Do you know the small business drives a significant part of India’s economy? They play a vital role in the success story. However, it is not an easy thing to do. Every now, a person might face financial issue. This is where an MSME loan could help.
The business loan is available for Micro, Small and Medium enterprises who require financial assistance. In this short post, we look at the essential details you need to know.
MSME loans – the basics
Financial institutions offer the MSME loan to Micro, small and medium enterprises. It could be used for working capital, increase cash flow or expand the business. The best thing is, you do not have offered collateral.
Here are few lenders who offer the MSME business loan with the interest rate.
- State bank of India – 8.30% onwards
- Kotak Mahindra Bank – 15% onwards
- HDFC Bank – 16% onwards
- RBL Bank – 19% onwards
- TATA Capital Finance- 18% onwards
- Bank of Baroda – Based on borrowers credit profit
The Loan Details
Here are the loan details, such as the amount, interest rate you needed to know.
- The minimum loan amount is offered up to Rs 30,000. The maximum is up to 1 crore, however, It can exceed depending upon the requirement.
- The interest rate will depend upon your profile and business requirements.
- The loan repayment tenure is from 1 year to 5 years.
- Since it is an unsecured business loan, collateral is not required.
- The processing charge for the loan is up to 4% of the loan amount.
- The foreclosure charge is up to 5% of the outstanding loan amount.
- The part-payment charge is up to 4% of the loan amount.
- The loan cancellation charge will vary from bank to bank.
Different Credit Facilities You Can Avail
- Working capital business loan
- Bill discounting
- Cash credit
- Overdraft
- Letter of credit
- Bill of purchase
- Merchant cash advance
What are the various schemes offered?
You can avail many popular schemes under the MSME loan.
- CLSSS – Credit linked capital subsidy scheme
- CGTMSE – Credit guaranteed fund trust for Micro and small enterprises
- Credit guarantee scheme
- Mudra Loan
- National Small Industries Corporation subsidy
- PMRY
- Stand up India
- Startup India
- PSB loan in 59 minutes
How you could use the MSME Loan
- You could use the MSME Loan to full fil the capital requirement.
- For a business expansion, it could be perfect.
- In case you need to buy new equipment or machinery
- To pay the salary, hiring staff, etc.
What is the eligibility criteria for an MSME loan?
- The age requirement is between 18 years and 65 years to be eligible for an MSME loan.
- Individuals, Business owners, women entrepreneurs, people falling under SC/ST/ OBC category, SMEs and MSMEs are eligible for the loan.
- Private, public limited companies, or partnership firms engaged in the trading, service or manufacturing sector are also eligible.
- The minimum business turnover requirement is Rs 10. However, it changes from bank to bank.
- The borrower should have an ideal credit score.
- The borrower should not have any defaulted loan in the past.
Documents Required for the MSME business loan?
- The loan application form
- Passport size photographs
- Identity proof – Aadhar card, PAN card, Driving license, Voter ID card
- Address proof- Telephone bill, water bill, electricity bill, water bill
- Business establishment proof
- Any other documents needed by the lender
How to do MSME registration?
In order to apply for the business loan, you will do an MSME registration. It is available on it’s official website as well as on Afinoz.com. Head to the website for further info.
Conclusion
The MSME loan is a perfect business loan for those borrowers who are seeking financial help. The interest rate is low, if you go with the right bank, no collateral needed and other charges are low as well. Overall, an ideal deal for a small entrepreneur who wants to make big.
