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MSME Loan Introduction

In recent years, the country’s booming economy has given an impetus to the rise of several SMEs (Small and Medium-sized Enterprises) and MSMEs (Ministry of Micro, Small and Medium Enterprises). Moreover, it has now become extremely easy to avail an MSME business loan to meet your business’ working capital requirements. An MSME loan can be used for several purposes such as upgrading your Company’s infrastructure, buying and repairing factory machinery, purchasing raw materials, etc. With us, at Finserv MARKETS, you can easily avail MSME and SME business loans to set-up or expand your business.

MSME Loan Scheme 2020 For Pandemic

The estimated 6.3 crore MSME units are considered as the backbone of the Indian economy. With the ongoing lockdown, the government introduced relief packages to support stressed MSMEs. The aim of providing these relief packages is to help meet the temporary liquidity mismatch due to the Pandemic crisis. This includes payment of statutory dues, salary/wages/electricity bills/rent etc.

Finance Minister of India, Nirmala Sitharaman announced the economic package to help the stressed MSMEs, sustain the disruptions caused by the Pandemic lockdown. The scheme offers:

  • Collateral-free loan package of about Rs. 6 lakh crore

  • Providing Rs. 3 lakh crore for small businesses

  • Rs. 30,000 crore lifeline to non-bank and housing finance companies (NBFCs).

The goal behind this economic package is to build a self-reliant India. The focus of “Atma Nirbhar Bharat Abhiyan” would be on land, labour, liquidity and law.

Features and Benefits of the Bajaj Finserv MSME loans

  • Quick online processing

    Finserv MARKETS offers online processing for all types of loans for small business. You can apply for a SME business loan online with us and get it approved under just 3 minutes. The online process not only saves time but also ensures that your request is processed instantly and the amount is disbursed into your bank account within 24 hours of approval.

  • Zero Collateral

    Most financial institutions demand a collateral against the loaned amount for a business loan. However, MSME loans at Finserv MARKETS are unsecured in nature and do not require the applicant to provide any form of collateral.

  • High Loan Limit

    Depending on the planned expansion scale, the range of the funds required for a particular business may vary. Therefore, the SME business loans offered at Finserv MARKETS come with a high loan limit of INR 30 lakhs.

  • Long repayment tenure

    It is necessary to have a comfortable loan repayment tenure so that the borrower does not default on his/her EMIs. At Finserv MARKETS, an applicant can enjoy a flexible repayment tenure of 12-60 months on his/her MSME business loan.

  • Value Added Services

    With MSME loans at Finserv MARKETS, you get easy access to value-added services such as financial fitness reports and customized insurance plans.

MSME Definition Revised

The booster scheme has brought a change in the definition of what constitutes an MSME. From now on, enterprises with an investment of less than Rs.1 crore and turnover less than Rs. 5 crore will be treated as micro, while businesses with less than Rs. 10 crore investment and Rs. 50 crore will be considered under the small category. The businesses that have an investment less than Rs. 20 crore and turnover less than Rs. 100 crore will fall under the medium category.

Existing MSME Classification

Criteria: Investment in Plant & Machinery or Equipment

Classification

Micro 

Small 

Medium

Mfg. Enterprises

Investment<Rs. 25 Lakhs

Investment<Rs. 5 crore

Investment<Rs. 10 crore

Services Enterprises

Investment<Rs. 10 crore

Investment<Rs. 2 crore

Investment<Rs. 5 crore

Revised MSME Classification

Composite Criteria: Investment and Annual Turnover

Classification

Micro 

Small 

Medium

Manufacturing & Services

Investment<Rs. 1 crore

Turnover<Rs. 5 crore

Investment<Rs. 10 crore Turnover<Rs. 50 crore

Investment<Rs. 20 crore

Turnover<Rs. 100 crore

Nirmala Sitharaman also stated that these changes will help businesses in the sector to expand and still reap benefits accorded to MSMEs by the government.

MSME Loan Eligibility

An applicant needs to fulfil the following MSME business loan eligibility when applying at Finserv MARKETS-

  • 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.

Eligibility For MSME Loan Scheme 2020

The government with its “Atma Nirbhar Bharat Abhiyan” package revised the definition of Micro Small and Medium Enterprises (MSME). The changes are made in the favour of MSMEs, as many successful MSMEs fear to outgrow the size of what has been defined as an MSME and end up losing their entitled benefits. With the revised definitions, the MSMEs can think of expansion and still avail benefits.

  • Fund Based Working Capital Limits irrespective of sector/ constitution are eligible for the booster scheme. This facility should be given only to the going concern borrower as on the date of sanction.

  • Existing MSME units having credit limits with satisfactory credit record of at least two years are considered eligible for the scheme.

  • All standard accounts including (Special Mention Account) SMA-0, SMA-1 on the date of sanction irrespective of internal rating are eligible.

Types of Company that are eligible for MSME Loan Schemes

  • Partnership Firm

  • Proprietorships

  • Limited Company

  • Hindu Undivided Family 

  • Producer Company

  • One Person Company

  • Private Limited Company

  • Limited Liability Partnership

  • Any association of persons

  • Co-operative societies

Documents Required For MSME Loan

  • Identity Proof: Aadhar Card, Passport, Voter ID card, etc.

