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How to get an MSME Loan?

Micro Small and Medium Enterprise- MSME sector has emerged greatly over the years. MSMEs not only play a significant role in creating many job opportunities at capital costs that are comparably lower than those of large industries, but they also aid in the industrialization of rural and underdeveloped areas, thereby reducing regional imbalances and ensuring a more equitable distribution of income and wealth across the country. MSMEs serve as auxiliary units to large businesses and have a significant positive impact on the nation’s socio economic development.

Applying for MSME loans has become easier today and with the government schemes in place, you can get it collateral free too.


How to apply for an MSME loan?

  1. There are two ways- you can apply it online or by physically approaching the bank. We will discuss the online method here. For doing it physically, the steps remain similar, except you have to go to the bank.

  2. Decide your Bank. Before you apply for an MSME loan online, you have to finalise which bank you will be taking loan from. Make sure to compare the interest rates, eligibility criteria, features and other details of MSME loans offered by different banks .

  3. Visit the official website of the bank/NBFC you decide and open the application process.

  4. If you already have an account with the bank, use your login ID and password to log into your banking account. If you’re not an existing customer, you can still apply for an MSME loan, but you will have to first create an account with the bank/NBFC.

  5. Navigate the loan option, fill in your details. It will ask you for your personal details like name, age, address proof, income details (List mentioned below) .

  6. Once you submit the form, you will be provided with the application number. Make sure to note down this number for future communications with the bank.

  7. Further, the loan officer will contact you with the following process.

  8. You might have to visit the bank once, usually it is completely digital but depending upon your bank, it might differ.

  9. The bank then verifies all your documents approved based on your eligibility. The funds are then dispersed soon in your bank account


Loan Schemes by Govt.

  1. The Pradhan Mantri Mudra Yojana

  2. The Credit Guarantee Trust Fund for Micro and Small Enterprises

  3. The Khadi and Village Industries Commission

  4. The Credit Linked Capital Subsidy Scheme

  5. Fund of Funds Equity Infusion

  6. SIDBI Make In India Loan For Enterprises


Documents Required

You have to provide only a few documents while submitting your online loan application:

  1. KYC documents (ID proof, address proof, PAN card, etc.)

  2. Bank account statements for your business

  3. ITR and profit-loss statements for your business for the last two years

  4. Proof of business ownership

You may be asked to provide additional documents once the loan process starts.


Eligibility

  1. Resident of India

  2. Age above 21 years

  3. Business in operation for atleast 3 years

  4. ITR filed at least for one year

  5. The MSMEs should be formed as a sole proprietorship firm, partnership firm, company or a Limited Liability Partnership (LLP)


Frequently Asked Questions

1.Which businesses can apply for loans?

Self-employed professionals and entrepreneurs, including retailers, proprietors, traders, small-scale manufacturers, are eligible for MSME loans in India.


2. How can I decide which bank is better?

Check the interest rates and EMI plans of each bank to compare which is better.


3. Is it necessary to put a collateral for a loan?

No, Govt. of India has issued schemes where you can take loan without any collateral. Consult with us to learn more.


4. What is the maximum amount I can take as a loan?

As per the RBI laws, you can take loan upto maximum 10 cr without collateral. Although, it also depends upon the lender, few banks do give loans of higher amounts.



Courtesy - Legal Desire

Link - https://legaldesire.com/how-to-get-an-msme-loan/

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