Comprehensive Guide On MSME Business Loan
The core of the Indian economy is MSMEs. Millions of people need to be given jobs, but innovation, creativity, and growth are equally important. The truth is that MSMEs struggle greatly during their expansion period. Due to a lack of infrastructure and resources for expansion, they cannot afford to take chances. The government has launched a number of initiatives to solve these problems, including:
1) The Pradhan Mantri Mudra Yojana (PMMY) offers quasi-small, semi-small, and micro-enterprises up to Rs. 10 lakh. For loans, borrowers can apply online or in person at commercial banks, MFIs, and NBFCs. Based on the “Shishu,” “Kishore,” and
2) To give small and medium-sized firms financial support without a third-party guarantee or collateral, the Credit Guarantee Trust Fund for Micro and Small Enterprises (CGT MSE) was created.
3) The Prime Minister’s Employment Generation Program is offered a loan by the Khadi and Village Industries Commission (KVIC) (PMEGP). As a system of lending subsidy, the loan is offered to chosen groups to help them establish enterprises, at 15–35% interest.
4) The Credit Linked Capital Subsidy Scheme – The scheme offers a 15% subsidy for further expenditure up to ₹1 crore to incorporate cutting-edge technology into business practices.
5) Fund of Funds Equity Infusion – This one is for MSMEs and is a scheme to assist MSMEs in their growth stage. An equity intervention provides cash to underprivileged MSMEs with growth potential.
6) SIDBI Make In India Loan For Enterprises – SMILE was created to help MSME promote the Indian government’s “Make in India” drive. It assists eligible businesses in meeting their debt-equity ratio by giving soft loans on quasi-equity. The primary purpose is to finance small businesses, and the payback period is up to ten years, with a 36-month moratorium.
You must know the benefits of Business Loan for MSME before applying for one.
Benefits of MSME Business Loans
You can establish or grow your firm with the help of MSME business loans. These loans can be utilised to pay for tools, machines, supplies, and other necessities for your success. They can offer financial assistance if you require money to start new ventures or pay off debts.
The absence of collateral requirements is the key advantage of using an MSME company loan. This indicates that you are not required to pledge other assets as collateral for a loan by the bank.
Utilizing an MSME loan also has the benefit of typically not charging interest on overdrafts. This implies that you will pay lower interest rates than what banks would typically charge for overdrafts because they won’t base how much they lend each month.
Application for a MSME Loan: Eligibility and Requirements
The MSME loan application procedure begins with determining your eligibility. You must be a resident of India between the ages of 25 and 65, and you must have operated a business for at least three years and filed income taxes for at least one year.
Once your eligibility is confirmed, you’ll need to submit some paperwork to complete your application. You’ll need to provide photocopies of two sets of documents:
-Proof that you’ve carried on a business enterprise for at least three years in India (e.g., income tax return from the last year)
-A certificate from a bank or credit union showing that you have an account with them
MSME Loan Documents Required
A MSME loan is a loan given to an individual or a company that has been registered as a micro, small and medium enterprise (MSME) in India. It is given by banks, financial institutions and non-banking financial companies to help them expand their businesses. The term MSME was coined in the year 1992 and since then it has gained importance in this country. In order to avail loans from Banks and NBFCs, one needs to have proper documents with them that will show that they are eligible for such loans.
There are many documents required for business loan but here we will talk about some of the most important documents that you will need while applying for a loan from them:
1) Identity Proof: Passport, driving license, PAN card: https://www.pan.utiitsl.com/, Voter’s identity card;
2) Residence Proof: Passport, leasing agreement, trade license, telephone and power bills, ration card and sales tax certificate;
3) Age Proof: Passport