What Is The Easiest Way To Get An MSME Loan?

Business loan

Micro, Small and Medium Enterprises (MSMEs) are an essential part of the economy. They account for a large part of the GDP and provide most of the employment. However, they often have trouble accessing the required finance to continue running and grow. Availing an MSME loan could provide the required financial assistance to these organizations.

Types Of MSMEs

An MSME is an enterprise set up for self-employment. The recent liberalization of the private sector has led to an increase in the number of people leaving large corporations to become entrepreneurs, and set up small organizations of their own.

Broadly, MSMEs are of two types:

  1. Manufacturing Enterprises: These are the MSMEs that are involved in manufacturing/ producing goods related to any industry. The investment required to set up these types of enterprises range between Rs. 25 lakh (for micro enterprises) to Rs. 10 crores (for medium enterprises).
  2. Service Enterprises: This type of MSMEs are involved in providing/ rendering services of any type. They may require investments between Rs. 10 lakh to Rs. 1 crore.

MSME Finance

Since the capital required to start a MSME is quite large, it is always prudent to find external sources for it. An MSME loan, for example, can provide a budding entrepreneur with the required capital to start their business. It is important though, to consider and compare MSME loan interest rates before applying.

In fact, many banks and NBFCs like Bajaj Finserv offer these MSME loans in India, at affordable interest rates. They come with many benefits as well. The Bajaj Finserv Business Loan for example, offers the following features:

  • Credit line: With this feature, the entrepreneur can borrow as much as is required within a credit limit. They will be charged interest only on the amount they borrow. What’s more, the principal component of the loan can be repaid only at the end of the tenor.
  • Loan Amount: You can avail up to Rs. 30 lakh as your principal loan amount.
  • No Collateral: It is an unsecured loan, so this MSME loan can be availed without collateral.
  • Offers: Offers like a top-up facility, reduced rates, etc. come with this loan.
  • Online Access: The entire application process is done online, making it easy to apply from anywhere.

How To Apply

Before applying for any loan, it is important to check your eligibility. MSME loans are approved for micro and small enterprises, but may not be for medium ones. Moreover, your eligibility may vary depending on whether you are a professional or not.

Practicing doctors, chartered accountants, architects etc., looking to start their own business, can avail these loans. Additionally, non-professionals like traders, proprietors, retailers, manufacturers, service providers etc. are also eligible to avail these loans. Entities like partnerships, private limited companies, limited liability partnerships, etc. can apply for these loans as well.

The application process itself is quite simple for online applications. After you check your eligibility, simply follow the following steps:

  • Open the online application form
  • Fill in your details (Identity, Business Details, Industry, etc.)
  • Scan and submit required documents
  • Wait for approval

An entrepreneur looking to apply for a MSME loan, would be required to submit the following documents:

  • KYC documents (identity proof like PAN card, Voter’s ID, etc. along with the KYC form)
  • Passport sized photographs
  • Business proof (sole proprietorship declaration, copy of memorandum, etc.)
  • Financial documents related to loan application
  • Account statements (latest ITR including balance sheet, income accounts, profit and loss accounts, etc.)

Lastly, entrepreneurs should have a good idea of their future business plan and also know more about sme finance. This will help them better plan their finances and know their requirements. This knowledge is important to be able to find exactly what they need, especially since there are so many options so easily available these days!