  • Address Proof: Electricity bill, Telephone bill, Passport, Aadhar Card, Driving License

  • Business Proof: Certificate of business existence, Income tax filings for the previous financial year, profit and loss statements for the past 3 years, etc.

  • 2 Passport-size photographs

MSME Loan Restructuring

To ease the stress of the pandemic outbreak on MSMEs, the RBI has extended loan restructuring for Micro, Small and Medium Enterprises for three months to March 31, 2021. This loan restructuring scheme is expected to give additional relief to small enterprises, over and above the government guarantee-backed emergency credit scheme for them. India Ratings and Research Agency stated that between September 2019 and April 2020, the proportion of rated mid and emerging corporates (MEC) universe in default increased to 18% from around 10%. The agency also estimates that 60% of its rated MECs qualify as MSMEs under the new definition.

Smart Ways of Using MSME Loan

MSME Loans are offered to startup owners, small business owners and women entrepreneurs on a short-term basis. The duration of MSME / SME loans is not the same everywhere and it differs from one lender to another. Lack of timely finance is one of the biggest setbacks for the growth of MSME in India. With MSME Loans it is easy to avail instant financing for the business. This helps to cover the financial requirements to carry out numerous business operations with ease.

Here are 5 smart ways to utilize the funds of an MSME / SME loan:

  • Inventory Management

Inventory management is a critical part of a small business as its profits depend on the sale volumes. The MSME loan funds can help secure your inventory supply chain. Manage seasonal dips or purchasing new product samples for business sales.

  • Purchasing Plant & Machinery

MSME loans can fund the purchase of new equipment required for the business. Since, investment in plant and machinery requires heavy funding, applying for an MSME loan can be to aid such expenses without straining the company capital fund.

  • Working Capital Management

If a company is unable to finance for running its day-to-day expenses, the production of wares and services will eventually suffer. An SME owner can apply for MSME loans and use the funds to make sure the company runs smoothly while being able to repay maturing short-term debt and expenses that might arise in the near future.

  • Consolidate your Business Debt

MSME loans allow you to consolidate smaller debts and turn them into a single EMI. This helps in reducing the strain caused on the monthly budget but also helps in aligning the debt repayment along with the invoicing schedule.

  • 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 marketing campaigns investment. An MSME / SME loan fund can help with the financing in running such a campaign for your business.

Do’s & Don'ts Before Applying for MSME Loan

Do’s

  • Most lenders rely on the borrower’s credit rating for loan approvals. Make sure to check your CIBIL score before applying for an MSME or SME loan.

  • Ensure all the required documentation is in place before starting the loan application process.

  • Make sure the MSME loan requirements are assessed before applying for the loan. Try not to overestimate or underestimate your MSME loan requirements as in both cases you will end up wasting time and money.

  • The business plan of your business specifies how you intend to use the loan funds and the time it might take to generate good returns from the investment.

Don’t’s

  • Do not apply with multiple lenders as it will bring down your CIBIL score by several. The lender might see this as financial desperation on your part, which might lower your chances of loan approval.

  • Avoid making delays in your loan repayments for existing debts even if you are taking the MSME loan for debt consolidation. This will affect your credit score negatively.

  • Be aware of fraudulent lenders that may charge you with huge fees for MSME loan approval. A genuine lender will never ask you for an upfront fee and charge you with a percentage on disbursal of loan.

MSME Loan Interest Rates and Charges

Finserv MARKETS offer affordable SME business loan interest rates, starting from 18%. In addition, nominal charges are levied as processing fees or penalties if the applicant decides to prepay or foreclose the loan.

How to Apply for Business loan for SMEs/MSMEs?

You can initiate the MSME loan process with these easy steps-

Step 1: Fill out the online application form at Finserv MARKETS by submitting your personal and business details

Step 2: Select the amount you want to avail as an MSME loan along with the preferred repayment tenure.

Step 3: Once you submit the online application, you can get it processed and approved under 3 minutes.

You can also check your SME loan EMI with Business Loan EMI Calculator.

How to Apply for MSME Loan Scheme 2020?

The registration process for MSME can be carried out online as well as offline. You can register for more than one industry with an individual registration.

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.

MSME Loan Interest Rates & Charges

  • The interest rate on loans for SME/MSME can be charged up to an interest rate of 9.25%

  • Non-banking financial companies (NBFCs) can charge up to 14% on loans.

  • The interest scheme will cover only existing borrowers with an outstanding credit limit of up to ₹25 crores as on 29 February, and having a turnover of up to ₹100 crores. 

  • Also, including the borrowers with up to 60 days past dues, and cover working capital and term loan facilities.

