In recent years, the country’s booming economy has provided momentum to the rise of several SMEs (small and medium-sized enterprises) and MSMEs (Micro, Small, and Medium Enterprises). Moreover, it has become quite easy to obtain an MSME/SME loan to meet your business’s working capital requirements.
You can use an MSME/SME loan for several purposes. Bajaj Markets offers loans that can support:
Upgrading your company’s infrastructure
Buying and repairing factory machinery
Purchasing raw materials
Setting up or expanding your business
Read on to learn about SME/MSME loans, their features, the application process, interest rates and more.
The registration process to get MSME or SME finance can be carried out online with ease. Just follow the below-mentioned steps to register your firm for the MSME loan scheme:
Entrepreneurs who are not registered as MSME or with EM-I
Entrepreneurs who have the Udyog Aadhaar Memorandum (UAM) or are registered as EM-II
On Bajaj Markets, you can get MSME/SME Loan at an affordable interest rate, starting at 12%. In addition, nominal charges are levied as processing fees or penalties if the applicant decides to prepay or foreclose the loan.
About 2%-3% of the loan amount*
Upto ₹50 Lakhs*
Disclaimer: Aforementioned loan specifics can vary at the lender’s discretion.
Check out some do’s and don’ts you must consider while applying for an MSME/SME loan.
Most lenders rely on the borrower’s credit rating for loan approvals. Check your CIBIL score before applying for an MSME or SME loan.
Do not apply with multiple lenders, as it reduces your CIBIL score considerably. The lender might see this as high financial reliance, which might lower your chances of loan approval in addition to your CIBIL score.
Ensure all the required documentation is in place before starting the loan application process.
Avoid delaying your loan repayments for existing debts even if you take the MSME loan for new business debt consolidation. This will affect your credit score negatively.
Make sure the MSME loan requirements are assessed before applying for the loan. Try not to overestimate or underestimate your MSME loan requirements as you will waste your time and money in both cases.
Be aware of fraudulent lenders that may charge you huge fees for MSME loan approval. A genuine lender will never ask you for an upfront fee and will typically charge you a percentage of the disbursed loan amount.
MSME/SME loans are offered to startup owners, small business owners, and women entrepreneurs on a short-term basis. The duration of MSM/SME loans is not the same everywhere and differs from one lender to another.
Lack of timely finance is one of the biggest setbacks for the growth of MSMEs in India. With MSME/SME loans, it is easy to avail instant financing for the business. An MSME loan for new businesses or established enterprises can offer the financial support to carry out numerous business operations with ease.
Here are five smart ways to utilise the funds of an MSME/SME loan:
1. Inventory Management: Inventory management is a critical part of a small business, as its profits depend on the sale volumes. The MSME/SME loan funds can help secure your inventory supply chain, manage seasonal dips, or purchase new product samples for business sales.
2. Purchasing Plants & Machinery: MSME/SME loans can fund the purchase of new equipment required for the business. Since investment in plants and machinery requires heavy funding, applying for an MSME/SME loan can aid such expenses without straining the company’s capital fund.
3. Working Capital Management: If a company cannot finance its day-to-day expenses, the production of wares and services will eventually suffer. A business owner can apply for MSME/SME loans and use the funds to ensure the company runs smoothly while repaying short-term debt and expenses that might arise soon.
4. Consolidate Your Business Debt: MSME/SME loans allow you to consolidate smaller debts and turn them into a single EMI. This helps reduce the strain caused by the monthly budget and helps align the debt repayment and the invoicing schedule.
5. Invest in Marketing: With an effective marketing strategy, a business can reinforce the trust and loyalty of its existing customers and acquire new customers in existing or new markets. However, marketing is a costly affair and requires investments in marketing campaigns. An MSM/SME loan can help finance these campaigns for your business.
As per the new definitions, any firm with an investment of less than ₹1 Crore and turnover of less than ₹5 Crores will fall under the micro category. Businesses with less than ₹10 Crore investment and turnover of less than ₹50 Crores will be considered under the small category.
Enterprises with an investment of less than ₹50 Crores and turnover of less than ₹250 Crores will fall under the medium category.
The government of India has proposed to offer collateral-free loans as a relief for MSMEs which the Centre will fully guarantee. A principal repayment moratorium for 12 months, along with the interest rate capping, will be applicable with a no-guarantee fee.
You can avail of an MSME loan through Bajaj Markets if you are a self-employed professional or non-professional, including a trader, retailer or proprietor.
It is not necessary, but it is always advisable to get your company registered as an MSME (if it satisfies the requisite criteria), for it will help your business scale up and save you from inconveniences like taxes, permissions, employee-related issues, and other legal issues.
You can easily apply for the booster scheme for MSMEs on the Udyog Aadhaar website. Just fill in the application form and provide the requisite details like Aadhaar number, industry type, address, bank account details, etc. You will be given a registration number once your application is successfully submitted.
No, you do not need to provide collateral for MSME loans since they are typically collateral-free loans.
No, it is not compulsory to have a credit rating to get an MSME loan. However, if you have a high credit rating, you can get lower interest rates, high loan amounts and other benefits.