MSME Loans are also known as Micro-Small-and-Medium Enterprise loans. They are a massive help to small businesses and entrepreneurs. An MSME loan can be used for various business purposes like purchasing inventory, upgrading equipment, expanding the office space, paying salary to staff and more.
Today, applying for an MSME loan is easier than ever before. All you have to do is select your preferred lender, fill the online application form, upload supporting documents, and voila – the loan amount is credited to your bank account directly once the loan is approved. In this guide, we walk you through the steps for applying for an MSME loan online.
Additional Read: What are the benefits of an MSME loan?
How to apply for an MSME loan online?
Step 1: Decide your lender. Before you apply for an MSME loan online, you have to finalise the lender. Make sure to compare the interest rates, eligibility criteria, features and other details of MSME loans offered by different lenders.
Quickly compare the latest interest rates for MSME loans from different banks and NBFCs.
Step 2: Visit the official website of your chosen bank/NBFC. You can also start the loan application process online using CreditMantri.
Step 3: If you already have an account with the bank, use your login ID and password to log into your banking account. If you’re not an existing customer, you can still apply for an MSME loan, but you will have to first create an account with the bank/NBFC.
Step 4: Navigate to the MSME loan section. Look for the online application form. Enter the required details. It includes your personal information, information about your business, income details, and other requirements.
Step 5: Once you have filled in all the details, upload the supporting documentation online. Most lenders require you to provide KYC proof, proof of business ownership, ITR, profit-loss statements and business bank account details.
Step 6: Check if you have provided all the required information. Submit the application form online.
Step 7: Once you submit the form, you will be provided with the application number. Make sure to note down this number for future communications with the lender.
Step 8: The bank receives your loan application. Then, the loan officer will contact you to finalise the other details of the loan.
Step 9: Depending upon the lender, you may be required to visit the nearest branch in-person to complete the loan formalities. However, most lenders today are 100% digital and do not require in-person visits for loan applications.
Step 10: The bank verifies your documents and approves your loan, provided you meet the eligibility requirements. Once the loan is approved, the funds are disbursed to your bank account within the next few days.
For further reading: All that you need to know about MSME loans
5 Points to Keep in Mind, Before Applying for an MSME Loan Online
Calculate your Business Requirements
Before you begin searching for an MSME loan online, the first step is to understand your business requirements. Analyse your current business needs, your financial goals – short-term and long-term and a deep dive into why you're applying for an MSME loan. It's a good idea to have a clear objective of how much loan amount you need, how you will use it and the expected returns (or gains) from your business. This prepares you for any questions asked by the lender.
Choose the Right Lender
While MSME loans are readily available, not all lenders will extend a loan offer for you. Different lenders have varying eligibility criteria. So, it makes sense to check the eligibility criteria at your preferred lender and see if you meet them. Other factors to consider while choosing the lender includes:
- Interest Rates
- Loan Amount
- Processing Fees
- Repayment Tenure
- Ease of Application
- Terms and Conditions
Thanks to the rise in digital banking, the easiest way to apply for an MSME loan is online. Easy, hassle-free process, online application accelerates the entire loan process from approval to disbursal. Make sure to read the steps listed above to understand the online loan application process.
Have the Required Documents Ready
The primary reason why loan approval takes a long time or a loan gets rejected because the applicant fails to provide the required documents. So, before you begin the loan application process, make sure to have all the documents required by the lender in hand. Upload the documents to your Google Drive or any other cloud service so that you can submit them easily during the online application.
Finally, Maintain a Good Credit Score
Most MSME loans are collateral-free. So, lenders evaluate your creditworthiness using your credit score. A good credit score of 750+ works in your favour and helps you get the loan quickly and without any hassles. Make sure to check your personal credit score and your business credit score, as lenders consider both these factors.
FAQs of MSME Loan Online
- What are the documents required to apply for an MSME loan online?
You have to provide only a few critical documents while submitting your online loan application:
- KYC documents (ID proof, address proof, PAN card, etc.)
- Bank account statements for your business
- ITR and profit-loss statements for your business for the last two years
- Proof of business ownership
If required by the lender, you may be asked to provide additional documents once the loan processing starts.
- Who can apply for an MSME/SME loan in India?
Any medium, small or micro business that has been in operation for 2 years can apply for MSME loans. Note that most lenders also have an age requirement, and the primary applicant should be between 21 and 65 years.
- Which businesses are eligible for MSME loans in India?
Self-employed professionals and entrepreneurs, including retailers, proprietors, traders, small-scale manufacturers, are eligible for MSME loans in India.
- What is the interest rate for MSME loans in India?
The interest rate for MSME loans in India starts from 7.65%. The interest rate varies depending on the lender. So, it's highly recommended that you compare the interest rates at different lenders and choose the best offer.
- Can I get an MSME loan without collateral?
Yes, most MSME loans do not require collateral. However, they need the applicant to have a credit score of 750+. Note that your business credit score also plays a crucial role in determining the outcome of your MSME loan. If you fail to meet these requirements, you may be required to provide collateral to reduce the risk borne by the lender.
- What is the maximum loan amount that I can get using an MSME loan?
As per the RBI's mandates, banks and other lenders can offer MSME loans up to 10 crores without collateral. However, the maximum loan amount varies from lender to lender. For example, Bajaj Finserv provides MSME loans up to Rs. 45 lakhs, whereas ICICI Bank offers MSME loans without collateral under the CGTMSE scheme for up to Rs. 2 crores.
- Where can I apply for an MSME loan online?
You can apply for an MSME loan at any private or public sector bank. Additionally, NBFCs also offer MSME loans.