MSME Loan News Update

MSME loan relief till month-end

The Emergency Line of Credit Scheme (ECLGS)worth ₹3 crores is unlikely to be extended beyond October 2020, by the government to the MSME sector. The scope for the ECLGS scheme was broadened by the government on August 1st. The government chose to double up on the upper ceiling of the loans outstanding while also adding loans specifically for chartered accountants, lawyers, and doctors to the scheme. Reportedly, the amount that has been sanctioned off so far is just about 65% of the target amount, yet the scheme is not likely to continue providing support to micro, medium, and small enterprises, if there are no takers.

Govt striving to provide funding to MSMEs

Since the lockdown began in March, the government of Uttar Pradesh alone has put in ₹26,000 crores into the MSME sector in the form of working capital loans. Augmenting MSME exports within the next three years so that they reach the target of ₹3 lakh crores is the government’s current focus. In the last two fiscal years, exports from MSMEs from the state hit ₹1.14 lakh crores and ₹1.20 lakh crores respectively. As the impetus for MSME exports, the government of UP is hammering out a fresh policy with respect to export promotion. The state is also aiming to conduct a study on leading industrialized states so they can cut the state’s production cost per unit towards MSMEs.

MSME Loan FAQ's

  • ✔️What is the new definition for MSME?

    While the previous order has now lapsed, the definition for MSMEs has changed to a combination of turnover and increase in the investment in plant and machinery. Any firm with an investment of less than Rs. 1 crore and turnover less than Rs. 5 crore will fall under the micro category, while businesses with less than Rs. 10 crore investment and turnover less than Rs. 50 crore will be considered under the small category. The enterprises with an investment less than Rs. 20 crore and turnover less than Rs. 100 crore will fall under the medium category.
  • ✔️What is the “Atma Nirbhar Bharat Abhiyan” scheme?

    The Atma Nirbhar Bharat Abhiyan package of Rs. 20 lakh crore was introduced to revive the Indian economy, to help farmers, migrant workers, etc. and to revive the industrial sector. The measures taken will go a long way in addressing issues faced by businesses and MSMEs. The steps announced will contribute to boost liquidity, empower the entrepreneurs and strengthen their competitive spirit of the MSME sectors.
  • ✔️What are the proposals aimed at offering relief to MSMEs?

    The government of India has proposed to offer collateral-free loans as a relief for MSMEs which will be fully guaranteed by the Centre. A principal repayment moratorium for 12 months along with the interest rate will be capped with no guarantee fee.
  • ✔️How to apply MSME loans during Pandemic?

    The process to apply for an MSME loan is quite simple and easy

    1. Fill in the online application form of MSME loan.
    2. Submit all the required documents to complete the process.
    3. Once approved the loan amount will get disbursed in the bank within 24 hours.
  • ✔️Is company registration required for MSME?

    It is not necessary, but it is always safe to get your company registered as it will help your business scale up and save inconveniences like taxes, permissions, employee-related issues and other legal issues.
  • ✔️Who can avail MSME loan?

    Self-employed professionals and self-employed non-professionals like proprietors, retailers, traders and others can avail the SME/MSME Loan at Finserv MARKETS.
  • ✔️How to apply for the booster scheme for MSME?

    1. You can log in to the website at udyogaadhaar.gov.in
    2. Provide documents like your personal Aadhaar number, Industry name, Address, bank account details, etc.
    3. Once the details are filled and uploaded, a registration number will be provided to you.

Business Loan Reviews

Business Loan Reviews

4.1out of 5

8 reviews

Easy steps

I would like to thank Finserv MARKETS whole-heartedly for providing me a loan under the MSME loan scheme in easy steps. After checking my eligibility, I applied for the loan online. To my surprise, there were no difficulties such as tiresome paperwork. The quick, online process saves times, and is very smooth.

Quick approval

I required money to boost my business. Then I came across the MSME loan on Finserv MARKETS. The best part of this loan is that it comes with a quick approval process. While the loan itself was approved within minutes, the loan amount was provided in my bank account within a day. Thank you Finserv MARKETS!

Simple steps

Thank you Finserv MARKETS for providing me a MSME loan in simple and easy steps. I applied for the loan online, and it required minimal documentation. While the loan itself was approved within minutes, I received the loan amount within 24 hours. I need to thank Finserv MARKETS again for the hassle-free process.

Smooth documentation

I was worried about my business in these tough times. I then applied for the MSME Loan, available on Finserv MARKETS. Thanks to the smooth documentation process, I was able to get a loan easily. I was just required to provide my identity proof, address proof, and business proof.

Quick process

Because of the pandemic, I was facing a shortage of finances for my business. I applied for an Business Loan online on Finserv MARKETS. The loan was approved within 3 minutes, and the amount disbursed in my account within 24 hours of approval.

Best Business Loan Ever

I am happy to have availed the business loan for SME at Finserv MARKETS. The application process was simple and documents required were minimal. I received the loan amount within 24 hours and that helped me to carry my business operations with ease.

Great Services

A friend of mine suggested me to avail business loan for MSME at Finserv MARKETS. I got the loan at a very reasonable interest rate and I couldn’t have asked for any better customer service.

Happy experience

I applied for the business loan for SME at Finserv MARKETS last year and was very happy with the swift process and the flexible EMI payments.