What is MSME / SME Loan?
Micro, Small, and Medium Enterprises (MSME), also referred to as small and medium enterprises (SME), are businesses considered to be the backbone of our economy. They not only provide employment to millions of people around the country but also generate revenue for the governments by paying their taxes. Banks and Non-banking financial companies (NBFCs) in India offer a variety of financial products such as MSME / SME Loans to meet the needs of these businesses.
With competitive rates, a simple loan application process, and quick disbursal of the loan amount, MSME / SME Loans are one of the best choices available for entrepreneurs to meet the financial needs of their business.
Does Money View Provide MSME / SME Loans?
Currently, Money View does not provide MSME / SME loans. We only provide personal loans up to Rs 5 lakhs to salaried and self-employed applicants. You can also take a personal loan to meet the financial needs of your business.
Purpose of MSME / SME Loans
The loan amount borrowed under this scheme can be used by small and medium enterprises for the following purposes:
- This loan can be used to meet the working capital requirements of an enterprise at the time of an expansion or upgradation.
- The funds borrowed under this scheme can be used to make advance or bonus payments to the employees
- Entrepreneurs can apply for this financing plan to purchase items such as equipment, machinery, vehicles etc. for business purposes.
- The cash received under this scheme can also be used to take care of any mismatch of the cash flow temporarily.
- Using the loan amount received under this scheme, merchants can repay any existing tied-up term loan that they might have availed previously.
- By applying for this loan, business owners can take care of their business credit needs and acquire the funds needed to effectively manage the debts and other financial commitments of their business.
Features and Benefits of MSME / SME Loans
Easy Application Process
Most lenders offer a simple loan application process and the loan requests are processed and approved without any hassles.
Quick Loan Disbursal
Lenders understand the importance of acquiring funds for the functioning of a business and hence offer fast disbursal of the loan amount.
Competitive Rates –
Due to the presence of many lenders offering SME loans in the country, the interest rates offered by them are quite competitive.
Flexible loan tenures
This loan offers customers the flexibility to select a repayment plan that not only suits their requirements and circumstances, but also their repayment capacity.
No Collateral and Third-Party Guarantee Requirement
There is no collateral or guarantee requirement for unsecured business loans for small and business enterprises.
Eligibility Criteria for MSME / SME Loans
The eligibility criteria followed by most lenders for SME loans are as follows:
- These loans are available for only small and medium-size businesses.
- The business must have received a satisfactory rating from an external credit rating agency.
- In order to be eligible for this scheme, the company should have a minimum turnover as dictated by the lender.
- An enterprise with funded or non-funded exposure can also avail a loan under this scheme.
MSME / SME Loan Interest Rates
The rate of interest offered with MSME / SME loans is usually based on several factors such as credit history, loan amount, repayment tenure, etc.
Given below is a list of some of the top MSME / SME loans providers in India and the interest rates offered by them.
|Bank||Minimum Interest Rate Per Annum|
|SBI (Mudra Loan)||9.75%|
|Bank of India||10.20%|
|Punjab National Bank (Mudra Loan)||10.30%|
|IDFC First Bank||18%|
|Kotak Mahindra Bank||16%|
MSME / SME Loans Fees and Charges
|Processing Fee||Starting from zero to 4 percent of the approved loan amount|
|Part or pre-payment Charges||Starting of zero to 4 percent of the pending loan amount|
|Loan Cancellation Charges||Differs from one lender to another|
|Foreclosure Charges||Starting of zero to 5 percent of the pending loan amount|
**Please note that the interest rates, fees, and other charges mentioned above may not be up to date and will differ from one lender to the other. Please contact the lender directly to know about the applicable interest rates, eligibility criteria, and fees & charges.
Documents Required for MSME / SME Loans
- Application form – duly filled and signed
- Copy of business plan
- Proof of income documents
- Photographs of the applicants (passport sized)
- ID proof documents such as Aadhaar, PAN, Voter ID, driving license etc.
- Address proof documents such as lease agreement, electricity, and bills, trade license, GST certificate, ration card, etc.
- Proof of business address documents such as Rent agreement, Memorandum of Associations (MoA), Sales Deed, Copy of Licenses, copy of registrations and certificates, Article of Associations (AoA) etc.
- Other documents such as bank statements for the last one year, proof of business registration proof, copy of partnership deed, copy of company PAN card etc.
The documents required to avail MSME / SME loans may differ from one lender to the other.