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. 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 Get an MSME Loan?

You can get an MSME loan in three simple steps:

  1. 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
  2. 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.
  3. Sanction
    After all of the applicant's paperwork and other submissions have been reviewed, the loan application will be approved.

Instructions for online MSME Application process:

DOs

  1. All of the relevant documentation for this procedure must be double-checked by the applicant
  2. Applicants should review their credit score because some digital lenders take it into account when approving loan amounts.
  3. It would be a smart move for the applicants to calculate the actual MSME business loan conditions in advance.
  4. In order to properly allocate loan funds, applicants must also have a viable business plan.

DON’Ts

  1. Applicants should be wary of online lenders who are out to defraud them. For example, for authorizing the MSME loan online, they charge an upfront fee. 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.
  2. Applying for multiple MSME business loans online can hurt an applicant's credit score.
  3. Before applying for an MSME loan, applicants must ensure that all outstanding debts are paid off.

Why Should You Avail an MSME Loan?

India's MSME sector is one of the most important sources of industrial production and employment. This section accounts for roughly 40% of the country's overall exports and 45 percent of its total industrial output. 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.

Some key takeaways are:

  • MSMEs will get a loan with no collateral
  • A loan worth Rs. 3 lakh crore has been granted to small and medium-sized businesses.
  • A 12-month moratorium is being offered
  • Manufacturing and service MSMEs will be treated as the same.
  • 48-month repayment period
  • 100% Money-Back Guarantee
  • Approximately 45 lakh units will be benefited.

What are the Features of MSME loans?

MSME loans can be used to finance a variety of important functions that contribute to a company's growth. You can save time by filling out an online application form and checking their specifications. You do not have to go through a lengthy approval process when applying for an MSME loan on digital platforms.

Here are some of the appealing features that digital lending platforms provide to their applicants:

  • Online Application:In the MSME loan application and approval process, digital lenders follow a fast-track protocol and strive to remove any possible delay factor. If the eligibility requirements are met, an online MSME loan is usually provided within a few days.
  • Amount and Loan Term:Entrepreneurs can get an MSME loan for up to Rs. 50 lakhs. In addition, the majority of digital lending platforms take a flexible approach to loan repayment. They usually have a term of 12 to 36 months to enable companies to repay it on their own timetable.
  • Hidden Fees: 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 one to thirty-six months. Applicants may also choose to pay back the loan in EMIs, bi-weekly, or monthly installments.

What are the Benefits of an MSME Loan?

  1. 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.
  2. No Collateral Required
    MSME/SME loans are unsecured loans with no collateral. In other terms, borrowers are not required to put up any collateral/security to secure the loan.
  3. Fast Funding
    Applicants may expect their loan to be approved within a few days. Funds will be disbursed at a faster pace as well. You don't have to wait weeks or months for your MSME business loan applications to be approved.
  4. Complete Control
    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.
  5. 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.

Check the Eligibility Criteria Before Applying for MSME Loan

Digital lending platforms do not have complicated eligibility conditions. In general, companies are eligible for a loan if they meet the following criteria:

  1. For the past year, the production unit has been operational.
  2. For the past two years, IT returns have been filed on time.
  3. GST returns for the previous 12 months are filed on time.