MSME means Micro, Small and Medium Enterprises. The ministry of MSME is a branch of Government of India which executes Micro, Small and Medium Enterprises through the formulation of different rules, regulations and laws in India. The Minister of MSME is Mr. Nitin Gadkari since 31 May 2019.
What are MSME loans?
- MSME loans are financial help taken by several financial institutions to fulfil their different expenses that are related to business directly or indirectly. These loans are unsecured in nature and there are certain criterias which an Enterprise or business or a person needs to meet to be eligible for such loans. Indian Government and RBI define MSME loans as infrastructure and financial supportive loans for business enterprises. These loans can be used for all the areas of a business According to the needs of the business.
Under several government schemes these loans are also offered by the financial institutions like –
- Credit Guarantee Funds Trust for Micro & Small Enterprises (CGTMSE)
- Prime Minister’s Employment Generation Programme (PMEGP)
- Micro-Unit Development and Re-finance Agency (MUDRA Loan)
Government of India has also stated the eligibility criterias of all the above mentioned schemes meeting which the loan can be granted to the business.
PURPOSE OR USES OF MSME/SME :
- For the investment in your firm’s infrastructure
- Meeting up the working capital requirements
- Installation of new plant and machinery
- Payment for several overheads
MSME Loan / SME Loan Features & Benefits:
- Convenient and Quick : MSME Loan or SME loans are the loans which can help you to grow your business so that you can meet up your financial requirements and expenses in an easy way.
- Loan without collateral : It means if you want to take MSME loan then you need not to pledge any of your assets as a collateral security. These loans can be approved within 24 hours with an attractive minimal interest rate.
- Loan Amount : The amount of money that a business can get from MSME loan can be minimum Rs. 10,000 upto Rs. 1 crore.
- Loan Types : In MSME loan there are different requirements of a business for which you can take loan i.e. Term loans which are for long or short term purpose, Working-Capital Loans, Equipment Finance for purchase or expenses on different equipment, Mudra-Loan,and many more
- Repayment Tenure: The loan repayment can be done from 12 months to 5 years of period, this period can extend in special cases.
What are the basic documents required for SME/MSME loan?
- Business Plan is the foremost requirement for the loam
- Duly filled Application form for MSME loan.
- Passport size photographs.
- KYC Documents of applicant as well as of co-applicants, if any
- Identity Proof: Passport/ driving licence/ PAN card/ Voter’s identity card .
- Residence Proof: For the proper verification a person needs to avail his Passport, lease-agreement, trade-license, telephone and electricity bills, ration-card and GST certificate.
- Age Proof: A person needs to provide his age proof which means all those government authorized documents which has the person’s date of birth, it may include PAN card, Aadhar Card, Passport etc.
- Income Proof of the applicant which includes ITR or bank statements.
- Address of Business as well as its proof of existence.
- Rent-agreement, Sales Deed, memorandum and article of association.
Eligibility criterias for SME/MSME loan?
- Applicants should be running a business for at least 2 years or more and should be in a profit earning state, to be eligible for applying for an SME/MSME Loan. They should not be more than 66 years of age and not be less than 18 years of age as well as they should have their income tax return filed for at least past one year.
- Last year GST return should be filed with the previous two years of ITR.
- The applicant should be a citizen of India with no criminal records till the date.
- Only Private or Public Limited, Sole-Proprietorship, Partnership Firm andLimited Liability Partnership can apply for these loans.
- The necessary documents should be certified or verified from a chartered Accountant.
How can I get an SME/MSME loan?
- You need to have a minimum credit score of 750 without any record of default and with that you should fulfil all the basic requirements or necessities which are given in the eligibility criteria of MSME loans.
How to apply for an SME/MSME loan?
For application of MSME loan you need to follow few easy steps –
- The application form on the website should be filled online only so that the processing of the loan can be done.
- All the relevant documents that are mentioned in the eligibility criteria or documents required need to be submitted.
- As soon as the verification will be done the money will be credited to the account of the applicant or business firm.
So, application for MSME loans is really easy and can be done without any much hassle. You just need to fall into the criteria and you can get the money amount credited in your bank account.
Founder & CEO| Fox Investor – Financial Blog Portal & A.V.A. Taxway Associates- Corporate & Tax Law Firm
Dr. Viibhor Agarwal has a Ph.D. in IPR, start-ups, and corporate law, as well as an MBA in finance from NMIMS Mumbai, and achieved numerous certifications in corporate law. He is a practicing corporate lawyer and the founder of two business verticals. He has advised over 2000 businesses, 5000 students, and 400 new start-ups all over India and other countries like Dubai, London, the USA, and Qatar. Dr. Viibhor Agarwal assists people with business expansion and branding, regardless of size, as well as business setup, financial literacy, start-up guidance, licensing, tax planning, and other legal compliance issues. Dr. Viibhor Agarwal’s goal is to provide complete financial and business literacy to all businessmen who want to start new businesses and grow existing businesses and to those students who want to open their start-ups. In each video, Dr. Viibhor Agarwal not only explains the method of the solution but also advises subscribers on practical tips learned from and faced by clients handled by Dr. Viibhor Agarwal daily. This blog portal provides you with an easy and clear solution to your business problem, allowing you to take your business to the next level.