How to apply for MSME Loan?

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The Central Government is trying to ensure that the business of the Micro, Small and Medium Enterprises (MSME) sector can operate properly. In this sequence, efforts are made to provide loans to MSME traders in an easy way. The Indian government wants to prevent MSMEs (Micro, Small and Medium Enterprises) from getting buried in debt. The best way to accomplish this is by providing loans to MSME owners that they can pay back easily on manageable terms. In India, we saw that there was a series of economic reforms implemented in order to help small and medium businesses grow.

How to apply for MSME Loan
How to apply for MSME Loan?

These businesses were however often unable to get the financing they needed which resulted in a decline in the growth rate of such enterprises. This is why last year Prime Minister Narendra Modi launched an online portal that would allow MSMEs to apply for short term loans no matter where they were located in the country, thereby making it convenient for SMEs to get funding on a larger scale, thus encouraging entrepreneurial growth throughout India. We will be talking about the MSME Business Loan Scheme and giving you full details about the scheme, along with information on how it works and a list of the bank loan providers that participate in this government scheme.

MSME Loan

Micro, Small and Medium Enterprises (MSMEs) are loans offered by banks or NBFCs to entrepreneurs. The repayment tenure for MSME loans is usually short, about 2-3 years so that the business can have enough capital in its hands to carry on with its project or a season if it is from the agricultural sector, etc. The MSME loan interest rate varies depending on factors like the profile of the borrower as well as how his business has been operating in the past.

A micro, small and medium enterprise loan is a type of a business loan given to small business owners who have a limited credit history or a not-so-perfect one, along with almost no collateral. Banks can determine whether or how much money they want to lend to borrowers by looking at their current assets, cash flow and credit scores. MSME loans can be used for working capital requirements of business owners or for managing cash flow, among other things.

MSME lending banks

Top Banks Offering MSME Loan in IndiaLINKS
State Bank of IndiaCLICK HERE
HDFC bankCLICK HERE
Allahabad Bank / INDIAN BANKCLICK HERE
Central Bank Of IndiaCLICK HERE
ICICI BankCLICK HERE
Bajaj FinservCLICK HERE
Oriental Bank of Commerce / PNB MSME LoanCLICK HERE
Union Bank of IndiaCLICK HERE

MSME Loan Schemes in India

  • Prime Minister Mudra Loan Scheme
  • Credit Guarantee Fund Trust (CGTMSE)
  • Micro-credit plan
  • Currency card
  • Credit guarantee fund
  • Prime Minister’s Employment Generation Program (PMEGP)
  • Women Entrepreneur Scheme
  • Equipment Finance Scheme

Eligibility of MSME loan?

  • Applicant’s age should be between 18 years – 75 years
  • Business must be at least 3 years old
  • Must have CA certified / audited balance sheet
  • The nature of business for which the loan is being applied for should be Proprietorship / Partnership / Private Limited Company / Limited Company /

Documents Required for MSME Loan

  • Aadhar Card
  • Pan Card
  • Age proof
  • Bank statement of last 12 months
  • Business registration certificate
  • If the business is already running, then copy of the balance sheet of Profit and Loss for the last 2 years
  • GST certificate
  • No Objection Certificate (NOC)
  • Income Tax E Filing Password and Date of Investment / Birth or ITR for last 3 years in XML format
    Current A/c – Net Banking Username and Password or Bank Statement for last 6 months
  • Director/Proprietor Details: Basic, Personal, Educational and Proprietary Details.
  • The government will trust you to know what is best for your business. They will accept your ability to self-certify without infringing on their need for official inspections. Due to this greater amount of freedom, about 10% of micro-businesses should be inspected each year for various reasons including the Labor Department’s routine inspection of the workplace environment.

How to apply for MSME Loan?

  • Go to udyogadhaar.gov.in to find information on the government’s portal that details the registration of MSMEs (Micro, Small and Medium Enterprises).
  • Enter your Aadhaar Number, enter your name and details, then generate OTP.
  • An OTP will be sent to your mobile number. Once you receive it, fill it in and click on “Validate”, after which you will be presented with an application form.
  • Enter all the required details.
  • After filling in all required information on the application form, click “Submit”.
  • After clicking on the “Submit” button, you’ll need to click “okay” to confirm if everything is correct with the data you’ve entered.
  • After you enter the necessary information in the form, a One Time Password (OTP) will be sent to your mobile phone. Fill the OTP and click on ‘Final Submit’ to submit the application form. This is just one more step in setting up your account!
  • Great. Now you will see the registration number, not it down for future reference.
  • Following a loan application submission, the web portal will be scrutinized by the bank to ensure that all accounts are accounted for and it meets their criteria before an approval can take place.
  • This web portal is associated with the Ministry of Corporate Affairs and Credit Information for checking loan applications before granting approval. You are required to submit your GST and IT along with your bank statement from all other existing business accounts.

Benefits and features of MSME Loan?

  • For MSMEs registered under GST, the new interest rate is a boon. They can deduct a rebate of two percent on floating rates up to Rs 1 crore.
  • The interest subvention for loans to exporters has been increased from 3% to 5%.
  • Increasing the mandatory purchases from MSMEs for public companies from 20 percent to 25 percent has been decided upon.
  • The government of India streamlined the process for small entrepreneurs by streamlining the already existing legal processes required to start a business. The newly approved Companies Act is kinder on small firms and gives them more breathing space.

MSME Business Loan Helpline Number

READ MORE: Best Personal Loan Apps in India

VC: MyOnlineCA

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