How to Apply for an MSME Loan in India
Appealing for a loan at a physical location or offline, means that one is approaching just one lender. When one applies for a loan in person, they might be required to book an appointment. One could be waiting for hours in a queue to avail a low-interest business loan. It is also possible one might travel for a while to reach the lender’s physical property.
Ensure that business loans can be utilized for establishing up novel enterprises or stepping up for instance expansion, diversification, modernization, technology upgradation. These can be understood as the following mentioned below:
- Accession of factory, land as well as the construction of building spaces,
- Purchasing of Plant and Machinery involving items lab equipment, testing equipment, furniture, electric fittings, etc
- To meet the working capital needs, such as the raw materials, stock-in-progress, as well as the finished goods, etc
- Trade Finance (Bill discounting) – for paying the creditors, while awaiting payment from debtors
- To launch a novel product range, along with the expansion of business, warehousing requirements, credit for departments such as marketing and advertising purpose
- Additional monetary assistance for any eligible purpose.
It’s good that a person has made up the mind to apply for a business loan online. Once a person would consist of choices of a wider scale of lenders including Banks / NBFCs / SFBs/ FinTechs who predominantly can access the application along with according to the geographic location, the closest lender one would approach an individual or a fintech from another city might also touch base with them.
With such a means, one can easily apply online 24/7. They can easily apply even in their free time at leisure. If one has set a certain budget / documents / information ready, they would easily find the application forms to fill in.
Comprehension of MSMEs
MSME is understood as the Micro, Small & Medium Enterprises are classified in two ways:
- Producing Enterprises tied up in the manufacture or production of goods concerning to any industry or locating plant and machinery meanwhile in the methodology of value addition to the final product having a well-defined name or character or use; as well as
- Service Enterprises involved in offering or contribution of service in availing a low-interest business loan
As based on the revised Classification w.e.f. 1st July 2020, MSMEs are critically described on the basis of Composite Criteria of “Investment in Plant & Machinery / equipment and Annual Turnover”.
Let’s comprehend the MSME classification in a more detailed way:
| MSME Classification taken as Manufacturing Enterprises and Enterprises Rendering Services | ||
| Investment in Plant & Machinery or Equipment | Annual Turnover | |
| Micro | Not more than Rs. 1 Crore | Not more than Rs. 5 Crore |
| Small
|
Not more than Rs. 10 Crore | Not more than Rs. 50 Crore |
| Medium | Not more than Rs. 50 Crore | Not more than Rs. 250 Crore |
| With respect to RBI Circular dated August 21, 2020, the value of Plant and Machinery or Equipment for all purpose of MSME classification as well as for all the enterprises shall signify the Written Down Value (WDV) as at the conclusion of the Financial Year and not cost of accession or original price, which was apropos of the context of the earlier MSME classification criteria. | ||
We must have cooperatively put a comprehensive guide on the documents needed for Business Loan for MSME. Here is the extensive list. A successful business growth for MSME can happen by availing a low-interest business loan.
- Application Form: Business Loan for MSME application form correctly filled and signed by all the applicant(s).
- Photographs: the passport size photographs of all the different kind of applicant(s)
- Identity Proof: Identity proof of each and every applicant(s) who is registering for the purpose of a Business Loan for MSME. The point of MSME Loans documentation can further involve the following items:
- Pan Card
- Aadhar Card
- Passport
- Voters Id Card
- Driving License
