MSME Loan: Efficient Financing Solution for Your MSME
Efficient Financing Option only for MSME
29 Jun 2020
Micro, Small and Medium scale enterprises (MSMEs) contribute significantly to the growth of the Indian economy. Expanding your business requires a substantial amount of capital. This is where a business loan can prove to be extremely handy. In order to run their business efficiently and maintain steady cash flow, a large number of small business owners resort to availing a business loan. This has increased the popularity of MSME loans significantly over the years. Therefore, if you are an entrepreneur looking forward to availing funds for your business, you may consider availing an MSME loan.
Benefits of getting an MSME loan
Quick Loan Processing
When running a business, time is of the essence. Even small delays can result in missing out on a lucrative market opportunity. MSME loans don’t require any collateral, and hence, time is saved on the appraisal of assets. These loans require short processing times and quick disbursal of funds, some as early as in 48 hours. Quick processing of loans is one of the main reasons for the popularity of these loans, as it saves a lot of time in the process of getting the required funds for the business.
Full Control Over Business
A small business owner may not look forward to relinquishing control of the business. MSME loans are specifically designed to meet all the financial requirements of small businesses. This loan is an excellent source of finance for business owners who want to avoid liquidation of control. Loan funds acquired from venture capitalists and angel investors come at the cost of reduced ownership in the business. Non-Banking Financial Companies (NBFCs) do not involve liquidation of control. The aspect of ‘control’ is important for an MSME owner, with limited assets at their disposal. With an MSME loan, you can gain full control over your business.
A low rate of interest is an important factor that is considered during the selection of a loan. Lower interest on loans means that the business owner is not required to pay a significant amount every month towards repayment of the loan. The money saved from the low-interest rate on loans can be put to better use for boosting the business further. MSME loans, with their competitive interest rates, ensure that only the minimum amount is spent in repayment of the loan, and the rest of the funds can be utilized for other business requirements.
No Predetermined Purpose
Small businesses often require financing for various purposes. Hence these loans do not have a predetermined usage objective. The business owner is free to utilize the MSME loan amount to fulfil all kinds of financial requirements of the business.
Types of Company Eligible for MSME Loan Scheme
Hindu Undivided Family
One Person Company
Private Limited Company
Limited Liability Partnership
Any association of persons
Eligibility Criteria for MSME Loan
To get access to the MSME loan you need to fulfil the basic loan eligibility criteria. The eligibility criteria for getting an MSME loan are as follows:
Applicant must be within the age-group of 25-55 years
The applicant’s business vintage must be more than 3 years
The applicant’s business should have filed for Income Tax Returns for at least the past 1 year
The applicant must have a minimum credit score of 750
The applicant must not have any past record of loan default in his/her name or in the name of the business.
Steps to Apply for an MSME Loan
Step 1: Log in to udyogaadhaar.gov.in for MSME Registration
Step 2: Fill in the details in the registration form available at the website
Step 3: Provide documents like your Aadhaar number, Industry name, Address, bank account details, etc.
Step 4: You can also provide self-certified certificates along with the application form.
Step 5: Once the details are filled and uploaded, you will receive the registration number for the same.
As a business flourishes, mergers and acquisitions are bound to happen for many firms. This would require a substantial amount of investment and funding. MSME finance can also be helpful in such cases. In addition to that, relocating a business to a newer or bigger location or investing in a new product line would require a large amount. Business owners can also use the loan amount to expand the online sales campaign, or for marketing and advertising budgets. Lastly, make sure that you read all the terms and conditions of your loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.
There are many government loan schemes, that are specifically designed to assist MSME projects, which are low on interest and totally free of collateral security stipulations. At Finserv MARKETS, you can easily avail MSME finance and SME business loans to set-up or expand your business. Offering low-interest rates with a host of other benefits of MSME loan like a line of credit facility. You can get an MSME loan up to INR 30 Lakhs without any collateral required. If you are an existing customer at Finserv MARKETS, you can also avail of exclusive pre-approved Business Loans through Finserv MARKETS app. With an MSME loan, you get access to a unique Flexi loan facility and loan approval in just 24 hours.
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