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LendingKart MSME Loan

Introduction

MSME/SME loans are special finance products offered to micro, small and medium enterprises. MSMEs comprise small businesses, traders, start-ups, small manufacturing units, cottage industries, women entrepreneurs and more.

Generally speaking, it’s difficult for MSMEs to avail business loans as these enterprises mostly do not have properties that they can pledge as collateral. This is where MSME loans come into the picture. Unlike business loans that are secured, MSME loans are unsecured, meaning loan applicants can borrow without the need for collateral.

Since MSME loans are unsecured, the minimum eligibility requirements for these loans are relaxed, making them easily available to all. Here, in this guide, we take a look at the MSME loans offered by LendingKart.

About LendingKart

LendingKart Technologies is a fin-tech startup offering small business loans. The company has developed various technologies using big-data analysis to make it easy for lenders to verify the creditworthiness of potential borrowers.

Formerly known as Aadri Infin Limited, LendingKart Finance Limited is a non-deposit, non-banking financial corporation focusing on SME lending. The goal of LendingKart is to make it super-easy for MSMEs to avail business credit easily. The USP of the company is that it makes use of sophisticated tools running on modern technologies like big data analysis to evaluate the creditworthiness of small businesses quickly and accurately.

One of the biggest benefits for borrowers is that unlike other banks and NBFCs, LendingKart does not focus on the past financial records of the borrower. As a borrower, you don’t have to submit your previous year's income tax returns and past financial statements to prove your eligibility.

LendingKart instead makes use of the borrower’s current year cash flows and business growth to determine the eligibility. Thus, the company makes it easy for businesses to avail the required working capital quickly without having to worry about their past financial records.

LendingKart has offices in Mumbai, Bengaluru and Ahmedabad but serves 1300+ cities across India. The company has disbursed over 70,000+ loans for 60,000+ small businesses pan-India.

5 Reasons to Choose LendingKart for MSME Loans

  • Superfast loan processing – Loans are processed within 72 hours from the moment you apply
  • No collateral required – You don’t have to submit any assets as security while applying for MSME loans
  • Fair interest rates – LendingKart offers some of the most competitive small business loan interests starting from 1.25% per month
  • Flexible repayments – You can repay the loan as per your convenience
  • Online Processing – The entire loan processing right from application to repayment happens online

Features of MSME Loans from LendingKart

LendingKart offers quick small business loans for MSMEs. These loans are approved via a completely online process that allows for quick processing. Additionally, LendingKart offers a wide range of customisations to their MSME loans, which gives these loans an edge compared to other similar products from other lenders.

Here are some of the top features of LendingKart MSME loans:

High Loan Value

Borrowers can choose small business loans that start from Rs. 50,000 and up to Rs. 2 crores. LendingKart is one of the few MSME loan providers who offer a high ticket loan size. This makes LendingKart loans a great option for micro, small and medium enterprises of all sizes.

Online Application

With LendingKart, borrowers can complete their entire loan application process online. Right from starting the application process, to submitting loan verification documents, and disbursal of the approved loan amount, everything is done online, providing borrowers with a hassle-free and seamless loan application process.

Quick Loan Processing

Once the borrower completes the online submission of supporting documents, the loan approval and verification process is completed within three working days (72 hours). LendingKart disburses the loan amount within three days of application, in most cases.

Collateral-free Loans

All MSME loans from LendingKart are unsecured. This means borrowers do not have to worry about submitting collateral or security to avail the loan. This is a huge benefit for small businesses that do not have any assets.

Competitive and Fair Interest Rates

LendingKart makes use of advanced financial data analytics to provide MSMEs with the best available interest rate. The entire interest calculation is automated and there is no manual intervention. This means, the final interest rates offered to the business is fair, competitive and is calculated based on the businesses’ ability to repay the loan.

Flexible Repayments

One of the biggest benefits of MSME loans from LendingKart is that borrowers get ample time to repay the business. Borrowers can choose tenures starting from 1 month up to 24 months (2 years). Additionally, MSMEs can choose to repay the loans either as monthly EMIs or even bi-weekly instalments. Thus, businesses can ensure that their loan repayments are in sync with their receivables.

