Easy Guide to Applying for MSME Loans

Many financial institutions in India offer customers unsecured loans for various business expenses. Such loans are commonly termed as MSME loans, where MSME stands for Micro, Small and Medium Enterprises. The names of these enterprises denote their sizes and the loans are meant to support the finance, infrastructure, and other areas of such businesses.    

Eligibility Criteria for MSME loan online

There are not too many eligibility criteria that need to be fulfilled for granting MSME loans in today’s times. Businesses will become eligible for these loans in the following cases:

· They have been filing GST returns in India for at least 1 year

· Their manufacturing plants have been working since 2 years at least

· The companies have filed IT Returns for the last 2 years

Unlike personal loans, credit scores are not the only factors responsible for reaching a decision here. Other business parameters are also taken into consideration when an application to apply MSME business loan is filed.  

 The Loan Application Process

Businesses can successfully apply for these loans by filling up the requisite applications given on the websites of reputed financial institutions. Approval may take some time due to the large number of applications being submitted all the time. If a business is an existing customer of a loan-disbursing financial institution, getting the loan is likely to be easier. The processes for new and existing customers would be slightly different from each other.   

Great Options for New Entrepreneurs

The COVID-19 pandemic has resulted in a major economic slowdown all over the world. However, all economies, including India’s, are trying hard to get back to their feet with time. Technology has made many options available for new entrepreneurs, one of which is financing. At this time, financing is absolutely essential for the required growth in the economy.

MSME loan criteria have been relaxed in the last few years, giving impetuses to many businesses for growth. It has also given confidence to many entrepreneurs, who seem to be having roller coaster lives due to the pandemic. Even those with disabilities can get these loans.  

Governed by Economic Conditions

MSME loans act as financial securities which are meant to govern economic conditions. This can be seen in various countries such as India, with banks increasing their lending capabilities with time. Some of the advantages of these loans are:

1. Easy Repayment Through Flexible Tenures - Convenient repayment is important for a loan to be helpful for any businessman. The repayment tenure is easy enough to allow borrowers to manage debt without defaulting. These loans help businesses plan their finances.

2. Favorable Interest Rate – On the basis of rate of Interest, monthly payments and cost of a loan are determined. An affordable EMI is made possible in the MSME loans through a lower rate. This feature is highly beneficial for small entrepreneurs.

3. Speedy Approval - Since the eligibility criteria of these loans are not tough, they are approved quickly, which is most helpful for establishment of a business

4. Handles Top Expenditures - High value MSME loans without securities can be used for rapid business expansion. Through these loans, businesses are able to handle all kinds of expenses during the expansion stage.  

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Created on Mar 15th 2021 07:52. Viewed 254 times.

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