How to get business loans for MSMEs?

Last Updated: 14 Oct 2024

MSMEs are micro, small and medium enterprises. It is important for MSMEs to be able to raise loan financing, in order to meet their expansion and operational needs. A number of banks and NBFCs, such as IIFL Finance, offer business loans to MSMEs. Some lenders offer unsecured business loans of as high as Rs 2 crore to MSMEs.

Why Opt For a Business Loan For MSME?

Here are the business-relevant purposes that a business can accomplish with the aid of a business MSME loan:

• Plant and machinery acquisition, including lab machines/equipment, accessories, furnishings, and electrical appliances.
• For expanding into new product line or for paying suppliers through bill discounting
• Purchasing used or brand-new vehicles, machines, or other equipment.
• To establish a new firm or organization or to grow existing ones.
• Building spaces should be constructed, or land, factories, or commercial properties should be purchased.
• Obtain the necessary working capital for tasks like paying employees, buying supplies and commodities, building up inventory, advertising, marketing, etc.
• Any additional financial aid for commercial objectives.

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Business Loan For MSME: Eligibility Criteria

Business Type	Service Sector Manufacturing Sector
Business Size (In Manufacturing Sector)	Medium → Investment of up to Rs 50 crore and turnover of up to Rs 250 crore. Small → Investment of up to Rs 10 crore and turnover of up to Rs 50 crore. Micro → Investment of up to Rs 1 crore and turnover of up to Rs 5 crore.
Business Size (In Service Sector)	Medium → Investmentt of up to Rs 50 crore and turnover of up to Rs 250 crore. Small → Investment of up to Rs 10 crore and turnover of up to Rs 50 crore. Micro → Investment of up to Rs 1 crore and turnover of up to Rs 5 crore.

Business Loan For MSME: Documents Requirement

• ID Proof: Aadhaar/PAN/Voter/Passport
• Residence Proof: Utility bills/Ration card/Rental agreement
• Business Address Proof: Utility bills, lease agreement, rental agreement
• Income Proof: Copy of balance sheet and PL account for the past two years
• Security Proof: Copies of lease deeds/title deeds as collateral

Business Loan For MSME: Key Features To Know About

You get entitled to a range of benefits when seeking a business loan from a reputed lender for your MSME. Here are a few benefits and aspects of using an MSME/SME loan:

• Fast Online Processing:

  The best lender allows you to apply for a MSME business loan online and receive approval in just two minutes. In addition to saving time, using the online approach guarantees that your request will be processed immediately and that the money will be transferred into your savings account within a day after acceptance.

• Maximum Loan Amount:

  The amount needed for a specific firm may differ depending on the extent of the intended expansion. As a result, most MSME business loans have a high credit ceiling.

• Long-Term Repayment Period:

  You must have a suitable loan payback period to avoid missing EMI payments. With an MSME/SME business loan, you can benefit from a flexible repayment period of 12–60 months.

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Conclusion

After an in-depth discussion of what a business loan for MSME is, one can get this process done more conveniently. Get your MSME loan now!

Frequently Asked Questions

When applying for MSME loans, do MSMEs’ credit scores matter?

Undoubtedly, when asking for MSME loans, having an excellent credit score of at least 750 is a distinct benefit.

Is it mandatory to provide collateral for a business loan for MSME?

A lender may give you an MSME loan without any collateral if your business has potential for generating sound cash flows in the near future.