Zero Hidden Charges

MSME loans from LendingKart do not have any hidden fees or charges. The only charges you have to pay are the upfront processing fee, which is around 1-2% of the loan amount. The zero hidden charges reduce the overall loan costs.

No prepayment penalties

LendingKart does not charge any prepayment penalties. This means you can close your MSME loans early without incurring extra costs. This is a huge boon for MSMEs as it allows business owners to repay their debts anytime after the payment of the first EMI.

Benefits of MSME Loans from LendingKart

Here are the top benefits of availing an MSME/SME loan from LendingKart:

Quick Disbursal

One of the biggest benefits of availing an MSME loan from LendingKart is that the processing time is super quick. Generally, it takes weeks or even months for banks and NBFCs to make a decision on business loans. With LendingKart, your MSME loans are disbursed within a few days. This means you can use the funds for any pressing business requirements like launching new products, product inventory, expanding the business, hiring staff and more.

Helps you stay in control of your Business

Another big draw of MSME loans from LendingKart is that the loans are unsecured – meaning you don’t risk losing your precious assets in case of loan defaults. This way, your businesses’ assets are not tied up with the loan.

No Restrictions on the Usage of the Loan Amount

You can use the loan amount for a wide variety of purposes – use it to expand your operations, purchase new equipment or machinery, start a new branch, hire extra staff, launch new products, marketing and more. LendingKart does not place any restrictions on how you use the loan amount. You can use it to increase your working capital or generate cash flow.

As you can see, MSME loans from LendingKart help you streamline your working capital and generate positive cash flow, via short-term borrowing.

Increases the Credibility of your Business

If your business is strapped for cash, then an MSME loan from LendingKart gives you the much-needed cash boost, helping you increase your profitability. This does wonders for your business, as it helps in increasing your credibility – you pay all outstanding, thereby increasing the trust of your suppliers.

Additionally, when you take a short-term loan and pay it off on time, it improves the creditworthiness of your business. Having strong credit ratings increases your business prospects, paving the way for increased investment opportunities.

MSME Loans from LendingKart – Fees, Interest Rates & Other Charges in Detail

LendingKart MSME Loans - Features
Customized Interest Rates15 to 27%*
Processing Fees1 to 2% (one-time)
Loan TenureUp to 24 months
Loan AmountStarting from Rs. 50,000 up to Rs. 2 crores
Pre-closure PenaltiesNil**
Repayment SchedulesFlexible monthly EMIs/Bi-weekly payments
Eligibility CriteriaBusinesses with turnover more than Rs.90,000 for 3 months

*The final interest rate charged depends on the financial health of your business – the annual turnover, profit and loss, and other revenues.

**You can foreclose the loan without incurring any penalties after the first EMI has been paid in full.

Eligibility Criteria for MSME Loans from LendingKart

The eligibility requirements from LendingKart for MSME loans are simple, making it easy for most businesses to qualify. Additionally, the paperwork for eligibility verification is minimal, making the loan approval and application process super fast.

If you meet the following conditions, then you can easily avail an MSME loan from LendingKart:

  • Your business must have been in operation for more than six months.
  • Minimum turnover of Rs. 90,000 or more for the last three months before you apply for the loan.
  • The business should have been blacklisted or excluded from SBA finance.
  • NGOs, trusts, and charitable institutions are not eligible for small business loans.
  • The physical location of your business, store, or factory should not be in the negative location list.

If you are not sure if your business meets the above conditions, you can always contact LendingKart to confirm your eligibility.

Documents Required for MSME Loans from LendingKart

The list of documents required depends on the type of business.

Documents RequiredOne Person Company/Limited Liability Company/Private Ltd CompanyPartnershipProprietorship
Bank Statement for the Last 12 months
Business Registration Proof*
PAN Card Copy of Proprietor(s)
Aadhar Card Copy of Proprietor(s)
Partnership Deed Copy
Copy of the PAN Card of the Business

* For business registration proof, you can submit any one of the following documents:

  • Business registration certificate
  • GST Filing
  • VAT Registration
  • Trade License
  • TIN
  • Drug License
  • Gumastadhara

How to apply for MSME loans from LendingKart?

