An MSME is any micro, small and medium enterprise involved in the manufacturing and processing of commodities.
Likewise, an MSME loan is a financial solution that is designed to aid these ventures. To check whether you are eligible for this loan, you must use an MSME calculator. MSMEs are the second-largest employers in India, with agriculture being the first. As such, they contribute approximately 24.6% of the service sector GDP in India.
To classify as a micro-enterprise, an enterprise should have an investment under Rs.1 crore and a turnover of up to Rs.5 crores. With the aid of the government, many lenders have increased security when providing loans to MSME businesses. Both private and government-driven loan programmes aim to provide aspiring entrepreneurs with the financial support they need to drive innovation in the country.
To this effect, some eligibility aspects that you need to consider when opting for an MSME loan are –
- You must be at least 18 years old and younger than 65 years at the time of maturity;
- The MSME must be operational in either the manufacturing or service sector;
- It must have a proven business record of more than 2 years and at least 5 years of experience in the industry in which it operates;
- The business must be registered as an MSME in the Udyaan portal, and the owner should be able to provide an MSME registration certificate on request;
- There should not be any default history in the venture’s financial records;
- The borrower must be the owner of the business.
Documents required while applying for an MSME loan are –
- Application form filled as per instructions;
- ID proof, as in passport, PAN card, driving license, etc.
- Residence proof, through passport, electricity bills, sales tax certificate, etc.
- Bank statements;
- Business registration proof;
- Proprietor’s PAN card;
- Sales tax documents;
- Partnership deed copy;
- Income tax returns;
- Business place address proof;
- Projected balance sheets;
Applying for an MSME loan is an easy task and can be done online and offline. In the online procedure, you would have to log on to the website of your loan provider and fill out the application form with the required details. It is also advisable to use the MSME loan calculator to ascertain the amount you can expect. A designated representative from the loan provider will contact you shortly with all the possible combinations related to your loan and options that could best benefit your business’ requirements.
If you choose to go offline instead, fill in the details of your MSME loan application and submit it to your lender along with the necessary documents as physical copies. Then, your lender will verify the application and documentation for authenticity. Post verification of the documents and the approval of your loan, the loan provider creates and shares the loan agreement. After signing this agreement with all its mentioned stipulations, the funds will be sent to your account within 24 to 48 hours.
MSME loans are short term loans that have been introduced to support all kinds of start-ups, small businesses and women entrepreneurs. The very concept of MSME loans as well as the eligibility criteria, interest rates, and tenor periods vary from one lender to another, but this can be used to your advantage if you do your research and find which lender can best provide the plan that is required for your business.
One of the main blocks to MSME growth in India is its time for financial backing. However, with MSME loans, obtaining the funds for the financial needs of your business is quick and easy.