MSME Loan – How To Apply For MSME Loan?

MSME loan is a financial product specially designed to facilitate small business owners and start-ups. It is a collateral-free loan that is provided by banks and NBFCs. However, to avail of the services, you must meet their eligibility criteria.

New MSME Definition

The criteria that differentiate between manufacturing and service MSMEs have now been removed. 

MSME Criteria

Key points of Aatma Nirbhar Bharat Abhiyaan

• Collateral free loans for All businesses (including MSMEs) up to the value of Rs. 3 lakh crore rupees.
• Manufacturing and service will now be considered as a single entity.
• This will benefit about 4.5 million units in India.
• Relief of up to 2% in interest will be provided for loans up to Rs 3 lakh.
• Owners of pedestrian businesses were offered a loan amount of Rs 10,000. This will benefit 50 lakh shopkeepers.
• Repayment period of 48 months with 100% Credit Guarantee.

Some Loans related information provided by the Banks and NBFCs

Lendingkart Finance MSME Loans details

• Maximum loan amount up to Rs. 2 crores.
• Minimum loan amount of Rs. 50,000.
• Interest Rate will be charged 18% onwards.
• Processing Fee is 2% of the loan amount.
• The repayment tenure for 36 months.
• Loan sanctioning time within 3 working days.
• Collateral security not required.

SBI MUDRA Loans Details

• Maximum loan amount up to Rs. 20 crores.
• Interest Rate will be charged 9.75% onwards.
• Processing Fee is 2.50% of the loan amount.
• The repayment tenure for 120 months.
• Collateral security not required.
• The current account holder must be at least 2 years old

Bajaj Finserv MSME Loan Details

• Maximum loan amount up to Rs. 30 lakhs.
• Interest Rate will be charged 18% onwards.
• Processing Fee is 3% of the loan amount.
• The repayment tenure for 60 months.
• Collateral security not required.
• Loan sanctioning time within 1 day.

Banks that provide MSME Loans

• State Bank of India
• ICICI Bank
• HDFC Bank
• Union Bank
• Indian Bank
• Central Bank
• Allahabad Bank
• Oriental Bank of Commerce
• Bajaj Finserv

In order to get an MSME loan firstly, you need to be a Micro or Small or Medium entrepreneur manufacturing or providing a service as mentioned in the MSMED Act 2006.

MSME Loan Schemes

MUDRA Loan

Micro Units Development and Refinance Agency or commonly known as MUDRA loan is a scheme that was introduced to provide support to the small business owners and it is operated under Pradhan Mantri Mudra Yojana (PMMY). The scheme fully assists banks to give loans up to Rs 10 lakh to all micro units MSME.

There Are Three Categories Under Mudra Loan

• Shishu category covers loans up to Rs. 50,000
• Kishore category covers loans above Rs. 50,000 and up to Rs. 5,00,000
• Tarun category covers loans above Rs. 5,00,000 and up to Rs. 10,00,000

Sub-Schemes Under Mudra Loan Scheme

• Mahila Uddyami Scheme
• Mudra Card
• Refinance Scheme for Banks
• Equipment Finance Scheme
• Credit for Micro Enterprises
• Micro-Credit Scheme
• Credit Guarantee Fund

Credit Guarantee Fund Trust for Micro and Small Enterprises

CGTMSE means the Credit Guarantee Fund Trust for Micro and Small Enterprises, an initiative of the Government of India in association with MSME and SIDBI, whose job is to establish a robust credit relief system which promotes better credit flow for MSMEs in India. 

Under the CGTMSE scheme; 

• Under MSME loan, MSMEs are eligible for a maximum credit cap of Rs 2 crore and Under MSME rehabilitation, the dilapidated MSME units are eligible for a maximum credit cap of Rs 1 crore.

Prime Minister’s Employment Generation Programme

PMEGP is a program of the Government of India under the Ministry of MSME and provides loans for setting up new units in manufacturing and business segments. The maximum project cost is Rs 25 lakh for the manufacturing sector and Rs 10 lakh for the service sector. Almost a 35% subsidy is given under this Scheme to increase the entrepreneurs in India.

Your own contribution to the project will be 5% to 10% and the government will subside your project cost from 15% to 35%.

How to apply for MSME loan ?

• Visit the Udyam Registration website. It is the national portal for registration of MSME enterprises.
• Fill in information such as Aadhaar number and name of Entrepreneur.
• After you fill the required details in the form, click on ‘validate’ and generate OTP.
• OTP will be sent to your Aadhaar linked registered mobile number. After that, fill the OTP on the window that appears and click on ‘validate’ and the application form will appear.
• Click ‘Submit’

Documents Required for MSME Loan

• Duly filled up the MSME loan application.
• Identity Proof: PAN Card, Driving Licence, Passport, Voter Identity Card.
• Residence Proof: Telephone Bill, Electricity Bills, Trade License, Passport, Lease Agreement, Ration Card and Sales Tax Certificate.
• Age Proof: Passport, Voter’s ID Card, PAN card.
• Financial Documents: Last 12 months’ bank statement, Business registration proof, Proprietor(s) PAN Card Copy, Partnership deed in case Partnership Firm, Company PAN card copy, P&L and Balance sheet copy of last 2 years, Tax documents, Municipal tax document