Applying for MSME loans from LendingKart is simple and all it takes is three easy steps.

Step 1 – Submit the Online Application

Visit the site of LendingKart and start filling up the online application. Enter your personal details, business info and other required details to receive an offer for MSME loans from LendingKart.

Step 2 – Upload the Required Documents

The next step is to upload scanned copies of the required documents for application eligibility verification.

Step 3 – Get the Loan Sanctioned

Once your documents have been verified and your loan is sanctioned, LendingKart disburses the loan amount directly to your business bank account within 3 working days.

How to calculate EMI of LendingKart MSME Loans?

When you take an MSME loan, you repay the amount as EMIs (Equated Monthly Instalments). Each EMI payment contains a part of the principal as well as the accrued interest. LendingKart offers flexible EMI repayment schedules. This has two major advantages:

1. You can repay the loan easily by breaking it into small, easily managed payments that can be paid either monthly or bi-weekly to speed up the repayment schedule.

2. You can also avail refinancing for the MSME loan amount, with the help of auto-renewal option provided by LendingKart.

The following compound interest formula is used for MSME loan EMI calculations:

E = P * r * (1+r) n / (1+r) n-1

Here, E – Refers to the EMI

P – Represents the principal, which is the total loan amount borrowed,

R - Represents the Rate of Interest (the interest rate should be a monthly rate)

N – Denotes the duration of the loan

MSME Loan EMI Calculator

LendingKart offers a digital EMI calculator that helps you determine the EMI for different loan amounts and tenure. Using the EMI calculator, borrowers get a clear idea of the interest and principal loan amount in each repayment, thus giving them a better picture of their borrowing.

Do’s and Don’ts when Applying for an MSME Loan from LendingKart

While LendingKart makes it easy to avail MSME loans, there are some do’s and don’ts to follow to ensure that you get the best interest rates. Apart from helping you reduce your loan rates, these do’s and don'ts to improve your chances of loan eligibility and prevent your loans from getting rejected.

Do’s

  • Make sure to check your credit score before applying for an MSME loan from LendingKart. Most lenders on the portal use credit ratings to determine whether a borrower is eligible or not.
  • Get the required documentation sorted before starting the loan application process. Note that LendingKart does not accept physical copies of the required documents. You have to scan and upload all documentation in digital form. Getting the documents ready simplifies the application process.
  • Have a business plan on how you intend to spend the loan amount. Prepare a plan that shows what you plan to spend the amount and how you plan to generate positive returns. Though not all lenders on the portal of LendingKart ask for these details, being prepared with a business plan helps to improve your trustworthiness with the lender.
  • Assess the loan amount you require based on the financial requirements of your business. Overestimating the required loan amount could cause your loan eligibility chances being reduced.

Don’ts

  • Don’t make the mistake of applying with several banks and NBFCs. This causes your credit ratings to drop. Also, lenders see this as a sign of your desperation. Make sure to shortlist just a couple of lenders with whom you’re sure of getting the loan and apply only with 1-2 lenders at a time.
  • Do not skip or delay loan repayments. This impacts your credit score negatively, which, in turn, derails your future loan eligibility.
  • Do not choose a lender before you analyse them. Several lenders charge hidden fees that could impact you negatively. Make sure to consider all the fees and charges before applying.

LendingKart MSME Loans FAQs

1. What is the difference between MSME loans and small business loans?

There is not much of a difference. Both are loan products offered to small businesses to boost their working capital and cash reserves. MSME loans are for micro, small and medium enterprises, while small business loans refer to all small businesses.

2. Which are the cities served by LendingKart?

LendingKart divides the areas they serve into four zones:

1. North

  • Delhi and NCR which includes Central Delhi, New Delhi, South Delhi, East Delhi, Faridabad, Gurugram, Ghaziabad, Rithala and Noida
  • Haryana which includes Chandigarh, Panipat, Karnal, Kaithal, Rewari, Palwal, Rohtak and Gurgaon
  • Himachal Pradesh which includes Shimla, Rampur, Kullu, Manali, Mandi and Chamba
  • Uttar Pradesh which includes Lucknow, Jhansi, Meerut, Varanasi, Allahabad, Kanpur and Agra
  • Punjab which includes Firozpur, Patiala, Jalandhar, Ludhiana and Amritsar
  • Uttarakhand which includes Kichha, Roorkee, Mussoorie, Haridwar and Dehradun

