Eligibility Criteria for MSME Loan

India is home to a large number of micro, small and medium scale enterprises (MSMEs). These MSMEs contribute significantly to the growth of the Indian economy. Establishing a new business or expanding an existing one requires a substantial amount of capital. This is where a business loan can step in to provide financial assistance. In order to run their business efficiently and maintain steady cash flow, a large number of small business owners resort to availing an MSME loan.

This has increased the popularity of business loans significantly over the years. Therefore, if you are an entrepreneur looking forward to availing funds for your business, you may consider availing a business loan. However, before you apply for an MSME loan, just make sure you are eligible for the same for a smooth process. Ensure that you qualify for the MSME loan eligibility, that is, you need to be the owner of an existing Micro or Small or Medium entrepreneur manufacturing or providing a service.

MSME Definition

The definition of Micro Small and Medium Enterprises (MSME) has been revised with the “Atma Nirbhar Bharat Abhiyan” package. The Finance Minister of India, Nirmala Sitharaman announced the changes in the favour of MSME, as many successful MSMEs fear to outgrow the size of what has been defined as an MSME and end up losing their entitled benefits. The revised definitions will help MSMEs think of expansion and still avail benefits. It has also been stated that there will be no more distinction between Manufacturing and Service MSMEs.

  • Fund Based Working Capital Limits irrespective of sector/ constitution are eligible for the scheme.

  • Existing MSME units with satisfactory credit limits and 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 for MSME loan.

Revised MSME Definition Criteria

  • Micro Units

Businesses under Micro units are the ones that have investments up to Rs. 1 crore and turnover of less than Rs. 5 crore. The definition earlier was on investment criteria of up to Rs. 10 Lakhs for Service MSMEs earlier and Rs. 25 Lakhs for manufacturing.

  • Small Units

Businesses with an investment limit raised from Rs. 5 crore to Rs 10 crore with a turnover of less than 50 crore fall under the small category. This applies to all MSMEs including the Service enterprises which earlier came under-investment of up to Rs. 2 crore.

  • Medium Units

Enterprises with investments up to Rs. 20 crore and turnover of less than Rs. 100 crore will be considered as Medium units. Earlier, the investment limit for Medium units was up to Rs. 10 crore and Service enterprises up to Rs. 5 crore.

What can MSME Loans be Used for?

  • Investing in your firm’s infrastructure

  • Meet working capital requirements for your business

  • Getting a new plant, machinery or latest technology

  • Pay for several overheads like accounting fees, advertising, rent, repairs, etc.

MSME Loan Eligibility

The following are the MSME loan eligibility criteria

  • 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 MSME Loan

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

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. There are numerous government-sponsored schemes, which are dispersed through banks. These schemes are specifically designed to assist MSME projects that have a low rate of interest and are totally free of collateral security.

At Finserv MARKETS, you can easily avail a business loan for MSME and SME 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 loans.

With an MSME loan, you get access to a unique Flexi loan facility and loan approval within 24 hours of the loan application. Finserv MARKETS is an ideal choice for getting a loan, where you get flexible loan repayment tenure of up to 12 to 60 months and enjoy the freedom of choosing your loan tenure. When applying for MSME loans you also get easy access to value-added services like a customized insurance plan and a Financial Health Check Report that would help you analyze your control over your finances.

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