business registration certificate, GST filing, drug license, trade license, a TIN, and your VAT registration.
Avail the MSME Loan
After all of the applicant's paperwork and other submissions have been reviewed, the loan application will be approved.
Tips & Tricks for MSME Loan Application Process
While applying for a loan is not hard, here are some steps you can follow to ensure that the entire process of availing an MSME loan is smooth.
MSME Loan Application - DOs
All of the relevant documentation for this procedure must be double-checked by the applicant before submitting the same
Applicants should review their credit score because some digital lenders take it into account when approving loan amounts
It would be a smart move for the applicants to check the actual MSME business loan conditions in advance
In order to properly allocate loan funds, applicants must also have a viable business plan else their loan application may get rejected
MSME Loan Application - DON’Ts
Applicants should be wary of online lenders who are out to defraud them. Any reputable digital lending network, on the other hand, will never charge an upfront fee; instead, it will charge a small percentage after the loan is disbursed
Applying for multiple MSME business loans online at the same time can hurt an applicant's credit score
Before applying for an MSME loan, applicants must ensure that all outstanding debts are paid off
Importance of MSME Loans
India's MSME sector is one of the most important sources of industrial production and employment. As a result, business finance has always been in high demand in the MSME market.
One of the most serious problems that numerous small and medium-sized businesses in the country face is the inability to obtain financing at the right time.
Non-banking financial companies (NBFCs) are a viable option for manufacturers that need immediate business financing. The online submissions for MSME loan applications have made the process very simple and fast.
Salient Features of MSME Loans
Applying for an MSME loan is not a complicated process especially thanks to digitization.
Here are some of the appealing features that digital lending platforms provide to borrowers looking for MSME loans -
Digital lenders follow a fast-track protocol and strive to remove any possible delay. If the eligibility requirements are met, an online MSME loan is usually provided within a few days.
Amount and Loan Term
Entrepreneurs can get MSME loans based on the industry they are working in and the investment needed and is generally up to Rs. 45 lakh.
There are no hidden fees or additional charges when you get an MSME loan from a trustworthy digital lender.
Flexible Repayment Options
Digital lenders offer MSME/SME applicants plenty of time and repayment options. The loan terms vary from 1 to 36 months or even more. Applicants may also choose to pay back the loan in EMIs, bi-weekly, or monthly installments.
Benefits of an MSME Loan
Competitive Interest Rates
The best thing about applying for an MSME/SME loan is that the interest rates are competitive. Digital lenders use an online MSME loan application process that is both time and resource-efficient. As a result, it assists them in cutting costs and providing MSMEs with favorable interest rates.
No Collateral Required
MSME/SME loans are unsecured loans with no collateral required which means that these loans are easier to avail
Applicants may expect their loan to be approved within a few days. Funds will be disbursed at a faster pace as well.
MSME/SME loans are unsecured loans available to applicants who meet certain requirements. The applicants retain full ownership and control of their property. They can put these assets to good use in order to expand their business.
Better Finance Management
Borrowers can expect some relaxation when they apply for an MSME/SME loan from a digital lender. They can put the money into plants and equipment, or they can use it to improve their cash flow and working capital.
Things to Keep in Mind Before Applying for MSME Loan
Before availing an MSME loan, it is important to check for the following -
Understand the Eligibility Criteria
Digital lending platforms do not have complicated eligibility conditions. In general, companies are eligible for a loan if they meet the following criteria:
The production unit has been operational for the past year
For the past two years, IT returns have been filed on time
GST returns for the previous 12 months are filed on time
Additionally, different lending companies can impose their own eligibility criteria. If you meet all of these, it is easy to avail a MSME loan.
MSME loans are boon to smaller enterprises which are also important for the country’s economy. As long as one meets the eligibility criteria, and documentation requirements, availing these loans are easy.
However, if you are looking for an additional loan or a short term instant loan, why not avail a personal loan? At Money View, one can avail an instant loan of upto Rs. 5 lakh with minimal documentation. The application process is hassle-free and the loan is credited to your account within 24 hours of approval.