Apply for MSME loan online. MSME loan interest rate | MSME loan scheme 2023
A Micro, Small and Medium Enterprise (MSME) loan is a type of business loan offered by banks / lending institutions to individuals, SMEs, MSMEs and start-up enterprises. MSME loans are used by business owners and enterprises to meet their working capital requirements, manage cash flow or expand their business, etc.
Many lending institutions/banks provide SME and MSME loans to their customers without collateral or any security. In this article we will talk about how to take MSME loan or how you can get MSME loan? Following are the MSME loan schemes and other related information.
MSME Loan for new and existing business/enterprise is a type of loan facility in the form of Term Loan (Short Term/Intermediate-Term/Long Term), Working Capital Loan, Overdraft, Cash Loan, Letter of Credit, Bill Discounting. , and other loan products.
Micro, Small and Medium Enterprises (MSME) loans are provided by a number of financial institutions, including banks / NBFCs, regional rural banks, small finance banks, micro finance institutions, etc. to startups, self-employed professionals, MSMEs, business for the owners. Sole proprietorships, private and public limited companies (PLCs), partnership firms, limited liability partnerships (LLPs), and other business entities engaged in the service, manufacturing, and trading sectors
MSME Loan – Purpose, Features, Eligibility & Loan Schemes
MSME loans are primarily used for business expansion purposes, starting a new business, meeting working capital requirements, augmenting cash flow, purchasing raw materials, goods or stocks, purchasing or upgrading equipment/machinery , paying rent/salary, hiring and training staff, etc.
Min. 21 years at the time of loan application and max. 65 years at the time of loan maturity
1 year minimum business vintage
Annual Business Turnover: As defined by the lender, will differ from bank to bank
Good repayment history with financial stability
No previous loan default with any financial institution
Decent credit score and creditworthiness of the applicant will be considered by the lenders
Eligible Entities that can apply for MSME Loans:
Individuals, startups, MSMEs, business owners, women entrepreneurs, self-employed professionals, and people falling under SC/ST/OBC category and various other business entities
Private or public limited companies, sole proprietorships, partnership firms and limited liability partnerships (LLPs) engaged only in trading, services and manufacturing sectors
Purpose of MSME Loans
MSME loans provided by financial institutions can be used for the following business-related purposes:
To start a new business/company or to expand existing ventures
Purchase of plant and machinery, such as test or laboratory equipment/machinery, electrical equipment, furniture, spare parts, etc.
Creation of building space, or acquisition of land/factory or commercial properties
Launching a new product range, or making payments to suppliers in the form of bill discounting
Meet working capital requirements such as payment of salaries, purchase of goods and raw materials, stocking of inventory for marketing and advertising purposes, etc.
Purchase of new or pre-owned machinery/equipment or fleet vehicles
Any additional funding support for business related purposes
Duly filled application form with passport size photographs
KYC documents of the applicant and co-applicants including passport, Aadhaar card, voter ID card, driving license, PAN card and utility bills (telephone, electricity bills)
Business PAN Card, Business Address and Vintage Proof
Last 1 year ITR along with last 6 months bank statement
Business Establishment Certificate or Letter of Incorporation
Proof of belonging to SC/ST or OBC, if applicable
Any other document required by the Bank / NBFC
MSME Loan Schemes initiated by the Govt. of India
MSME loan schemes launched under the Ministry of MSME (MoMSME) are provided by various banks/NBFCs to the Micro, Small and Medium Enterprises (MSME). Mentioned below are the popular MSME schemes offered by financial institutions and launched by the Government of India:
CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
CLCSS: Credit Linked Capital Subsidy Scheme
credit guarantee scheme
Mudra Scheme under PMMY
National Small Industries Corporation (NSIC) Subsidy
PMEGP: Prime Minister’s Employment Generation Program
PMRY: Prime Minister’s Employment Scheme
PSB loan under SIDBI in 59 minutes
Does MSME Loan comes with or without Collateral/Security
MSME loans are both secured and unsecured business loans, however, most lenders offer unsecured business loans which are called collateral-free loans. In case of collateral-free loans, borrowers are not required to deposit any collateral/security with the bank/NBFC or any financial institution.
MSME loans come with various features and benefits which are mentioned below:
Collateral-free MSME/Business Loans up to Rs. 2 Crore (Unsecured Business Loan
Collateral-free business loans are generally short-term loans that can be repaid within a period of 12 months and up to a maximum of 5 years (can be higher as per business requirements)
Financial institutions such as private and public sector banks, non-banking financial companies (NBFCs), regional rural banks (RRBs), cooperative banks, small finance banks (SFBs), and micro finance institutions (MFIs) provide MSME loans. competitive interest rates
The loan amount offered will depend on the applicant’s profile and credit score, creditworthiness, repayment capacity and financial stability.
Factors Affecting MSME Loan Interest Rates
The MSME/SME loan interest rates offered by financial institutions are based on various factors mentioned below:
Applicant’s income, credit score, financial history/stability, creditworthiness and repayment capacity
Desired loan amount and repayment tenure
Business stability, annual turnover and profitability
Credit rating of the company, nature/tenure/volume of business, etc.
How To Apply For An MSME Loan?
Log on to the website of your loan provider and fill up the application form by filling in the required details.
A designated representative of the loan provider will get in touch with you shortly with the options that may best suit your needs.
After your eligibility is determined, you will need to submit documents for verification.
The required documents can then be scanned and submitted online.
If you want to take an offline loan, you can collect the copies and request from the loan provider.
Once all the relevant documents are collected, they are forwarded to the concerned team for verification.
After verification of documents and approval of your loan, the loan provider creates a loan agreement.
Finally, after signing the contract, the applicant’s account is credited within 48 hours.
MSME Toll-Free Number: 1800-123-7376
General Enquiries: 011-23063288 / 011-23063643