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Business Loan for MSME: Eligibility, Process & How to Apply

MSME is an abbreviation for micro, small, and medium enterprises; sometimes abbreviated as SME for small and medium enterprises. However, business loans for MSME and SME Loans are essentially the same and are available to firms that fit into these two categories. These loans are often granted on a short-term basis to startup entrepreneurs, small company owners, and female entrepreneurs. The length of MSME / SME loans varies depending on the lender.

It is a loan that any MSME firm may get for their new business, whether it is expansion or development. It would include acquiring machinery and equipment or raw materials, fulfilling working capital requirements, investing in fixed assets, paying rent, wages, and other daily or monthly costs, managing cash flows, and making any other operational financial provision. These loans are available at competitive interest rates and with flexible repayment terms. However, each bank that offers MSME loans will set its own rates.

Eligibility

To get authorised for an MSME loan, you must meet the eligibility requirements specified by your lender. The criteria will differ from bank to bank and may even vary depending on the type of programme offered. Following are the general requirements you must meet: -

  • The applicant's company must have submitted Income Tax Returns for at least the last year

  • The applicant must not have a history of loan defaults in his or her name or that of the business

  • The loan must be used to start a firm in the service or manufacturing sectors

  • The candidate for an MSME loan must be over the age of 21

  • The candidate must be a member of one of the following groups:

    • Sole Proprietorship

    • Self-Employed Individuals

    • Companies that are Private Limited

    • Partnership Firms

Particulars Criteria

Business Type

  • Manufacturing Sector
  • Service Sector

Business Size in Manufacturing Sector

  • For Micro- Above 25 lakhs
  • For Small- Above 5 crore
  • For Macro- Above 10 crore

Business Size in Service Sector

  • For Micro- Above 10 lakhs
  • For Small- Above 2 crore
  • For Macro- Above 5 crore

Documents

Following are the MSME loan documents required for the application: -

  • Business address proof

  • Bank statements over the last six months, as well as bank information

  • Application form duly completed, together with passport-sized photos

  • Certificate of business establishment

  • Passport, aadhaar card, voter's ID card, driving license, PAN Card, and utility bills (telephone and water bills) are examples of KYC papers for candidates and co-applicants

  • Income Documentation

  • Proof of membership in the SC/ST or OBC categories, if applicable

Process of MSME Loan Application and How to Apply

MSME loan procedure is very simple as there are two ways of sending in the application.

  • You can visit the nearest Muthoot Finance branch and can request an application form. They can assist you further with the documentation in order to be eligible for the loan.

  • Another way is that you can apply for an MSME loan application online. You may submit your application by filling out the form with the requisite documents and submitting it on their website.

Benefits and features of the MSME Loan

MSME loans are a good source of funding for business owners who want to expand or even start a small business. The following are some of the benefits of MSME loans:

  • The MSME business loans are intended to improve credit flow in the MSME sector.

  • These loans are intended to improve technology in the small company sector.

  • MSMEs loans contribute to the overall growth of the small-scale sector by funding skill development and training initiatives.

  • Depending on the ongoing cycle and the plan, the payback duration might range from 12 to 30 months.

  • Loan applications can be submitted online or in person at the local branch.

  • Hassle-free documentation where the applicant doesn’t need to run here and there to get their paperwork done.

Adequate and timely finance is essential for every firm to flourish, especially startups, first-time business owners, SMEs, and MSMEs.

Muthoot Finance facilitates business loans for all such entities. These business loans may be utilised for a variety of objectives, including business development, meeting holiday season spike and working capital requirements, stock acquisitions, recruiting staff, and so on. Visit your nearest Muthoot Finance branch to know more and discuss your business loan requirements in detail.

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