2. East

  • Orissa which includes Bhubaneshwar, Berhampur, Sambalpur and Cuttack
  • West Bengal which includes Kolkata, Kalyani, Howrah and Hooghly
  • Bihar which includes Patna, Siwan, Buxar, Darbhanga, Jahanabad, Aurangabad, Nalanda and Sasaram
  • Jharkhand which includes Ranchi, Dhanbad, Jamshedpur and Deoghar

3. West

  • Goa which includes Panaji, Ponda, Mapuca, and Madgaon
  • Maharashtra which includes Mumbai, Nanded, Aurangabad, Ahmednagar, Nashik, Thane, Ulhasnagar, Pimpri, Palghar
  • Rajasthan which includes Jaipur, Dholpur, Ajmer, Alwar and Behror
  • Gujarat which includes Ahmedabad, Surat, Gandhinagar, Jamnagar, Vadodara, Deesa, Bharuch and Porbandar

4. South

  • Tamilnadu which includes Chennai, Trichy, Madurai, Coimbatore, Erode, Salem, and Vellore
  • Kerala which includes Trivandrum, Kochi, Ernakulam, Malappuram, Thrissur and Kollam
  • Andhra Pradesh which includes Amaravati, Vijayawada, Guntur, Vishakapatnam, Rajahmundry, Tirupati, Kakinada, Nellore, Kadapa, Anantapur, and Kurnool
  • Telangana which includes Hyderabad, Adilabad, Nizamabad, Karimnagar, Nalgonda, Warangal, Secunderabad, Khammam, and Ranga Reddy

3. What is the maximum tenure for MSME loans from LendingKart?

The maximum tenure offered for repaying the loan is 24 months (up to 2 years).

4. How long will it take to get my MSME loan approved?

If you have submitted all the required documents, then the loan amount is generally sanctioned within 1 to 3 working days.

5. How will I receive the loan amount?

The sanctioned loan amount will be credited to the associated bank account of the business.

6. Can I repay my MSME loan faster?

Yes, you have two methods to repay your loan faster.

1) Choose bi-weekly EMIs instead of monthly EMIs. This way, you pay the EMI once every two weeks, thereby repaying your loans twice as faster.

2) Foreclose the loan. You can choose to pre-pay the balance loan amount anytime after the first EMI, without incurring any extra charges.

7. Can I renew my loan after repayment?

Yes. LendingKart offers easy renewal for existing borrowers. You can choose this option while applying for the loan. If you choose auto-renewal, once you have repaid the initial loan, a subsequent loan amount is credited to your account for a processing fee of 2% of the principal. The subsequent loan amount is similar to the initially sanctioned amount.

8. How is my interest rate determined? Are there any ways to reduce the interest rate of an MSME loan from LendingKart?

The interest rate depends on several factors like the loan amount, age of the business, financials of the business and more. Here are a few factors to help you avail MSME loans at reduced interest rates:

  • Loan amount – The loan amount you are applying for plays a crucial role in determining the final interest rate. Generally, if you apply for higher loan amounts, then you have a higher possibility of getting lower interest rates.
  • Credit Scores – The rule of thumb here is higher the credit score, lower is the interest rate and vice versa. Work on boosting the credit score of your business before applying for an MSME loan.
  • Balance Sheet – If your business has a healthy balance sheet and you’re earning good profit margins, then your interest rates are likely to be lower.
  • Age of the Business – Businesses that have been in operation for a longer period receive MSME loans from LendingKart at discounted rates.

9. How can I utilize the funds from the MSME loan?

There are no restrictions on how you can use the funds. Here are a few top ways in which businesses use the loan amount to grow and expand their business:

  • For purchase of equipment
  • Inventory management
  • Increase working capital
  • Launch new products/services
  • Set up a new office location
  • Consolidate business debt
  • And more

10. How is my maximum loan limit determined?

The credit rating and the financial health of your business determine your maximum loan amount. You can increase the maximum loan amount by reducing the existing debts of your business and by optimizing operating expenses.

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