MSME or, Micro Small and Medium Scale Enterprises is the backbone of the Indian economy. They form a major part of the industrial sector in the country offering employment to more than 12 crore individuals across the nation.
The government has a number of MSME Loan schemes in place to boost this sector financially and technically. Various MSME loan products are available, specially designed for the MSME sector. Financial allocations to the MSME sector is an important part of the annual financial budget.
Some of the popular MSME Loan schemes are:
- Pradhan Mantri Mudra Yojana
- Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)
- Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)
- Financial Support to MSMEs in ZED Certification Scheme
- MSME Loans from the leading public sector and private sector banks
How can I apply for a specific loan for the MSME sector?
In order to apply for an MSME loan, you have to be an established MSME enterprise for a minimum of 2 years and show a specific profit in these years.
Here are some basic criteria to apply for an MSME Loan:
- The age limit of 21 – 65 years
- Minimum business age of 2 years making a profit
- A good credit score of 750 and above
- Proper documentation of business records and IT records for the past 2 years
- Minimum turnover criteria are lender specific and also depends on the loan type and loan amount
- Able to produce some considerable collateral or guarantee to back up your loan amount
Here is how you can apply for MSME Loans:
- You can approach your nearest bank branch to learn more about the MSME loan product on offer
- You have to fill in the application form with complete details of your business enterprise
- You have to submit documents supporting your current turnover and projected income for the near future
- You have to submit documentation regarding the end use of the loan amount
- It would be beneficial to attach some collateral or guarantee to your loan application for a better approval rate
If the application is for an MSME loan from the bank, the bank may forward it to the respective department for loan approval. Upon approval, the amount is disbursed into your account.
However, if the MSME loan product is a government scheme, the application shall be forwarded to the respective government team for approval. Upon approval, the amount is disbursed into your account.
Tips for faster MSME loan approval
The application process for MSME loans differs based on the lenders. However, the basic process is very much the same across all lenders.
- Provide all relevant documentation relating to your project to give clarity on your loan purpose.
- Provide a strong business plan to support your application
- Provide substantial collateral if possible to boost your approval chance